The Russian coal industry, one of the largest raw materials industries in the economy, comprising more than 30 single-industry towns and hundreds of thousands of employees, is hurtling towards a severe crisis. Having lost Western markets, faced with a sharp drop in demand in “friendly” countries and multi-billion dollar losses, coal companies have begun to sharply cut production.
According to Rosstat , coal production in Russia fell by 6.7% year-on-year in July, and its total volume of 31.5 million tons was the lowest since the 2020 pandemic. Compared to the peaks shown in December 2022, coal companies have lost about 12 million tons of monthly production, or 27%. The production of hard coal, the main product of coal miners, which accounts for 80% of production, has collapsed by 8.2%, and anthracite, the most valuable grade, by almost a quarter (by 23.7%). In August, according to operational statistics from Rosstat , the decline in coal production accelerated to 10.1% year-on-year.
Supplies to China in the first half of 2024 fell by 8% and are not expected to grow, complained Russian Energy Minister Sergei Tsivilev in September. The fact is that Beijing has imposed duties on Russian coal, the minister explained. At the same time, other suppliers - Indonesia and Australia - were not affected by them, since they are part of a free trade zone with China. India has cut its coal imports from Russia by 55%, and Turkey by 47%, according to CREA estimates. Russia's total coal exports fell by 11.4% in January-July, to 112.6 million tons. And since coal miners exported about half of their output, the blow was painful for them, Kluge notes.
As a result: according to Rosstat, more than half of coal companies became unprofitable, and the net financial result of the entire industry became negative. The total loss of the coal industry for January-July amounted to 7.1 billion rubles. At the same time, the losses of unprofitable companies increased by 3.4 times, and the profit of profitable ones decreased by 72%.
“The worst crisis in 30 years”
…so far.