Profits turned into holes on the ledger, and the rest of the world quietly rewired the routes that used to run through Russia. The old faith that the market would always deliver met reality, and reality didn’t blink.
A single year tells the story. Fat margins in 2023, then losses the following year, then an even deeper pit by mid-2025. More than half the companies slipped into the red.
Europe’s import ban didn’t argue. It slammed the door. Roughly a quarter of the export market vanished in a season, along with the easy cash that came with it. The pivot to Asia ran into iron and gravel.
Coal is rock, not liquid. Rock needs rails, and the Trans-Siberian plus BAM were already packed.
Congestion climbed. Costs followed. Buyers in China and India read the situation and demanded discounts that stuck around long after the headlines moved on.
Sanctions tightened the vise on operators. Flagship producers landed on fresh lists, and another slice of exports got harder to place.
Competitors smelled the opening.
Mongolia laid a direct rail artery into China and pushed coking coal across it at speed. Indonesia filled thermal demand. Australia recovered volumes once Beijing thawed relations. Global coal trade set records while Russia’s share thinned. The market kept moving, and it didn’t wait for Moscow to catch up.
Inside the pits, the pain arrived slower and cut deeper.
Western machinery, planning software, and service networks kept complex mines humming. Cut off parts and updates, and the decline looked like entropy. More downtime, rougher safety, lower throughput.
Dozens of operations idled or shut. Equipment aged out. Workarounds failed in the places that matter: the longwall and the face. Even mines seized during the war refused to behave under those constraints.
The numbers from December 2022 to September 2025 tell a lopsided story. China took 43% of all Russian coal exports. India grabbed 20%, Turkey 11%. That kind of concentration doesn’t give leverage to the seller. It hands the pricing gun to the buyer, and Beijing pulled the trigger without hesitation.
Even within that dependence, Chinese intake slipped 5.3% in the first half of 2025. No wave of Chinese technology arrived to replace Western systems. Why invest in upgrades when discounted cargo kept arriving anyway.
Production itself tells the decay story in stark relief. From 439 million tonnes in December 2022 down to 432.5 million by December 2023. Exports initially fell 9% between 2020 and 2022, then dropped another 13% from 2022 to 2024.
Meanwhile, crude oil revenues ticked up 6% in 2024. Pipeline gas climbed 9% year-on-year. Coal crashed to its lowest level since the invasion.
The financial carnage is uglier than the volume losses. The sector posted nearly 375 billion rubles in profit in 2023. Twelve months later: a net loss of 112.6 billion rubles. By the first seven months of 2025, losses ballooned to 225 billion rubles, double the damage of the entire previous year.
That 2023 profit spike was war-jacked pricing, not proof of structural strength. The moment global prices normalized, the cost stack buried the sector. Rail tariffs, electricity, gas, and the mandatory discounts to place Asian volumes ripped margins apart.
Coal barely registers in national revenue, yet it supports about 140,000 jobs and dozens of single-industry towns.
Prior restructuring left scars. Workers got little notice, support was misdirected, and social services were dumped on municipalities that couldn’t pay the bills. Layer today’s closures on Kuzbass’s environmental tab and the pattern is hard to miss.
Coal dust in lungs. Homes cracked by blasting. Rivers poisoned. Mortality spikes that authorities refuse to acknowledge, much less compensate.
At least 51 operations halted or suspended by recent counts. More than a quarter of the sector. By September, 23 coal companies had shut down entirely, with another 53 teetering.
The ledger balances only if people don’t count.
Policy never prepared for this turn. The energy strategy treated climate and diversification like an afterthought. Emissions targets aimed for no more than 105% of 2005 levels by 2030. A target so weak it functions as surrender.
Power generation stayed tied to legacy sources. In 2024, so-called clean power sat at 36% of the mix, with nuclear doing most of the lifting at 18%. Wind plus solar combined? Less than 1%. That puts Russia fifteen times below the global average.
When coal buckled, substitution inside the system was thin. Dependence didn’t shrink. It shifted.
There’s a simple geopolitical lesson for anyone who has waited on a late train.
Cheap and reliable from a hostile supplier was always a mirage. Security carries a premium now, and buyers are paying it for reliability, redundancy, and partners who don’t treat molecules as leverage.
That is why Indonesian, Australian, and Mongolian cargoes are locking in share. Reliability became the product.
The post-1945 bargain rested on a fantasy: that supply would always arrive, even from complex regimes, and that institutions could mop up disruptions without addressing systemic fragility. The 1970s oil shocks provided an early warning. Countries substituted oil out of power generation, built strategic reserves, created the International Energy Agency. But the fundamental assumption persisted.
Russia’s invasion detonated that model. Energy became a weapon. The assumption of guaranteed supply died.
Russia’s share of global coal exports sank from 18% in 2019 to roughly 13.5% in 2024. The EU’s August 2022 ban ripped out an estimated €8 billion a year in revenue. Fresh US sanctions targeting SUEK, Mechel, and Sibanthracite squeezed another 8% to 10% of remaining exports.
The Kremlin thought Europe’s dependence was an invincibility shield. The subsequent targeted sanctions that rapidly dismantled the coal sector proved that calculation fundamentally wrong. Industrial vulnerability ran both ways, and it accelerated diversification away from Russian supply chains far faster than Moscow anticipated.
For Moscow, the map narrows.
Eastbound rail slots are finite. Gear ages faster than it can be replaced. The best customers negotiate the toughest terms. Rivals sign long offtakes while Russian assets sit idle.
The official line leans into hydrocarbons and hopes the price cycle will rescue the spreadsheet.
It won’t.
Price isn’t the only problem. Chokepoints matter. Sanctioned technology matters. Buyer leverage matters. Trust, once lost, taxes every ton.
The coal sector ran on Western capital goods and expertise. Caterpillar and Komatsu machines, Sandvik cutters, Siemens control systems, planning software to orchestrate safe extraction. When sanctions iced the parts, maintenance, and software, operations didn’t implode overnight. They decayed.
Russian investors couldn’t even profitably operate captured Ukrainian mines. That detail tells everything about operational capacity under constraint.
Industrial sanctions bite slower than financial ones. But they cut bone-deep. And the mechanics aren’t unique to coal. They’ll stalk any sector that runs on imported capital goods and complex coordination.
The coal pits already wrote the final note in plain language: closures, discounts, red ink.
Margins thin out. Towns empty. Equipment rusts in place.
The world redraws its energy map in quieter colors, farther from the regions that tried to bend physics and finance to political will.
The post-war energy illusion rested on the idea that global commerce and geopolitical stability were inseparable and mutually reinforcing. That security doctrine fetishized flow, not resilience.
The coal collapse is the quantitative proof that the illusion is over. Fossil fuels sourced from hostile powers are no longer economic commodities. They’re instruments of instability.
Mongolia doubled coking coal exports in 2023 thanks to infrastructure Moscow never built. Indonesia and Australia grabbed thermal share while Russian volumes became synonymous with volatility. Global coal trade hit records in 2023. Thermal exports jumped 7%, metallurgical 15%.
The market moved on. So did the infrastructure, just not Russia’s.
The noise has faded, but the signal is clear. The governing logic exposed itself: fossil extractivism, authoritarianism, militarism bound together. A model that mistakes resource leverage for durable power and confuses coercion with competence.
Today it’s coal. Tomorrow it’s whatever else depends on the same brittle scaffolding.
The eastbound rails are tapped out. Technology is aging into failure. The best customers are also the toughest negotiators. Competitors are building railways and signing contracts while Russian operations idle or shut.
Stranded assets. Regions emptied of opportunity. A slow grind into unprofitability that no price spike will reverse.
The coal story is a break. The sector spun from headline profits to bleeding losses while the world quietly rewired around it. The myth that markets always self-correct met the reality of sanctioned technology, logistics friction, and buyer concentration.
The pits told the truth in the only language that matters: volumes, margins, closures.