Russia is facing a crisis in its coal sector following reports that the government has noted a substantial dip for the 2025 outlook. Coal is as much a part of the Russian identity as vodka, and provides millions of jobs to the Russian people while delivering crucial energy capacity to the populace as well as exporting the commodity overseas. However, the forecast for the coal sector, which is predominantly operated in the Kuzbass region, is not looking good at all. Coal plays a vital role in Russia, as several towns need the sector to provide the only form of employment they can find.
The Kuzbass Ministry of Coal reports the sad state of affairs in the coal sector
For a country the size of Russia, finding the right sector to provide sustainable employment is crucial to keeping the populace calm and avoiding any social unrest. The Russian coal industry is the cornerstone of the nation’s raw material sector; however, the economic pressure being felt by Mother Russia has led to the sector facing a crisis of monumental proportions.
In the first half of this year, Russian coal companies reported sizeable losses that beggar belief. One would imagine that a country like Russia, which is still a major superpower despite the current political climate, would have plans in place to alleviate any pressure on one of the largest and important sectors in the country. The evidence presented suggests otherwise.
For the first half of 2025, Russian coal companies reported combined losses of around $2.3 billion, which surpasses the entire deficit from 2024 and represents a 2500%, or a 26-fold increase year-on-year.
“Negative factors for the Russian coal sector include falling global prices for thermal coal, down to $64–83 per ton, and a stronger ruble, which has reduced mining profitability.” – Experts at the Gaidar Institute
Despite a rise in demand, the coal sector in Russia is facing a bleak future if the current trends continue
Demand for coal globally is on the rise; however, coal is only mined where it is profitable to do so, and at the moment, there is no profit to be found for the myriad of coal companies in Russia. In the Kuzbass region, approximately 17 coal mines have closed, some permanently, and according to the Russian Ministry of Energy, 27 more companies are on the brink of bankruptcy.
The sanctions imposed on Russia are having a significant effect on the coal sector. Following the global outrage over the Ukraine war, China has become the only country willing to openly do business with Russia. However, it cut imports by 25% in the first half of 2025 and 34% in the second quarter. That resulted in a 7% decrease in coal production, with major producers like Mechel reporting declines of up to 24%.
The current state of affairs is a stark contrast to the coal sector in the United States. The Moscow Times stated that in order to avoid social unrest, the government has temporarily suspended mining taxes and social contributions until November.
“Over the past 20 years, Kuzbass has lost nearly 300 coal enterprises, with labor disputes and unpaid wages fueling unrest. With falling exports, rising costs, and limited domestic demand, the Russian coal industry faces a bleak future.” – The Moscow Times
Can the Russian coal industry survive the myriad of issues that have presented themselves
For the Russian state, the hope will be that the coal sector will be brought back to life and once again become a major economic force for the nation. If that does happen, the coal sector in Russia will remain a crucial form of energy generation and a large-scale employer for the future. If not, the coal sector in Russia might become a thing of the past, looked upon with the same disdain that the Soviet Union had. Russia will have a lot of ground to make up if it wants to compete with the likes of the United States, which has been invigorating the coal sector. Speculating at this point is futile, so the only thing we and the Russian coal sector can do is wait.
