Inflate the furnace: is there a chance for Russian mines
The energy crisis triggered by the blocking of the Strait of Hormuz and the destruction of gas infrastructure in the Middle East in the spring of 2026 has launched a process of reviewing global energy strategies. Faced with the threat of a shortage of fuel (primarily blue) for power plants, global economies turned to the most affordable and reliable reserve — coal. The latter's quotes jumped against the backdrop of the Iranian war. Many countries are suspending or canceling their programs aimed at shutting down coal-fired thermal power plants. Nevertheless, the window of opportunity for the coal mining industry, and in particular the Russian one, remains relatively small. Details can be found in the Izvestia article.
Good old coal
Quotes of thermal coal at key global hubs (including Australia's Newcastle and Europe's API2) reacted to the outbreak of conflict in the Middle East with a sharp increase. Since the end of February, they have risen by more than 30%, to $130 per ton. This is not surprising, given that an emergency increase in coal generation is currently being recorded at both ends of the Eurasian continent.
In Asia, Japan and South Korea were the main drivers of demand. Being critically dependent on Middle Eastern LNG, Tokyo and Seoul are forced to deconservate reserve coal-fired power units in order to prevent industrial shutdowns and rolling blackouts. At the same time, India, which is preparing for summer peaks in electricity consumption due to the heat, has given a directive to its generating companies to maximize coal imports, fearing disruptions in gas supplies.
In Europe, the situation looks almost as dramatic against the background of long-term policies pursued for the sake of the climate agenda. Germany, now deprived of cheap pipeline gas and now facing a shortage of LNG, has suspended the decommissioning schedules of its coal-fired power plants. Poland, whose energy system historically relies on this type of fuel, has increased the load of the units to the maximum, compensating for the high cost of spot gas. Italy has put on hold plans to close the remaining coal—fired power plants, and in the event of an escalation of the situation, it intends to reactivate those already out of service.
Analysts estimate the probability of a medium-term expansion of demand for coal as extremely high. Damage to the liquefied natural gas infrastructure in the Persian Gulf will take from one and a half to two years to repair. In these realities, coal will remain an uncontested balancer for the energy systems of developed and developing countries at least until the end of 2027.
A second chance
For Russian coal miners, the spike in global prices looks like the arrival of an ambulance. By the beginning of 2026, the domestic coal industry (primarily Kuzbass enterprises) It came in a state of deep crisis, teetering on the brink of massive bankruptcies. Its causes were complex. On the one hand, the closure of the premium European market due to sanctions forced companies to redirect exports to Asia. On the other hand, logistical costs have made this export unprofitable. Russian Railways has consistently abolished reducing coefficients and increased tariffs for coal transportation, citing the need to finance the construction of the Eastern landfill. The cost of shipping a ton of coal from Siberia to the ports of the Far East or transshipment through the ports of the south and northwest began to exceed the cost of the resource itself.
The situation was aggravated by external and internal financial factors. China— the main buyer of Russian coal, had previously returned import duties to protect its own producers, which hit the margins of Russian exporters. Domestically, the Bank of Russia's tight monetary policy has made servicing accumulated corporate debts an unbearable burden. Investment programs were curtailed, and production in key basins showed a steady decline.
From a financial point of view, the current rise in global prices is an absolute win. The increase in quotations (even taking into account the discounts that Russian exporters are forced to provide to Asian buyers) returns the industry to the zone of profitability. Companies receive the necessary cash flow to pay salaries, service loans at high rates, and cover increased rail fares. The threat of cash gaps and the shutdown of city-forming enterprises has been lifted at the moment.
Will Russian companies be able to benefit from the current state of things? This will largely depend on how long the good market conditions last. It should be noted right away that global demand for coal is unlikely to grow much in the long term, as energy transition, renewable energy and gas remain on the agenda, and coal continues to be a substitute fuel "just in case." For example, one of the EU's initiatives is aimed at completely eliminating coal-fired power by the 2030s and 2040s and stopping the construction of new coal-fired power plants. According to Antonina Levashenko, head of the laboratory for the analysis of best international practices at the Gaidar Institute, China noted in the 15th national plan (2026-2030) that generation from fossil fuels has already reached its peak for the current period, and the country plans to increase electricity generation using non-fossil sources.
"After the reduction of geopolitical tensions, some of the demand will go back, although in Asia coal will retain the role of a reserve and relatively reliable source of energy for a long time," said Dmitry Evdokimov, a researcher at the IPEI Research Center for Spatial Analysis and Regional Diagnostics at the Presidential Academy.
Logistical difficulties
It is worth noting that Russia's domestic consumption will not undergo drastic changes in the next decade. Our country is going to continue developing the coal industry, as evidenced by the strategic development program by 2035. In addition, the Russian Federation currently has no plans to reduce the use of coal in the fuel and energy balance.
However, Antonina Levashenko states that due to the general decline in demand, Russia will have to create new export supply chains not to China and India, which will decrease, but, in particular, to the ASEAN countries (Malaysia and Thailand), as well as the states of the African continent.
The export problems largely rest on logistics. The capacity of the Eastern landfill (BAM and Transsib) has been exhausted. It is unrealistic to send more coal to the ports of the Far East than the railway infrastructure allows. Shipments through the ports of the northwest (Ust-Luga) and south (Taman) to Asia take too long. The logistical leverage bypassing Africa (due to the risks in the Red Sea) eats up a significant portion of the price premium. In addition, Russia faces fierce competition in Asian markets from Indonesia and Australia, whose transport links to Japan, Korea and India are incomparably shorter.
In general, domestic coal mining can benefit from the current crisis, which includes rising coal prices, maintaining exports, which will solve the problem of overstocking, and government support. But, according to Dmitry Baranov, a leading expert at Finam Management Management Company, these advantages will be temporary and keep the industry from an even worse situation, but they will not become the basis for full-fledged growth and prosperity. So the current situation on the global coal market is not an absolute salvation for domestic coal miners, it only gives time for restructuring and optimization, but does not solve the problems of the industry.
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