Russia’s coal Industry Plunges into Crisis, Threateningโฃ Economic Strain
Moscow – Russia’s coalโค industry is facing โa “once inโข 30โข year crisis,” with widespread lossesโข and โคpotential bankruptcies โthreatening a key sector of the nation’s economy. The downturn, exacerbated byโ sanctions and โฃthe war in Ukraine, โis prompting a limited government bailout and raising concernsโ about the future viability of numerous mining operations.
Kuzbass, responsible for over โขhalf of Russia’s coal output, registered a 70.6 billion-rouble (ยฃ647 million) deficit inโข 2024 and has already borrowed โ36 billion roubles (ยฃ330 million) in the โคfirstโข half of 2025. Across the โcountry, 19,000โ coal industry jobs have been lost this year,โฃ with 30 enterprises – representing 30 million tonnesโฃ of annual production โค- at risk of โbankruptcy.
Steel-to-coal conglomerateโฃ Mechel is โscaling back operations, including mothballing a mine and reducing its workforce, reporting a 28% decline in output โduringโข the first half of the year.The company anticipates full-year losses could triple to between 300-500 billionโฃ roubles (ยฃ2.8 billion-4.65โ billion), potentially increasing the โคsector’s total debt to 1.5 trillion โขroubles (ยฃ14 billion).
In May, President Vladimir โฃPutin approved a bailout package – โคfollowingโค resistance from the finance ministry – offering tax pauses, loan forbearance, and reduced tariffs to struggling companies, โขbut โฃstopping short of direct subsidies. Energy minister Sergei Tsivilev, a former Kuzbass governor and coal tycoon with close ties to Putin, is leading theโ implementation โofโ the aid.
“Ourโ forecast for global coal prices is bearish through to 2027, with some seasonal upsideโ risk in the โคfinal quarterโฃ of 2025,” โคstated Alex Thackrah, senior manager โat a coal โขanalytics firm.more than half โof 180 Russian โฃcoal companies reported losses last year, and sanctions areโข hindering access to Western equipment, forcing companies to scavenge for parts.
The Kremlin is also attempting to leverage coal mines inโ occupied Donbas, Ukraine, which previously relied on approximately โยฃ750 million in annual subsidies from Kyiv. With those funds now unavailable, Russian-backed operations are increasingly being transferred back to โstate control due to their unprofitability.
“War is bad for most of โthe Russianโข businesses,if not all of them. But the coal sector is in really deep s***,” an unnamed โคbusinessman told the Financial Times.
Pavlo Kukhta, Ukraine’s former deputy โขeconomy minister, explained, โ”The Donbasโข mining industry is old and relied heavily onโ state โคsupport from Kyiv, with subsidies reaching about โยฃ750million a year.When Russia took over,the subsidiesโ dried up and now the industry is collapsing. Russia’s mining sector faces the โsame problems.”