Kremlin attempts to bail out Russian coal industry as Energy Ministry warns of catastrophe
Russia’s coal industry is in deep crisis, with export deliveries turning unprofitable in every direction, according to Deputy Energy Minister Dmitry Islamov. In an interview with TASS published on July 1, Islamov confirmed that coal exports from Russia are currently yielding negative margins—whether sent east, west, or south.
“The margin is still negative across all routes,” Islamov stated. “If we average it across the year, the eastern direction is slightly better, but still unprofitable.”
The remarks offer rare official confirmation of the mounting economic pressure on Russia’s energy sector amid falling demand, logistical bottlenecks, and international sanctions. Once a key revenue source, Russian coal exports have struggled under a combination of restricted access to Western markets, discounted prices, and rising transport costs.
To stabilize the situation, the Kremlin has already approved a state-backed rescue program. According to earlier reports, Russian President Vladimir Putin has endorsed a Ministry of Energy support package that includes discounted railway tariffs. Russian Railways (RZhD) will offer a 12.8% discount on coal exports via western and southern routes and reinstate favorable coefficients for thermal coal through the end of 2025. The Russian Finance Ministry will reimburse RZhD for the losses incurred from these subsidies.
The measures reflect the growing strain on Russia’s traditional export infrastructure. The EU’s near-total embargo on Russian coal, introduced in 2022, forced Moscow to reroute massive volumes to Asia, particularly China and India. However, those markets demand steep discounts and involve longer, costlier transport routes, often with inadequate rail or port capacity to absorb the volumes intended for Europe.
While Islamov insisted that coal will remain in Russia’s energy mix “for 1,000 years,” the economic reality suggests otherwise. Even in its eastern “more favorable” corridor, Russian coal is being sold at a loss.
But with sanctions tightening and green energy transitions accelerating globally, the long-term outlook for Russian coal remains uncertain—even within its own borders.
