Challenges Loom for Russian Coal Industry: Rising Costs and Export Duties

Production costs for Russian mines are among the highest in the world, with railway and port costs ranging from $45/t to $60/t and $8/t to $50/t, respectively. This means that some Russian miners have been struggling to sell at a profit with thermal coal prices around $100/t on a FOB Russia, leading them to cut exports. DBX expects Russian coal exports to fall to 13.5 million metric tons in September, which would be the lowest monthly figure in over 3 years.

Furthermore, Russia has announced an export duty on all major exports, including iron and steel, metals, and coal. According to reports, these duties will take effect on October 1, 2023, and remain in force until the end of 2024. The duty will be determined by the exchange rate for the rouble and is expected to be around 7% with today's rate. This will further challenge the economics for Russian coal exporters and may result in a further reduction in Russian coal exports if prices do not increase.

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