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Home Coal Demand

Putin approves measures to support Russian coal industry

Editor by Editor
3 weeks ago
Reading Time: 3 mins read
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Russian President Vladimir Putin approved the Government’s proposed measures to support the coal industry, including discounts on railroad tariffs, tax benefits and guaranteed export of coal to Far Eastern ports from Khakassia.

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The Russian coal industry has lost almost 30 billion USD since 2022, resulting from sanctions pressure, as well as rail tariff and fiscal measures within the country. The bulk of the losses in amount of 18 billion USD are related to the restrictions imposed on Russian companies, while another 12 billion USD were withdrawn from the industry due to the growth of railway tariff and fiscal burden.

In 2024, coal companies suffered a consolidated loss of 1.6 billion USD caused by the simultaneous impact of such negative factors as falling global coal prices, high cost of railroad transportation, logistical restrictions and ruble appreciation.

The measures approved by the President include:

  • providing by Russian Railways (RZD) from May 1 to December 31, 2025, a 12.8% discount on coal export shipments to western and southern ports;
  • renewal of the reduction coefficients to the tariff of 0.4 and 0.895 within the same period of time. Until June 2022, the reduction ratio of 0.4 was applied for coal transportation over 3,300 km, and 0.895 – for export shipments;
  • the allocation of subsidies from the federal budget to the monopoly should be envisaged to compensate for shortfalls in RZD’s revenues;
  • conclusion of agreements between RZD and coal companies in Khakassia on guaranteed coal exports in 2025 in the eastbound direction;
  • creation of an instrument on the basis of VEB.RF for restructuring, rehabilitation and bailout of coal industry enterprises;
  • some enterprises in the industry may be granted a deferral of taxes and insurance premiums;
  • a proposal to initiate international negotiations on the removal of import duties on Russian coal for deliveries to China and India.

According to the estimates of the Russian Ministry of Energy, without prompt intervention and the state support, coal production in Russia in 2025 will collapse to 399.6 mio t (-43.8 mio t or -9.9% vs. 2024), with exports slumping to 166.5 mio t (-29.4 mio t or -15% vs. 2024).

In 2024, coal production declined 0.2% to 439 mio t, with exports plunging to 195 mio t (-17 mio t or -8.1% vs. 2023).

The share of loss-making coal companies exceeded 50% by the end of 2024. Due to the crisis in the coal industry, about 30 Russian coal companies with a total production of 40 mio t per year are in pre-bankruptcy. Another 62 companies with total production of 126 mio t per year have losses above the industry average. In Kuzbass and Khakassia, many companies are forced to reduce production plans and conserve certain mining areas.

From 2020 to 2024, the rail freight tariff for coal supplies from Kuzbass, Khakassia and the Novosibirsk region to seaports has already increased by almost 100% (4 times higher than the accumulated inflation over the period). From December 01, 2024, freight rail tariffs were raised by another 13.8% as part of the planned indexation for 2025. Additionally, from January 01, 2025, a target surcharge of 2% was introduced.

In Q1 2025, exports of thermal coal became loss-making even in the most profitable direction, such as deliveries to China via Far Eastern terminals.

The program approved by the Russian President to support the industry will enable coal companies to reduce losses when shipping coal through western ports and possibly gain a marginal profitability when shipping through ports in the Far East.

The agreed measures may help the industry survive the critically challenging times; however, they will not fundamentally solve such issues as depressed export prices and the strengthening of the ruble. Without a noticeable rise in global market indices, the industry will continue to balance on the edge of profitability.

Source: CCA Analysis


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