Two-thirds of Russia’s coal producers have slipped into the red, with the sector posting massive losses in the first half of 2025, highlighting the rapid decline of one of the country’s most important raw material industries. According to Rosstat data, coal companies recorded a combined net loss of 185.2 billion rubles between January and June, averaging over 1 billion rubles in losses every day. The share of unprofitable companies surged to 66%, compared with 112.5 billion rubles in losses for the whole of 2024.
Sanctions and shrinking markets accelerate downturn
The collapse is tied directly to sanctions imposed in response to Russia’s war against Ukraine, including a European Union embargo on Russian coal and restricted access to Western markets. Losing Europe’s energy market, once the industry’s main destination, could not be offset by Asia. In the first half of 2025, Chinese imports of Russian coal fell by 25%, dropping 34% in the second quarter alone.
Falling global coal prices — now hovering between $64 and $83 per ton — and a stronger ruble further eroded margins, making Russian exports less competitive. Meanwhile, high borrowing costs, supply chain constraints, and soaring equipment and logistics expenses compounded financial stress, hitting small and medium-sized operators particularly hard.
Kemerovo region hit hardest by closures
The downturn has had devastating effects on Russia’s Kemerovo region, or Kuzbass, which accounts for roughly 60% of the country’s coal production and nearly 80% of coking coal output. Seventeen mines there have already shut down, some permanently, leading to mass layoffs and wage arrears. The Energy Ministry estimates that 27 firms — responsible for about 10% of national coal output — are now close to bankruptcy.
Experts warn that many companies are “doomed to extinction.” Stanislav Mitrakhovich of the National Energy Security Fund noted that while global coal consumption is growing, mining remains viable only where it is economically efficient. In Russia, production and transport costs are prohibitively high.
Strategic risks for Moscow
The collapse of coal mining poses broader risks for Russia’s economy and social stability. The industry sustains dozens of single-industry towns and hundreds of thousands of workers, but as profitability collapses, the prospect of large-scale unemployment looms. Analysts argue that government crisis measures have failed to address the structural issues of sanctions isolation, declining demand, and reduced access to capital and technology.
Russia’s coal sector, once a pillar of export revenues and regional employment, is increasingly viewed as a stranded industry. Without viable markets and investment, experts warn the decline will accelerate, leaving the Kremlin with another unresolved social and economic challenge.
