Deputy Energy Minister Dmitry Islamov reported that losses in the Russian coal industry exceeded 875 mio USD in Q1 2025. Islamov emphasized that the situation in the coal industry continues to deteriorate this year.
Negative factors remain strong, which are confirmed by the statistics for the first 4 months of the year, demonstrating the adverse dynamics of the industry’s development.
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of 18 billion USD are related to the restrictions imposed on Russian companies, while another 12 billion USD were withdrawn from the industry due to the growth of railway tariff and fiscal burden.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.
According to the Kuzbass government, all coal companies in the region are operating below the profitability threshold. Since the beginning of 2025 64% of mining companies in Kuzbass were unprofitable.
Due to the crisis in the coal industry, 27 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.
Under 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).
Due to the crisis in the coal industry, 27 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.
Earlier, Vladimir Putin approved the government’s proposed measures to support the coal industry, including discounts on railroad tariffs, tax benefits and guaranteed coal exports to Far Eastern ports.
RZD’s 12.8% discount for export coal transportation in the western and southern directions from May 1 to December 31, 2025, became a key element of the government’s program to stabilize the coal industry, including renewal of the reduction coefficients to thermal coal tariff of 0.4 and 0.895.
Nevertheless, Deputy Transport Minister Alexey Shilo believes the profitability of coal transportation in the western and southern directions does not require discounts from RZD, because, in his opinion, suppliers continue to declare the volume of coal transportation to the ports of the North-West and South several times higher than the parameters of the financial plan of RZD for 2025.
The volume of transportation claimed by exporters to the ports of the North-West from January to April amounted to 38.4 mio t, which is 19.5 mio t higher than the approved loading plan, and to the ports of the South – 31.2 mio t (23.1 mio t more). Thus, according to the conclusions of the deputy minister, the high application base indicates the ability of coal companies to sell their products at the current level of prices and transportation costs.
Market participants are of the opposite point of view: deliveries via ports in the North-West and South are loss-making amid rising transportation costs, low global prices, international sanctions and high production costs, so coal producers are forced to export coal with zero or negative profitability. Russian suppliers have to reduce exports in all directions. In Q1 2025, exports of thermal coal became loss-making even in the most profitable direction – deliveries to China via Far Eastern ports.
In January-April 2025, rail transportation of coal for export to the ports of the North-West dropped to 16.2 mio t (-3.2 mio t or -16.7%).
The industry support program approved by the Russian President may enable coal companies to reduce losses when handling coal through western ports and possibly gain marginal profitability when shipping via ports in the Far East.
Source: CCA Analysis
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