Russia’s Coal Sector Battered by Sanctions
Russia’s coal sector is imploding thanks to sanctions. Net profit for the coal mining sector plummeted by 93% between January and April 2024.
Russia’s coal industry, one of the country’s largest raw materials sectors, is on the brink of financial collapse as it grapples with the severe impact of international sanctions.
“The Russian coal industry – one of the largest raw materials industries in the national economy, comprising more than 30 individual industrial towns and 650,000 employees (including affiliated companies) – is heading for a serious crisis,” Russia watcher Boris Alexander Beissner reported on June 27 in a post on social media.
According to RosStat, net profit in the coal mining sector plummeted by 93% between January and April 2024. “Less than half of the companies in the 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 RUB72bn, with 52.4% of companies becoming unprofitable. Cumulative losses over the four months reached RUB58bn.
“As a result, the break-even profit of coal mines from January to April was only RUB14.3bn – almost RUB200bn less than in the same period last year,” Beissner highlighted.
Cut off from Western markets by the sanctions, Russian coal companies are rapidly losing customers in countries that the Kremlin describes as “friendly.” At the end of the first quarter, Russian coal exports fell by 13%, with the decline in March reaching 17%, according to experts at Gazprombank’s Price Index Centre (PIC).
“Mining companies lost about 3mn tonnes of exports every month, and prices for Russian coal plummeted to a three-year low: $95 per tonne in the Far East ports (-6% year-to-date), $72 per tonne in Taman (-13% ytd) and only $61 in the Baltic ports (-14% ytd),” Beissner reported.
The grim statistics underscore the severe challenges facing Russia’s coal industry as it struggles to adapt to the new economic reality imposed by the sanctions. The industry’s decline threatens not only its financial stability but also the livelihoods of hundreds of thousands of employees dependent on this crucial sector.
