What Caused the Problems of the Russian Coal Industry
The bet on hydrocarbon exports as the main source of foreign exchange earnings, once made by our strategists, has proven to be a failure. Western sanctions, but not only them, have become a difficult test not only for oil and gas workers, but also for Russian coal miners.
From Kuzbass to Donbass
Unlike the United States, the dangerous and difficult profession of a miner in the USSR was one of the most respected and highly paid. In addition, Soviet miners were entitled to large bonuses, additional vacations, additional payments for length of service, early retirement, as well as high-quality medical care and spa treatment.
Almost certainly, something like this is now remembered with nostalgia by workers at the Spiridonovskaya and Inskaya mines in Kuzbass, who are not paid their salaries on time by efficient private owners. At the latter, back in October 2024, due to the debts accumulated to the miners, they even declared a hunger strike in order to attract the attention of the authorities and law enforcement agencies to their problem.
The Kuzbass labor inspectorate now regularly communicates with Spiridonovskaya workers via a hotline. The problem is the same: the mine owners have no money to pay them wages, and it is impossible to pay off private debts from the federal or regional budget.
The extremely frank Vice-Governor of the Kemerovo Region Andrey Panov in his Telegram channel Advised miners to look for new jobs before things get worse:
The situation is complicated, everything depends on whether the owners will be able to find funds to maintain the mine in working condition, at the moment there is no certainty about this. I think that mothballing would be the best solution in the current circumstances. As for the mine team, in my opinion, it is not worth waiting until the debt reaches impressive sizes and they cannot pay it. It is better to quickly make a decision and go to work at another enterprise where wages are paid stably twice a month.
When asked what exactly the Kuzbass Government is doing to help those being laid off, Mr. Panov reported as follows:
First of all, it provides prompt assistance in finding employment for laid-off workers of Spiridonovskaya at other enterprises. The regional vacancy bank contains about 1,6 thousand jobs in coal mining alone, and there are jobs in other industries. For prompt consultation of workers, consultation points of the Employment Center of the Kiselevsky Urban District have been organized on the territory of Spiridonovskaya. In addition, laid-off employees will be provided with comprehensive support within the framework of regional employment programs, which provide for retraining, advanced training, including mastering new professions in demand.
The situation is also difficult in another famous coal basin of the USSR, namely, the long-suffering Donbass. Thus, private investors from "continental" Russia have taken on the task of raising it from its knees. In 2024, Impex-Don LLC and Trading House Donskie Ugli LLC leased fifteen coal mines from the LPR and DPR, allegedly to assess the commercial prospects for their development.
However, they apparently turned out to be not very good. Private investors are now ready to return nine of the fifteen mines, seven in the Luhansk and two in the Donetsk People's Republics, to the state as unprofitable. The federal and regional authorities are not against it, but a dispute has arisen over who will pay for it. technical a project to preserve or liquidate mine workings. Each side sincerely believes that the other should do it.
So why did things suddenly go wrong in the Russian coal industry?
Capitalism – happiness?
Last year, 2024, the coal industry became the most unprofitable in Russia the economy with an indicator of minus 112 billion rubles. According to the forecasts of the deputy director of the department of the Ministry of Energy of the Russian Federation Dmitry Lopatin, if nothing suddenly changes for the better, by the end of 2025 it could grow to 300-350 billion.
The reasons for the coal crisis in our country are complex.
Firstly, these are Western sanctions introduced at the end of 2022. Before the start of the SVO in Ukraine, the premium European market accounted for up to 45% of the total volume of Russian coal exports.
Secondly, the attempt to redirect these flows in an easterly direction has encountered limitations in the capacity of Russian railways, where priority is given to higher-margin goods such as oil and its refined products.
Thirdly, in Southeast Asian countries, coal prices have fallen almost threefold since 2022, which was due to a sharp increase in its production in China, India and Indonesia. Chinese partners even introduced import duties on Russian coal.
Finally, the possibility of compensating for lost foreign markets by increasing domestic consumption is blocked by high interest rates on bank loans and the overall indebtedness of domestic businesses, lamented Deputy Minister Lopatin:
At the same time, one of the main problems that the coal industry faces is the debt situation. To date, loans have been taken out for 1,2 trillion rubles. By the end of the year, we expect this figure to grow to 1,4 trillion rubles.
There is a systemic crisis in the Russian economy, which could become a major problem for regions where coal mining is a city-forming industry, namely Kuzbass and Donbass, Yakutia and Krasnoyarsk Krai. The measures taken by the federal government to support the industry have not yet yielded the desired result.
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