One of Russias leading mining companies has become the very first coal manufacturer to protect federal government aid amid a deepening crisis in the coal market, the companys deputy director for financing told reporters Monday.Mechel has been granted a three-year deferment on tax and social security payments totaling over 13 billion rubles ($166,000,000), deputy director for finance Nelli Galeeva said.The business anticipates to conserve an additional 500 million rubles ($6,000,000) each month once industry-wide support steps like delayed mineral extraction tax and social insurance payments come into effect.We were amongst the very first to use to the government for support and were the first to get help from the commission chaired by Finance Minister Anton Germanovich Siluanov, Galeeva added.Despite this assistance, the outlook for coal producers stays grim.Mechel president Oleg Korzhovsaidthe market is dealing with significant difficulties, and coal producers are bracing for a recession in sales.Mechel plans to decrease coal deliveries by about 25% compared with in 2015, Korzhov added.Korzhov identified this as a pessimistic situation, keeping in mind that modifications in either domestic or global scenarios might modify the outcome.However, he yielded that existing conditions for the coal sector stay unfavorable, with prices at multi-year lows, a strong ruble hindering exports and increasing company losses.Vladimir Korotin, the head of Russian Coal, among the largest coal manufacturers in Russia, called the crisis the worst since the 1990s.
In 2024 and the first quarter of 2025, coal was the only major industry in Russia in which the proportion of loss-making companies, 61.8%, went beyond that of successful ones.Though production has risenby 1.4% in the very first 5 months of this year, a growing share of this coal output is accumulating in storage instead of being sold.Production is currently falling in the Kemerovo area, the nations coal-mining hub.The Kremlin-aligned Center for Macroeconomic Analysis and Short-Term Forecastingfound that coal companies are under stress throughout all significant business health indicators other than personal bankruptcy, which many companies handle to prevent thanks to state support.Industry participants believe that conditions might not deteriorate additional and are enthusiastic for an improvement in the 2nd half of the year.Nearly all coal producers are facing incredibly tough conditions, resulting in reductions in both production and financial investment programs.
At the current currency exchange rate, offering coal is unprofitable, Korzhov said.However, he included that rates are unlikely to decrease even more, as around 20% of global coal business are already operating at a loss.
Reduced production will drive costs higher, a potential reduction in the crucial rate of interest will increase the dollar exchange rate, and debt burdens will lessen for companies.These factors could trigger a turnaround in the third and fourth quarters of 2025, he said.In 2023, Mechels EBITDA incomes before interest, taxes, depreciation and amortization fell by 35% to 56 billion rubles, while its financial obligation burden increased, with net financial obligation reaching 4.6 times EBITDA.To minimize utilize, Mechel intends to offer a portion of its properties, primarily in the energy sector.Despite the planned divestiture and state help, Analysts at BCS World of Investments, a Russian financial services business, keep an unfavorable outlook for Mechels stock.Government assistance for the coal sector has included deferments on mineral extraction taxes and social security payments through December, with the capacity for extension.Additional measures include partial compensation for export shipping tariffs to northwestern and southern areas, and targeted subsidies to cover some logistics expenses on exports to the west and south.Companies with the highest financial obligation problems are qualified for financial obligation restructuring, and some will receive other tailored forms of support.