Bloomberg: Russian Mines Are Closing En Masse
- 12.07.2025, 11:57
China has abruptly turned its back on Putin's "friend".
The Russian coal sector is experiencing a serious crisis caused by high interest rates on loans, sanctions restrictions and a decline in demand from China. Thus, Bloomberg, citing data from the Federal Statistics Service of the Russian Federation, reports that the fall in global coal prices has also added to this, revealing structural problems in the Russian economy.
According to the publication, in 2024, only half of coal companies remain profitable, and the situation is rapidly deteriorating. For example, Mechel PAO recently announced a possible 25% reduction in sales due to unprofitable mining. In some parts of Siberia, mine operations have already been suspended.
Mining companies are facing a shortage of equipment, as it has become almost impossible to restore technical capacities due to sanctions. Companies are forced to "cannibalize" - to dismantle equipment from other facilities in order to somehow support the work of the existing ones.
In addition, the cost of borrowing exceeds 20%, which makes business almost unprofitable. And amid weak demand from China, coal prices have fallen to their lowest levels in years.
"The coal industry is facing what can be called a perfect storm: all the problems have come together," said Natalya Zubarvich, a specialist in Russia's regions at Moscow State University.
Although the coal industry accounts for less than 0.5% of Russia's GDP, it provides more than 15% of electricity production and performs a critical social function.
For example, the Kemerovo region, the largest center of coal production, has already recorded a 20% budget deficit in the first quarter of 2025 due to decreased tax revenues. The authorities were forced to cut social programs, including bonuses for doctors.
If the current trends continue, the industry may end the year with double losses - more than $4.5 billion. The total debt of companies may exceed 1.4 trillion rubles, which creates the risk of large-scale financial instability.