Russia’s Coal Industry Faces Severe Crisis Amid Sanctions and War

Russia’s coal industry is experiencing its worst crisis in over 30 years, driven by Western sanctions, plummeting global prices, and logistical struggles due to the ongoing war in Ukraine. In the first seven months of 2025, the sector accumulated losses of ₽225bn ($2.8bn), a dramatic reversal from the ₽375bn profit it saw in 2023. The war has exposed long-term vulnerabilities within the industry, which directly employs over 140,000 people and plays a crucial role in regional economies, particularly in Kuzbass.

Global thermal coal prices have sunk to multiyear lows, with Russian producers forced to sell at steep discounts—up to 60% below international benchmarks—in order to retain Asian markets. Export volumes have shifted toward China, India, and Vietnam, but remain below pre-war levels. Meanwhile, logistical costs have soared, with transportation absorbing nearly 90% of final coal prices.

Sanctions and bottlenecks have exacerbated the collapse, causing 23 companies to shut down and another 53 to be at risk. A modest government rescue package offers limited support through tax deferrals and discounted tariffs. Even in occupied Donbas, a historic coal region, investors are abandoning mines, as the absence of Ukrainian state subsidies has rendered them unprofitable.