Russia's coal industry plunges into crisis as some mines halt production – Bloomberg
Russia's coal industry has plunged into a deep crisis due to sanctions, high lending rates and falling demand from China. About this writes Bloomberg.
According to the Federal Statistics Service of the Russian Federation, in 2024, only half of the country's coal companies remained profitable, and the situation continues to deteriorate.
Mechel, one of the largest companies in the industry in Russia, has already announced plans to cut sales by 25% this year. Some Siberian mines have stopped production because each new ton of coal only increases losses.
After three years of sanctions, Russia cannot provide the industry with the necessary Western equipment.
According to employees of two of the country's leading companies, miners are forced to "cannibalize" equipment – disassemble equipment from several sites to assemble a single working unit.
The problems are exacerbated by high interest rates: companies have to take out loans at more than 20%. Meanwhile, coal prices are falling to their lowest levels in recent years due to lower demand from China.
The crisis in the industry is also affecting regional budgets. In particular, the Kemerovo region, the main coal-producing region of the Russian Federation, recorded a budget deficit of 20% in the first quarter.
If the situation does not change, the industry's losses by the end of the year may exceed 350 billion rubles ($4.5 billion), and the total debt will reach 1.4 trillion rubles ($18 billion).
Previously, Russian coal mining companies were actively exporting to the EU, but after the ban on coal supplies in 2022, they tried to refocus on China. However, this year, Chinese demand began to fall as well.
- Ukraine's Foreign Intelligence Service expects that the Russian economy will begin to collapse by the end of 2025 under the pressure of sanctions and military spending.
- The head of Russia's Sberbank German Gref has admitted that the problems in the Russian economy caused by rising military spending, inflation and the increase in the key rate of the Central Bank, will not be resolved quickly.