The most profitable sector of the Russian economy is sinking: the share of unprofitable enterprises has increased

The share of unprofitable coal companies in Russia has exceeded 52%, and coal exports have fallen by 12% due to low export prices and rising transportation costs. According to forecasts, the losses of the Russian coal industry in 2024 could reach 450 billion rubles due to sanctions and economic difficulties.

This is reported by Radio Liberty. These data were published by Rosstat and confirm the deep crisis that the Russian coal industry is facing.

According to Rosstat, in January-April 2024, the total profit of Russian coal companies amounted to 14.3 billion rubles ($162 million), which is 15 times less than in the same period last year. For comparison, in 2023, the share of profitable companies in the coal industry was 67%, and in 2022 it was 79%.

These data indicate a significant deterioration in the financial condition of coal companies. The significant drop in revenues was the result of several key factors. Reasons for the decline in revenues:

• lower coal export prices: since April 2023, coal export prices have remained at a minimum level. This reduced the profits of coal companies that are focused on the international market;

• Increase in railroad tariffs: the increase in tariffs for coal transportation by rail significantly increased transportation costs. This particularly affected exports, as most coal is transported by rail to ports;
• Increased rates for loading coal in ports: the increase in the cost of loading coal in ports also added additional costs, which affected the overall competitiveness of Russian coal on the world market.

The sanctions imposed by the EU in August 2022 had a significant impact on Russian coal exports. EU countries refused to import Russian coal due to the invasion of Ukraine by Russian troops. In April 2022, Japan also refused to buy Russian coal. These restrictions deprived Russian coal companies of important markets, further exacerbating the crisis.

The Energy Commission under the State Council predicts that by the end of 2024, the Russian coal industry could suffer losses of 450 billion rubles ($5.1 billion). This forecast is based on current trends in the industry and the expected continuation of low prices for coal exports.

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