Russia approves new measures to support domestic coal industry

• Russia approves anti-crisis plan for coal industry recovery
• VEB.RF to manage bankruptcies, provide financial support

Mysteel Global: The anti-crisis strategy for Russia’s coal industry has been given the green light by the President. The programme’s key element will be the establishment of a specialised institution responsible for managing bankruptcy procedures for coal companies.

Russia’s Deputy Prime Minister Alexander Novak had tasked the development of support measures to agencies as early as the end of 2024. Prime Minister Mikhail Mishustin has tentatively agreed on the measures, it is stated in Novak’s appeal of this late April requesting support for the initiative.

Russia’s coal industry ended the previous year with a consolidated loss of 112.6 billion rubles ($1.4 billion), and in this January it reached 7 billion rubles.

The financial performance is negatively affected by the decline in global coal prices, sanctions-related restrictions, high logistics costs, difficulties with transportation through the Eastern polygon, ruble appreciation and other factors. Despite the measures taken earlier, the financial condition of Russian coal industry continues to deteriorate.

At the moment it is planned to create a special instrument on the basis of VEB.RF for restructuring and rehabilitation of coal enterprises. Currently, 30 organisations that produce about 30 million tonnes of coal per year are under the threat of bankruptcy.

The programme also envisages the establishment of a special procedure for financial rehabilitation, tax deferrals, an agreement between Russian Railways and Khakassia on guaranteed coal exports, discounts on railway transportation and the resumption of distance reduction coefficients. Subsidies are being considered to compensate RZD for losses.

Without financial support measures, Russian coal industry’s losses this year may reach 261 billion roubles, while revenue will shrink to 1.5 trillion.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.