Russian coal industry in worst crisis since 1990s – FT

Russia's coal industry has become one of the main economic casualties of the Kremlin's full-scale war against Ukraine, as sanctions, rising costs and low prices have plunged miners into their deepest crisis in three decades.

Source: Financial Times

Details: According to Russia's state statistics agency, the sector lost US$2.8 billion in the first seven months of the year, double the total losses recorded in 2024.

"War is bad for most of the Russian businesses, if not all of them. But the coal sector is in really deep sh*t," one prominent Russian businessman told the Financial Times.

Coal accounts for less than 1% of Russia's GDP and government revenue, making it far less significant than oil or gas.

However, the industry directly employs more than 140,000 people and remains vital for certain Russian regions as a source of jobs and local budget revenue.

"The coal industry is going through its sharpest crisis since the 1990s. Thousands of jobs across a dozen Russian regions are at stake [as well as] . . . tax revenues," said Vladimir Korotin, CEO of Russian Coal, one of the country's 15 largest producers, earlier this year in an interview with Kremlin-aligned Russian news agency Interfax.

According to the Russian Energy Ministry, 23 Russian coal companies – around 13% of the total – had ceased operations by September, while another 53 were on the brink of closure.

Several factors have contributed to the crisis. Global prices for thermal coal fell to multi-year lows in 2025, as production reached record levels in China, the world's largest producer and consumer.

Prices now stand at about US$93 per tonne, 78% below their 2022 peak.

Meanwhile, Russian producers began offering steep discounts due to sanctions.

FT calculations based on Argus agency data show that at the start of 2022, Russian coal prices were 60% below international benchmarks, later narrowing to around 20% as trade flows stabilised.

The sharp rise in domestic rail transport costs has added further pressure. Higher-margin goods such as oil, previously exported to the EU and now redirected elsewhere due to sanctions, have caused congestion on lines linking coal-producing regions to major ports.

Few could have predicted this crisis immediately after the full-scale invasion, when coal and energy prices surged sharply.

Background:

• Leonid Pasechnik, Moscow-appointed "head" of the so-called "Luhansk People's Republic", has appealed to Kremlin leader Vladimir Putin for support in resolving the region's coal industry problems.
• Earlier this year, Russian companies leasing 15 coal mines in the occupied parts of Donetsk and Luhansk oblasts abandoned nine of them, citing unprofitability amid global coal prices and high production costs.
• For example, Impex-Don had leased two mines in the so-called "Donetsk People's Republic", while Donskie Ugli leased seven in the "Luhansk People's Republic". The companies tried to return the mines to the occupation administrations for liquidation, despite previously promising to invest RUB 65 billion (US$797 million) into these sites.

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