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The coal industry is on the verge of bankruptcy due to falling prices; in 2024, the loss before tax could amount to 34 billion rubles against the profit in 2022 and 2023; this is the only loss-making industry in Russia, Kommersant writes, citing a presentation by the Fuel and Energy Complex Analytical Center. To help the industry, the Ministry of Energy is proposing a number of anti-crisis measures, but not all of them are supported by market participants.
The coal industry is on the verge of bankruptcy due to falling prices; in 2024, the loss before tax could amount to 34 billion rubles, while in 2022 and 2023 it brought in 783 billion rubles and 357 billion rubles of profit, respectively, according to the Fuel and Energy Complex Analytical Center. Thus, this year, the coal industry has become the only unprofitable one in Russia, analysts note. This is reported by Kommersant.
This situation was caused by a number of measures, the AC TEK notes, first of all, the cancellation of the reduction coefficients in the Russian Railways tariff, as well as the introduction of an export duty and import duty in China, linking the mineral extraction tax to global benchmarks for coking coal and an additional surcharge to the mineral extraction tax rate. In general, due to fiscal and tariff measures introduced during the period of high coal prices, 500 billion rubles were withdrawn from the industry, the AC TEK calculated.
To help the industry, the Ministry of Energy is proposing a number of anti-crisis measures. Among them is the extension to 2025 of the agreement on coal export from Kuzbass, Khakassia, Buryatia, Tuva, Yakutia and the Irkutsk region, as well as the conclusion of a similar agreement in the Novosibirsk region, providing for the export of 20 million tons. However, an anonymous source of the newspaper in one of the coal companies did not support this proposal - in his opinion, given the prices of coal and high tariffs of Russian Railways, it will "simply kill" the coal industry of the Novosibirsk region.
In addition, the department proposes to set the indexation of the railway tariff for coal at the level of “ inflation minus 0.1%” in 2025, to cancel the exchange rate export duties after the start of the increasing coefficients to the mineral extraction tax in 2025, and to hold negotiations with China on the abolition of the duty.
Coal production in 2024 will decrease to 425 million tons compared to 439 million tons in 2023, predicts Alexander Kotov, head of consulting at NEFT Research, in a conversation with the newspaper. According to NEFT Research estimates, exports in 2024 will be less than 200 million tons compared to 213 million tons a year earlier.
At the same time, according to the expert, due to sanctions, coal companies are forced to increase investments in production (they are provided by reserves and loans created in 2021-2022). This process exceeds the stagnation of production volumes, due to which the gross volume of investments in the industry is growing, Kotov notes.
Prices for coking coal are falling amid weak demand for steel in China, Kommersant reported earlier, citing a report from the Argus agency. By the end of August, Russian premium coking coal with high volatility was trading at $130 per tonne on a FOB Vostochny basis, compared to $150 per tonne at the beginning of June. Some Russian exporters are offering coking coal at “aggressively low” prices in order to reduce its stockpiles in Chinese ports, Argus analysts noted.
