Total Collapse in Russia’s Coal Industry

Russia’s coal-mining regions are grappling with a sharp decline in budget revenues as coal companies face financial difficulties caused by the loss of export markets and reduced production. Finance Minister Anton Siluanov reported that profit tax revenues in the Kemerovo region, which accounts for 60% of Russia’s coal production and 80% of coking coal, have dropped by 59%. Similar declines have been observed in Buryatia and the Jewish Autonomous Region.

According to Rosstat, nearly half of Russia’s coal companies are now operating at a loss, with the sector’s combined financial result for January-September showing a deficit of 91.3 billion rubles, compared to a profit exceeding 350 billion rubles during the same period last year. Western sanctions, which banned Russian coal imports, are the primary cause of the crisis, leading to a significant drop in exports. Asian countries, previously major buyers, have also reduced their demand. As a result, Russia’s total coal exports fell by 11.4% to 112.6 million tons from January to July.

Additional challenges include falling coal prices, payment blockages, and limited access to imported equipment. In September, Russia’s coal production fell by 4.9% for hard coal and 4.7% for lignite. The Ministry of Energy’s analytics center warned in October that the coal industry is on the brink of bankruptcy. The loss of Western markets, reduced demand from “friendly” nations, additional taxes, and increased railway transportation tariffs have cost coal companies 500 billion rubles from 2022 to 2024.

Urgent measures are needed to support the coal sector and revise tax policies to prevent further economic deterioration in affected regions.