Russian Railways (RZD) has announced it will not extend its agreements with key coal-mining regions regarding eastbound coal exports in 2025, potentially triggering a significant decline in coal production and export volumes. The state-owned monopoly has submitted this initiative for consideration by Russian President Vladimir Putin. While RZD may make an exception for the Kuzbass region, this would only happen if the agreement covers more than just coal.
If these agreements are not renewed, the coal industry could face substantial challenges next year. A sharp drop in coal production, potential mine closures, and social instability in mining regions are likely outcomes, as regional budgets heavily rely on coal-related revenues. RZD’s eastbound coal shipments account for around 60% of the capacity in the Eastern rail network. Under the current 2024 agreement, RZD is committed to transporting about 100 million tonnes of coal from various regions, including Kuzbass (54 million tonnes), Yakutia (26.3 million tonnes), and others.
However, coal-producing regions, particularly Kuzbass, have requested higher export quotas for 2025. Kuzbass is seeking a guaranteed export volume of at least 68 million tonnes, citing concerns about declining coal prices, tightening sanctions, and the economic impact of reduced exports. Additionally, rising railway tariffs, set to increase by 22.7% in 2025, are compounding the industry’s struggles. Regional leaders are calling for the government to cap tariff hikes at the inflation rate.
The potential financial hit is significant. For every 1 million tonnes of coal that cannot be exported eastward, companies could lose up to $125 million in revenue. In the first nine months of 2024, coal rail exports dropped by 9.3%, with eastern routes accounting for 61% of the 140.8 million tonnes transported. Coal production in Kuzbass also fell by 8.1% during the same period.
