Russia’s coal industry is in deep trouble. Weak demand, even from major buyers like China, has led to a glut at export ports, driving down prices even further. Major producers are being forced to cut output and shut down mines despite billions of rubles in state support. More than half of Russia’s coal companies are now operating at a loss. In Kuzbass, miners have gone without pay for months and are staging hunger strikes, though many still cling to the hope that the state will step in. The government’s answer: sign up for the war.
Losses in the Russian coal industry are projected to hit 350 billion rubles in 2025 ($4.4 billion), according to the Ministry of Energy — triple last year's already disastrous bottom line. Between January and May alone, the sector posted 112 billion rubles ($1.4 billion) in losses. Debt has piled up, with total loans to the coal industry now standing at 1.2 trillion rubles ($15.1 billion). Given the high central bank interest rate, borrowing is especially costly.
Deputy Energy Minister Dmitry Islamov expects investment in coal this year to fall well below last year’s 248 billion rubles ($3.1 billion). But the biggest issue is unpaid wages: some mines have had to shut down because they can no longer pay their workers. In June, the Spiridonovskaya mine in the Kuznetsky Basin, or Kuzbass, which employed 900 people, ceased operations. At that mine alone, workers are owed about 90 million rubles ($1.1 million), and the plan is to simply lay off most of them.
PJSC Kuzbasskaya Toplivnaya Company is owned by entities linked to Iskander Khalilov and Viktor Pichugov.
OJSC Coal Company Kuzbassrazrezugol was owned by the UMMC holding until early 2023. As of late 2021, its beneficiaries included Iskander Makhmudov, Andrey Kozitsyn, and their partners. In 2023, UMMC exited the list of shareholders; the new ownership structure has not been disclosed.
PJSC Siberian Coal Energy Company (SUEK) is owned by Andrey Melnichenko, likely through AIM Capital since June 2023. Nearly 100% of AIM Capital is held by the Cyprus-based company Linea.
OJSC Holding Company SDS-Ugol is primarily owned by Mikhail Fedyaev.
PJSC Raspadskaya is majority-owned by Evraz, a company controlled by Roman Abramovich.
AO United Coal Company Yuzhkuzbassugol is owned by Raspadskaya.
Spiridonovskaya miners are owed 90 million rubles — $1.1 million — and the plan is to simply lay off most of them
The war initially appeared to be a boon for Russian coal. The energy crisis triggered by Europe’s pivot away from Russian gas pushed prices up. And while the EU banned Russian coal entirely as of August 10, 2022, Vladimir Putin promised a “pivot to the East.” Coal shipments that once went mainly to Europe were rerouted to China.
But industry experts were already predicting problems way back then. Logistics routes to Europe had been built over decades and included a developed rail and port infrastructure, while to the east, only the Trans-Siberian Railway and the Baikal-Amur Mainline were available. The former was immediately overwhelmed, and the latter had to be rapidly upgraded and electrified.
Initially, cargoes with higher added value were given rail priority over coal. By the end of 2022, non-coal shipments on eastern routes had risen 3.5%, while transport of nonferrous metals, chemicals, and paper jumped 45.5%; container traffic grew 40.2%. Coal exports, by contrast, were second-to-last in the priority queue. Although the coal lobby won for itself a temporary boost on the list, by 2025 only Kuzbass coal retained its preferential treatment.
With or without priority status, shipping coal east means longer distances — and higher costs. The average delivery range by rail and sea has grown 25% since 2021, driven mainly by increased sea transport, as exporters are now forced to use southern and northwestern ports for shipments to South and East Asia.
At the same time, coal prices on the world market are falling. On top of the usual cyclical downturn, demand from China has dropped. Over the past three years, China has accounted for 44% of Russian coal exports, while India (19%), Turkey (11%), South Korea (9%), and Taiwan (4%) round out the top five buyers. Smaller amounts go to Vietnam, Malaysia, Indonesia, Sri Lanka, Japan, Brazil, and minimal volumes go to Egypt, Israel, Morocco, and Mexico.
China, notably, imports both coking coal (for steelmaking) and thermal coal (for power plants). But since China has its own thermal coal reserves, it prioritizes domestic suppliers. During the energy crisis, China even reopened several shuttered coal power plants. That temporarily boosted demand for thermal coal, but the effect did not last.
As for coking coal, demand has been dampened by China’s cooling economy and fears of U.S. tariffs. In May, China cut coal imports from Russia by 18% year-on-year.
PJSC Kuzbasskaya Toplivnaya Company is owned by entities linked to Iskander Khalilov and Viktor Pichugov.
OJSC Coal Company Kuzbassrazrezugol was owned by the UMMC holding until early 2023. As of late 2021, its beneficiaries included Iskander Makhmudov, Andrey Kozitsyn, and their partners. In 2023, UMMC exited the list of shareholders; the new ownership structure has not been disclosed.
PJSC Siberian Coal Energy Company (SUEK) is owned by Andrey Melnichenko, likely through AIM Capital since June 2023. Nearly 100% of AIM Capital is held by the Cyprus-based company Linea.
OJSC Holding Company SDS-Ugol is primarily owned by Mikhail Fedyaev.
PJSC Raspadskaya is majority-owned by Evraz, a company controlled by Roman Abramovich.
AO United Coal Company Yuzhkuzbassugol is owned by Raspadskaya.
In May, China reduced coal imports from Russia by 18% compared to last year
At the same time, Russia’s coal sector faced another shock: sanctions blocked supplies of critical mining equipment. Japanese and American machines were miners’ favorites, but these have now been replaced by Chinese imports. “It’s like switching from a Mercedes to a cheap Korean car — the lifespan is shorter, it doesn’t run as well, it’s less comfortable, but basically, it works,” a coal industry insider working in Russia told The Insider. He said the equipment shortage problem was resolved in 2024.
As a result, production costs have risen on average by 30%, driving coal profitability to zero. Government-imposed export duties have also contributed to the financial failure. The coal sector is caught in a perfect storm with no end in sight.
Ownership matters more than ever. The coal industries of Yakutia (Neryungri coal basin) and Vorkuta are faring relatively well. Vorkutaugol, owned by Severstal, can rely on the steel maker’s support, as can Yakutugol, owned by the Mechel holding company, which also controls the Chelyabinsk Steel Plant.
Severstal’s half-year profits dropped 55%, and Mechel is being called a “zombie company” due to losses and heavy debt. Another player, Kolmar, founded in 2004, is reportedly 30% owned by Gennady Timchenko’s Volga Group and 70% by Putin relative Anna Tsivileva, a deputy defense minister and the wife of Sergey Tsivilev, former governor of Kuzbass and now Russia’s Minister of Energy. Kolmar’s coal is sent to Kuzbassenrichment plants, while the Yakutian deposits are young and mostly mined by cheaper open-pit methods, which helps them stay afloat.
Kuzbass is currently among the most troubled regions. It has an abundance of mines, but although local metallurgical companies help prop up demand, the metallurgists are also struggling. Demand and prices for metals are falling, while high excise taxes make the situation even worse. Some factories have begun to halt production.
PJSC Kuzbasskaya Toplivnaya Company is owned by entities linked to Iskander Khalilov and Viktor Pichugov.
OJSC Coal Company Kuzbassrazrezugol was owned by the UMMC holding until early 2023. As of late 2021, its beneficiaries included Iskander Makhmudov, Andrey Kozitsyn, and their partners. In 2023, UMMC exited the list of shareholders; the new ownership structure has not been disclosed.
PJSC Siberian Coal Energy Company (SUEK) is owned by Andrey Melnichenko, likely through AIM Capital since June 2023. Nearly 100% of AIM Capital is held by the Cyprus-based company Linea.
OJSC Holding Company SDS-Ugol is primarily owned by Mikhail Fedyaev.
PJSC Raspadskaya is majority-owned by Evraz, a company controlled by Roman Abramovich.
AO United Coal Company Yuzhkuzbassugol is owned by Raspadskaya.
Regional governance adds another complexity. From 1997 to 2018, Aman Tuleyev headed up Kemerovo Oblast with a strict vertical power structure. But after he was removed after the “Winter Cherry” shopping center fire in 2018, which killed 60 people, purges and redistributions of influence to new beneficiaries followed. In 2024, new governor Tsivilev was promoted to Russia’s energy minister, and Ilya Seredyuk became governor.
The region’s public debt is approaching 100 billion rubles ($1.2 billion), 42% of its annual revenues, and its yearly budget deficit is expected to reach 22 billion rubles ($277.1 million), 8.7% of expenditures. As a result, the local finance ministry has cut social programs, including funding for children’s recreation. Rumors of an impending bankruptcy continue to be denied.
Over half of Russia’s coal companies were unprofitable in 2024. Twenty-seven mining enterprises hovered on the brink of bankruptcy. Nine Kuzbass mines and two in Khakassia halted operations. Yet most companies prefer to work at a loss rather than to stop production entirely. Mothballing and reopening mines cost money, and layoffs risk social explosions. Local authorities usually pressure employers to continue working.
PJSC Kuzbasskaya Toplivnaya Company is owned by entities linked to Iskander Khalilov and Viktor Pichugov.
OJSC Coal Company Kuzbassrazrezugol was owned by the UMMC holding until early 2023. As of late 2021, its beneficiaries included Iskander Makhmudov, Andrey Kozitsyn, and their partners. In 2023, UMMC exited the list of shareholders; the new ownership structure has not been disclosed.
PJSC Siberian Coal Energy Company (SUEK) is owned by Andrey Melnichenko, likely through AIM Capital since June 2023. Nearly 100% of AIM Capital is held by the Cyprus-based company Linea.
OJSC Holding Company SDS-Ugol is primarily owned by Mikhail Fedyaev.
PJSC Raspadskaya is majority-owned by Evraz, a company controlled by Roman Abramovich.
AO United Coal Company Yuzhkuzbassugol is owned by Raspadskaya.
Over half of Russia’s coal companies were unprofitable in 2024. Twenty-seven mining enterprises hovered on the brink of bankruptcy
Delayed wages, common in the 1990s, are back. “I work at the Zarechnaya mine and just want to vent. Wages were delayed for almost two months — promises were made repeatedly but not kept. Only this week did they finally pay us. It’s good they didn’t stiff us, but it’s stressful not knowing what tomorrow holds,” a subscriber to Kemerovo and Kuzbass News complained. Switching mines isn’t an option, as jobs are disappearing.
Under the circumstances, protests do not appear to be an option. Those who express strong dissent are often blacklisted — like the miners who went on strike at the Inskaia mine after months of unpaid wages. In 2024, miners not only staged worker strikes but also a hunger strike, yet they were still fired afterward. In addition, criminal cases have been opened against the owners.
The mood is bleak. Many workers see no option other than to enlist in the military. Those still going into the mines tolerate labor violations, including safety breaches. “Some leave, others just grumble. Mines close because they’re unprofitable. Only profiteers profit, having seized resources and production,” said Kemerovo resident Larisa (name changed), who agreed to speak with The Insider.
Larisa recalls how, when Putin visited Kemerovo in 2021, miners were told to inflate their wage reports. Today, they stand at around 35,000 to 40,000 rubles ($441 to $504) per month, and even these meager sums often go unpaid. Only a few mines offer salaries above 80,000 rubles (around $1000).
Most workers outside the mines earn even less — 20,000 to 25,000 rubles ($251 to $315). “People don’t live, they survive paycheck to paycheck,” she said.
In the mining community, pay is calculated uniquely: foremen earn much more than rank-and-file miners, and the gap further widens higher up. “Workers and foremen risk their lives equally, but pay differs,” a coal industry source told The Insider.
“Methane is the biggest problem in any mine,” the source said. “Above certain levels, workers must be evacuated and operations paused. But that means losses, so gas detectors get taped over. Working underground is a game with death, but miners are used to this. There’s a saying: ‘If you’re afraid of gas, you’re no miner.’” Reports of methane concentrations exceeding limits are routine.
Currently, Kemerovo residents are upset over the awarding of the “Medal for Special Contribution to Kuzbass” 2nd class to regional construction minister Irina Pecherkina, who was taken to court over the loss of 43 million rubles in budget funds ($541,698). “She lost 43 million, got a 10,000-ruble fine, and a medal that boosts her pension,” Larisa complained.
Against this backdrop, budgetary outlays on construction projects are facing a local backlash. The Teatralnaya museum-theater complex, replete with a hotel, is set to open in 2026 — two years late. News about the project on local Telegram channels sparked mostly negative reactions. Larisa says people resent the theater being built on an already strained budget while profits go to Sberbank, “which oversees the project.”
PJSC Kuzbasskaya Toplivnaya Company is owned by entities linked to Iskander Khalilov and Viktor Pichugov.
OJSC Coal Company Kuzbassrazrezugol was owned by the UMMC holding until early 2023. As of late 2021, its beneficiaries included Iskander Makhmudov, Andrey Kozitsyn, and their partners. In 2023, UMMC exited the list of shareholders; the new ownership structure has not been disclosed.
PJSC Siberian Coal Energy Company (SUEK) is owned by Andrey Melnichenko, likely through AIM Capital since June 2023. Nearly 100% of AIM Capital is held by the Cyprus-based company Linea.
OJSC Holding Company SDS-Ugol is primarily owned by Mikhail Fedyaev.
PJSC Raspadskaya is majority-owned by Evraz, a company controlled by Roman Abramovich.
AO United Coal Company Yuzhkuzbassugol is owned by Raspadskaya.
When methane concentration rises, miners must be evacuated and work halted. But this means losses for owners, so gas detectors are simply taped over
The question increasingly being raised in Kuzbass online communities is: “When will the minors start banging their helmets?” Such groups mostly serve as forums for venting, not for serious protest planning. Still, users post messages like: “They stole from miners, now they should return it;” “Everyone knows the coal industry is dying;” and “Our thieving bastards squeeze every kopeck out of the region without developing anything.”
The public’s reluctance to enter into open confrontation may stem not only from fear of repression but also from dependence on Moscow. Now many see military contracts as a way out of poverty and unemployment. Under critical posts, other users offer up comments like: “No money, no work, so they go to the war to earn and die;” and “Now it’s clear why profiteers keep wages so low — so they’ll have recruits for their war. Otherwise, no volunteers.”
It’s unsurprising that Kuzbass miners readily go to war — they are accustomed to physical risk, and they can’t earn nearly as much for their trouble working underground. And it’s not just miners. “The rescue squad in Yurga was disbanded after fake reports showed no work. They had too much work but no staff. The laid-off rescuers went straight to the war,” said Larisa. Meanwhile, military contract ads are everywhere. “If only they recruited for the State Duma that way,” she joked.
The government is aware of the problems and holds numerous meetings in Moscow and locally, but its response has been largely reactive. The authorities postponed mineral extraction taxes and social contributions until December, and proposed subsidies to compensate part of the increased logistics costs due to the long-distance exports must now travel.
The Ministry of Energy will now decide which Siberian coal firms get a 12.8% discount on export rail shipments to northwest and southern routes. Four Kuzbass firms have been approved: SDS-Ugol, Mechel-Mining, Vorkutaugol, and Siberian Coal Industry Company. Late last year, a special bankruptcy procedure was adopted, with VEB.RF acting as bankruptcy trustee. This move signals a readiness to nationalize parts of the coal sector. According to an Insider source, up to one-third of Kuzbass enterprises may be affected.
PJSC Kuzbasskaya Toplivnaya Company is owned by entities linked to Iskander Khalilov and Viktor Pichugov.
OJSC Coal Company Kuzbassrazrezugol was owned by the UMMC holding until early 2023. As of late 2021, its beneficiaries included Iskander Makhmudov, Andrey Kozitsyn, and their partners. In 2023, UMMC exited the list of shareholders; the new ownership structure has not been disclosed.
PJSC Siberian Coal Energy Company (SUEK) is owned by Andrey Melnichenko, likely through AIM Capital since June 2023. Nearly 100% of AIM Capital is held by the Cyprus-based company Linea.
OJSC Holding Company SDS-Ugol is primarily owned by Mikhail Fedyaev.
PJSC Raspadskaya is majority-owned by Evraz, a company controlled by Roman Abramovich.
AO United Coal Company Yuzhkuzbassugol is owned by Raspadskaya.
Kuzbass miners eagerly go to war — they’re used to taking physical risks, and they can earn far more in a trench than they can underground
Even in Kuzbass, industrial diversification is finally on the agenda. At the St. Petersburg International Economic Forum this past June, agreements were signed for projects worth 50 billion rubles ($629.9 million). Key projects include LNG plants in Topki and Prokopyevsk, and the Sheregesh tourism complex (which locals largely oppose).
Tourism is less profitable than energy, and it’s hard to imagine miners working as waiters or ski instructors. However, LNG, which is in demand worldwide, could be a promising direction for Kuzbass and other methane-heavy mining regions — but developing it requires new gas capture technologies and significant investment.
That’s why, for the most part, coal producers mostly still simply hope for a market rebound. European coal prices are rising, hinting at stronger Asian demand. But time is working against the mines, and debts may crush the industry before recovery becomes possible. Meanwhile, Kuzbass is continuing to borrow. Sberbank recently approved a 6-billion-ruble loan ($75.6 million) at a 22.21% annual interest. The region, supervised by a Putin relative, won’t be allowed to fail — but that won’t ease residents’ hardships.
Coal-region authorities have no Plan B. Their main advice for miners is to quit crisis-hit mines, and industry representatives offered no clear solutions at the recent Siberian Development Council.
VTB Bank chairman Andrey Kostin, however, speaking at the Bank of Russia’s Financial Congress, said inefficient operations, including mines, must be closed. “We have problems — take coal. Let’s be honest: why produce so much? Deep mining is inefficient. Yes, there are social costs, but we must act. Without restructuring and closures, we’ll face labor shortages, rising costs, etc. It’s time to consider this, because inefficient sectors suffer first,” the banker noted.
PJSC Kuzbasskaya Toplivnaya Company is owned by entities linked to Iskander Khalilov and Viktor Pichugov.
OJSC Coal Company Kuzbassrazrezugol was owned by the UMMC holding until early 2023. As of late 2021, its beneficiaries included Iskander Makhmudov, Andrey Kozitsyn, and their partners. In 2023, UMMC exited the list of shareholders; the new ownership structure has not been disclosed.
PJSC Siberian Coal Energy Company (SUEK) is owned by Andrey Melnichenko, likely through AIM Capital since June 2023. Nearly 100% of AIM Capital is held by the Cyprus-based company Linea.
OJSC Holding Company SDS-Ugol is primarily owned by Mikhail Fedyaev.
PJSC Raspadskaya is majority-owned by Evraz, a company controlled by Roman Abramovich.
AO United Coal Company Yuzhkuzbassugol is owned by Raspadskaya.