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Coal mining in Russia will decline until 2023

Coal production in Russia will decline by 10.5 % in 202 to 395 million tonnes, according to a macroeconomic forecast issued by the Ministry of Economic Development for 2021-2023.

The forecast, endorsed by the government at a meeting on 16th September, said the dip in production was linked to low world coal prices and a trend of decreasing purchases by key coal consumers on European markets.

The downturn in production will continue in 2021, with a decline of 1.1 %, followed by a further decline of 0.3 % in 2022. The forecast calls for no year-on-year change in 2023.

According to the forecast, increases in production in recent years were the result of growth in exports.  Coal shipments on the domestic market will remain at roughly the same level over an extended period owing to competition with the gas sector.

The medium-term outlook, according to the forecast, calls for trends to be maintained in terms of declining coal consumption and a shift towards use of the most effective energy-use sources.

The Ministry of Economic Development, quoted by Interfax news agency, says the sector will come up against further limitations on foreign markets, namely a transition by many countries to the use of alternative, more environmentally-friendly energy sources, tougher environmental demands and the introduction of a “hydrocarbon tax”.

This will lead to a significant decline in volumes on world markets and heightened competition between companies producing hydrocarbons. The forecast says that competitivity of Russian coal will depend on reducing the burden of transport costs and costs inherent to production inasmuch as there are reduced prospects for reducing rail freight tariffs.

Russia’s Energy Ministry has also forecast a 20-22 % decline in Russian coal export deliveries, with the decrease most pronounced in shipments to the West.

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