Profits of Russian coal companies (adjusted for losses) in January-February 2024 collapsed 5.3-fold from 1.2 bln USD to 0.2 bln USD (-1.0 bln USD y-o-y). At the same time, the losses doubled to 0.3 bln USD.
The share of loss-making entities increased from 39% to 46%.
In 2023, profits of Russian coal companies dropped 2.1-fold to 3.9 bln USD (-4.6 bln USD y-o-y) due to falling prices on the global market and a substantial increase in costs.
Additional factors that continue to have a negative impact on coal miners’ financial results include limited transportation capacity of railroad infrastructure, export duties, rising railway tariffs, and western sanctions.
For many Russian suppliers, the current level of global prices and production costs make coal exports loss-making, forcing them to reduce production and abandon their new coal deposit development projects.
If the current trend continues, Russian coal exports in 2024 will decrease by 30-35 mio t. If unfavorable factors intensify and, in addition to SUEK and Mechel, other Russian coal companies, their export terminals and international transactions fall under sanctions, the loss of Russian exports may amount to about 50-60 mio t.
Coal production in Kuzbass, the main coal mining region of Russia, where high-quality material is extracted, decreased to 52.6 mio t in January-March 2024. (-1.1 mio t or -2.1% y-o-y ). Exports in Q1 2024 fell to 45.5 mio t (-6.6 mio t or -12.8% y-o-y).
Source: CAA
