Discussions in Russia about the regional crisis have increasingly centered on the "shift" of coal production to the East, spurred by the development of new deposits located closer to Far Eastern ports. Can these new projects genuinely compensate for the decline in coal production in Kuzbass, both in terms of volume distribution and across various coal segments?

The real potential for a shift in coal production in the East through new projects (including expansion at existing deposits) by 2030-35 is 50 mt. Since early 2024, the implementation timelines for some projects have already been revised due to funding shortages and difficulties in equipment supply.

In the thermal coal segment, key projects in the East include the Zashulanskoye coal deposit, the Ogodzhinskoye deposit, the Urgalugol (SUEK) assets, the expansion of EMCO production on Sakhalin, and the Syllakhskoye deposit.

In the anthracite segment, total output is expected to rise from the low 2024 base owing to the achievement of full capacity at Coalstar's Bogatyr open-pit mine and the restoration of production at Sibanthracite assets, with the main production base remaining in the Novosibirsk Region.

In the coking coal segment, production growth in the East will continue primarily in Yakutia (Elga, Kolmar).

Things are moving faster in Kuzbass — though in the opposite direction. From 2018 to 2024, total coal production in Kuzbass decreased by 22% (57 mt). Specifically, thermal coal production declined by 26% (over 48 mt). Although production levels rebounded in 2021 following a decrease in 2020 due to coronavirus restrictions, coal production in the region began to steadily decline after the loss of the European market in August 2022.

Taking 2024 as a baseline, coal production in Kuzbass is expected to decline by 17 mt in 2025. At least 18 mining operations have been suspended in the region. Given the lack of prospects for improving the logistical situation, it seems unlikely that these operations will resume in 2026. Even if the remaining producers maintain their current production levels, total coal production in Kuzbass in 2026 is expected to decline by approx. 5%, or 9 mt.

Thermal coal production in the region will continue to decline faster due to low export profitability. Coking coal producers are supported by domestic demand from steelmakers. However, several underground mines are closing due to rising production costs and insufficient automation to safely mine deeper reserves.

As a result, the medium-term shift of coal production to the East could, at best, help maintain Russian coal production at 2024 levels or lead to a slight decline. The recovery of production, which remains a key focus of government strategies, requires cost reduction and improvements in logistics for exporters, as well as active investment in new projects and technologies to control rising production costs. Currently, the situation in the industry shows the exact opposite trend.

(By Lena Soldatova, analyst at Metals and Mining Intelligence)