Russia economy faces huge 'emergency' as coal industry loses £1bn

By Conor Wilson, News Reporter

Russia's coal sector has lost £1 billion in the last year (Image: Getty)

Desperate Vladimir Putin has approved a series of emergency measures to stabilise his country’s flailing coal industry as the Russian economy continues to flounder. The measures include discounts on transportation and guaranteed export agreements, to revitalise the sector, according to Russian state media.

The industry has been hit severely by Western sanctions aimed at crippling Russia’s war economy as well as by falling global prices and logistical bottlenecks. In 2024, the sector was hit by staggering losses of 112.6 billion rubles (£1 billion), with exports declining for the third consecutive year. Deputy Energy Minister Dmitry Islamov told lawmakers at a State Duma energy committee hearing: “The crisis in the coal industry has become so severe that entire production facilities are being forced to shut down.

Russian coal exports have declined for the third consecutive year (Image: Getty)

“Putin approved the programme that the Energy Ministry developed, but significant work remains to implement these measures.

“The situation with prices, exports and tariffs is still very challenging.”

In a letter written to Putin last month, Deputy Prime Minister Alexander Novak pleaded for additional support beyond existing measures that include export guarantees for the Kemerovo region and rail fee discounts for coal transport.

According to Reuters, Novak called for high-level talks with China and India in a bid to discuss abolishing tariffs on Russian coal.

It is understood that Western sanctions imposed in the wake of the Ukraine invasion forced 80% of Russia’s coal exports to be diverted through Asian countries.

Coal is not the only struggling energy product in Russia, with the country’s supply of cheap oil running out.

It is one of many failing Russian industries including coal, wheat and pensions (Image: Getty)

Gazprom Neft CEO Alexander Dyukov said recently that Russian energy companies were increasingly being forced to tap into so-called “hard-to-recover” oil reserves to maintain current production rates.

These include deep, complex, and geologically intractable deposits that require expensive extraction methods, advanced technology, and massive government support.

At Gazprom Neft alone, more than 60% of oil production already comes from these high-cost sources.

By 2030, more than half of the new oil production across Russia is expected to come from such sites.

Dyukov's warning comes as new financial data shows energy revenues have dramatically plunged over the past 12 months with income from oil and gas sales falling by an eye-watering 1.09 trillion roubles (£10 billion) last month, a drop of 12% year-on-year.