bne IntelliNews – Russia’s coal sector hit by sanctions

The Russian coal industry, one of the country’s largest raw materials sectors, is on the brink of financial collapse amid the severe impact of international sanctions.

“The Russian coal industry – one of the largest raw material industries in the national economy, encompassing more than 30 individual industrial cities and 650,000 employees (including affiliated companies) – is heading towards a serious crisis,” Russia watcher Boris Alexander Beissner said in a June 27 social media post.

According to RosStat, net profit in the coal mining sector fell by 93% between January and April 2024. “Less than half of the companies in this sector ended the first four months of 2024 in the black, compared to two-thirds of them a year ago,” Beissner noted. The total financial result fell to RUB 72 billion, and 52.4% of companies became unprofitable. Cumulative losses for the four months reached RUB 58 billion.

“As a result, the net profit of the coal mine from January to April amounted to only 14.3 billion rubles – almost 200 billion rubles less than in the same period last year,” Beissner emphasized.

Cut off from Western markets by sanctions, Russian coal companies are rapidly losing customers in countries that the Kremlin calls “friendly.” According to experts from Gazprombank’s Price Index Center (PIC), Russian coal exports fell by 13% at the end of the first quarter, reaching 17% in March.

“Mining companies lost around 3 million tons of exports per month, and Russian coal prices fell to a three-year low: $95 per ton in Far Eastern ports (-6% year to date), $72 per ton in Taman (-13% year to date) and just $61 in Baltic ports (-14% year to date),” Beissner reported.

The grim statistics underscore the serious challenges facing Russia’s coal industry as it struggles to adapt to the new economic realities imposed by sanctions. The industry’s collapse threatens not only its financial stability but also the livelihoods of hundreds of thousands of workers who depend on this vital sector.