The draft anti-crisis program for the coal industry, which was prepared by the Ministry of Energy, includes more than 60 names of support measures, including more than 20 tax breaks. Among them are tax holidays, the temporary application of a special reduction coefficient to the mineral extraction tax rate for the period 2025-2026, and others. By the end of 2024, the industry has become the only unprofitable one in the country. Experts doubt that all the proposed measures will be implemented. However, given the problem of single-industry towns, coal miners will receive some preferences. According to analysts, it would be fair for tax breaks to be linked to commitments to develop deep processing of coal, and nationalize the most problematic enterprises.
Draft anti-crisis program for the coal industry
The head of the Ministry of Energy, Sergey Tsivilev, presented a draft anti-crisis program for the coal industry at a visiting meeting in Kemerovo. Izvestia reviewed the document, which contains more than 60 names of measures to support the industry, including more than 20 tax breaks.
To save the industry, which by the end of 2024 has become the only unprofitable one in the country, it is proposed to introduce tax holidays, temporarily apply a special reduction coefficient to the MET rate for the period 2025-2026, and remove restrictions for 2025-2029 on reducing the income tax base by the amount of losses received or accumulated in previous tax periods in the amount of 50%. In addition, it is proposed to abolish the mineral extraction tax on coal for mines and sections located within the framework of a single production complex with power plants.
According to the draft anti-crisis program, regulators must work out tax support measures by June 2025.
Meanwhile, in the "Main directions of budget, tax and customs tariff policy for 2024-2026", the Russian government indicates that the tax burden in the coal industry remains at a low level — only 2%.
According to Alexander Frolov, Deputy Director General of the Institute of National Energy, tax revenues from the coal industry to the federal budget differ from those of oil and gas companies not even by several times, but by an order of magnitude.
— Coal companies provided 360 billion rubles of tax revenue in 2022. Taken out of context, this is a huge amount. But, for comparison, such revenues from Rosneft and Gazprom amount to trillions of rubles (according to open data, this figure reached 4-6 trillion rubles). Moreover, 2022 was very successful for coal miners due to the rise in price of raw materials," he noted.
In the first half of 2023, the tax deductions of coal companies decreased by 51% to 126.4 billion rubles. Such data was previously provided by Anatoly Yanovsky, head of the working group on environmental safety of the Commission under the President of the Russian Federation.
What are the losses of coal mining companies
Nevertheless, according to Rosstat, the net loss of Russian coal mining enterprises in 2024 amounted to 112.6 billion rubles against a profit of 374.7 billion a year earlier.
According to an interlocutor of Izvestia, who is close to developing support measures, the reasons for this state of affairs lie in Western sanctions, lower prices, as well as increased fiscal and tariff pressure within Russia.
— In June 2022, Russian Railways abolished the effect of reducing coefficients (0.4 for range and 0.895 for thermal coal) on coal exports, and also in December 2024, they changed the tariff indexation methodology. As a result, Russian Railways tariffs for coal transportation have doubled or tripled since January 2022. The fiscal policy of the state requires special attention. In the first quarter of 2023, a MET surcharge of 380 rubles per ton was introduced for coal, which led to the withdrawal of 30 billion rubles from the industry. Also, in the fourth quarter of 2023, the Ministry of Finance introduced an exchange rate export duty on Russian coal, which led to an additional withdrawal of another 75 billion rubles," the source explained.
As a result, there is a drop in profitability and a reduction in production, he noted. According to the Central Fuel and Energy Department, total coal production in the Russian Federation in 2024 decreased by 0.2% (to 439 million tons). The crisis affected the thermal coal segment the most: production of such fuels (including brown coal) decreased by 1% year-on-year, to 321 million tons. The situation is slightly better in the coking coal segment, where production is increasing due to increased demand in India and the implementation of the Elgin project: this figure increased by 2% (to 117 million tons), the expert added.
According to Izvestia's interlocutor in the industry, without taking support measures, the crisis in the coal industry will worsen: a drop in exports to levels below 2017 (less than 190 million tons) will provoke a reduction in coal production and continue to decline to a level close to 400 million tons in the country (-10% YoY). And the closure of coal enterprises will lead to social tension in single-industry towns and their possible resettlement.
Representatives of coal companies, the Ministry of Energy and the Ministry of Finance did not respond to Izvestia's request. However, earlier the financial department told the media that they were considering the possibility of increasing the mineral extraction tax on coal.
The increased MET should replace the exchange rate export duty, which was abolished at the end of 2023 with the resistance of the Ministry of Finance. It is still unclear how much this tax will be increased and exactly how.
It's not a one-way game
According to Alexander Frolov from the Institute of National Energy, the coal industry is experiencing financial difficulties, but cannot claim that it is the only one affected by the sanctions.
— Coal companies expected the closure of the European market, unlike oil and gas companies. This is due to the shutdown of coal-fired power plants in the EU. It just wasn't supposed to happen in 2022, but closer to 2030. Nevertheless, the state was preparing for this event — the transport facilities, called the Eastern Polygon (expansion of the Transsib and BAM), were developing. I am not aware of the participation of coal companies in these works (at least at the level of financial investments). Perhaps I am mistaken, but the work within the framework of the Eastern landfill is carried out without the participation of coal miners. Although most of these works are carried out for the sake of their interests," the source said.
According to Dmitry Tortev, a member of the expert council of the State Duma Committee on Energy, it is predictable that the head of the Ministry of Energy promotes the interests of coal-mining regions.
— There is logic in this: if the crisis of the coal industry lasts another year, the regions risk falling into a debt pit, from which they may not be able to get out. Recent data from Rosstat on regional tax contributions to the country's consolidated budget is indicative," he said.
According to him, for example, Khakassia already has a "minus" in this indicator, not to mention the need to fulfill social obligations to the residents of the republic. Several mines have closed in Kuzbass, and this trend will continue, he said.
— And if people start leaving the regions after the closure of production, it is unlikely that they will be able to return to their former places. Now, confidence in the future is important for all coal—mining regions so that they do not become depopulated," the expert believes.
Nevertheless, according to Alexander Frolov, in the current conditions it would be fair to link tax breaks and other types of support for the coal industry with the participation of coal companies in the development of logistics capacities. As well as social support measures in single-industry towns.
— For the state, the main problem associated with coal miners is single—industry towns that are completely dependent on mining facilities. It would be nice if coal companies would direct part of the money saved on taxes and railway fares to social programs (up to retraining staff for other professions if it is clear that the mines are unprofitable). It would also be a good idea to link tax breaks with commitments to develop deep processing of coal. Similar experience has been implemented in the oil industry, where tax breaks stimulate the modernization of refining capacities," he added.
Dmitry Prokofiev, an expert at the Foundation for Assistance to Regional Initiatives, believes that in the current situation, the industry still needs to be subsidized.
— We should not expect a quick result — the economy of the raw materials industries is sluggish, and the situation in the coal industry is largely determined by the return of world prices for this fuel to the multi-year norm. The government plan takes into account a significant part of the coal miners' demands. The regions now face two tasks: to make the most of the proposed measures and to provide the government with effective feedback on the real situation on the ground, both in general and on the situation at individual enterprises. If the measures specified in the plan are not implemented, then budget problems will be expected primarily by the coal—producing regions themselves, and not by the country's macroeconomic indicators," the Izvestia interlocutor believes.
According to Alexander Frolov, in general, this situation helps to take a broader look at the dispute over who is the more effective owner — the state or private business.
— With a few exceptions, all our coal is private. Perhaps the state should consider nationalizing the most problematic enterprises, taking into account the tax breaks previously granted to these enterprises, the expert concludes.
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