By Dominikus
Russia’s coal industry, one of the world’s largest producers and exporters, is facing significant operational and financial challenges as it seeks to maintain its position in key Asian markets. Speaking at the 1st Global Coking Coal Conference 2025 in Xiamen last week, Wang Wei, Sales Manager of Shanghai Besteel Import & Export Co., Ltd., emphasized the urgent need for an estimated US$200 billion investment to upgrade Russia’s aging logistics infrastructure and resolve critical bottlenecks in coal transportation. Notably, Indonesia’s leading steelmaker Krakatau Steel and Chinese coking coal companies operating in Indonesia are also key customers, highlighting Russia’s growing presence in Southeast Asian markets.
“To address logistics bottlenecks in the western and southern transport corridors, an investment of US$ 200 billion is urgently needed. Additionally, advancing the development of the Northern Sea Route (NSR) could shorten transportation cycles to Asian markets by up to 40%,” Wang said.
This call for massive investment is underpinned by Russia’s coal export volumes, which have reached approximately 200 million tons annually in recent years. However, Russia’s coal companies face a severe debt crisis and declining investment levels. The base interest rate of the Central Bank of Russia surged from 9.5% in March 2022 to 21% in 2025, the highest since 2003, exacerbating financial strain. Investment in Russia’s coal sector dropped 10% to 248 billion rubles (about US$ 3.3 billion) in 2024 and is projected to fall another 19% to approximately 200 billion rubles (US$ 2.6 billion) in 2025.
Russian railway transport is also undergoing regulatory changes, with new “non-discriminatory access rules” lowering the priority of coal and oil shipments from the third to the sixth level. This shift risks causing export delays and increased logistics costs. Freight rates from the Kuzbass coal basin to the Vostochny port in the Far East climbed from US$ 45 per ton in 2024 to US$ 51 per ton in early 2025. Port charges remain high as well, although the average fee at Vostochny port was recently reduced from US$ 20 to US$ 13.5 per ton under pressure from loss-making coal producers. Total logistics costs for moving coal from Kuzbass mines to northern Chinese ports are estimated between US$ 72.5 and US$ 76.5 per ton.
Read also : Russia's coal exports to Asia decline amid fierce competition from Indonesia
Russia’s annual coal output has hovered around 440 million tons in recent years, with coking coal production accounting for about 110 million tons. Annual coal exports remain near 200 million tons, including approximately 31 million tons of coking coal. Exports declined slightly in 2024, mainly to China, Turkey, and South Korea. In Q1 2025, Russia produced 111 million tons of coal and 26 million tons of coking coal. The country’s coking coal mines are concentrated primarily in the Kuzbass and South Yakutia regions.
Domestic demand for coking coal in Russia has been rising steadily, reaching around 205 million tons in 2024. This demand is driven by municipal heating and residential sectors, the coking industry, and power generation.
Russia holds proven coal reserves totaling 193.3 billion tons, comprising 101.2 billion tons of lignite, 85.3 billion tons of bituminous coal (including 39.8 billion tons of coking coal), and 6.8 billion tons of anthracite. Its coking coal reserves alone account for 42% of the global total, underscoring Russia’s critical role in the metallurgical coal market.
The presentation also highlighted Russia’s extensive customer base across Asia. Key buyers include major steel producers such as South Korea’s POSCO, Japan’s Nippon Steel and JFE Steel, and India’s SAIL and JSW Steel, alongside Vietnam’s Formosa Plastics and Malaysia’s Alliance Steel. Importantly, Indonesia’s Krakatau Steel and Chinese coking coal companies operating in Indonesia are also significant customers. This diverse clientele reflects Russia’s vital role in supplying metallurgical coal to major industrial hubs in the region and illustrates the growing competitive pressures faced by Indonesian coal exporters in overlapping markets.
Editing by Reiner Simanjuntak
