Russian miner Mechel makes production cuts amid deepening losses
Russian mining company Mechel has reportedly suspended some of its coal operations amid deepening financial losses.
The company has temporarily halted operations at one mine as well as certain open-pit coal mine sections, while significantly reducing production of unprofitable coal grades, according to a report by Reuters.
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In its half-year report, Mechel stated: “Under the current circumstances, we have decided to suspend production of unprofitable product types, partially redirecting resources toward products that are more in demand in today’s realities.”
The move comes as the country’s coal sector grapples with low prices, international sanctions and a strong rouble, which is undermining the competitiveness of its exports, highlighted the news agency.
Mechel reported a 28% decline in coal output to 3.66 million tonnes (mt) in the first half of 2025 (H1 2025).
Sales of coking coal concentrate dropped 15% to 1.7mt and thermal coal sales slumped 21% to 1.37mt.
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By GlobalDataIts H1 loss widened to Rbs40.5bn ($501.17bn), compared to Rbs16.7bn in the previous year.
The company’s financial position is also strained by a net debt burden of Rbs252.7bn, exacerbated by high interest rates.
The Russian Government introduced measures in May to support the country’s coal sector, including deferring tax payments.
Mechel secured a three-year deferral on payments of tax arrears, fees and insurance premiums totalling Rbs13.8bn.
Despite these efforts, the industry continues to face significant headwinds.
Mechel attributed the industry’s struggles to declining coking coal concentrate prices, rising operational costs, rouble appreciation and sanctions-related constraints.
The company is in ongoing discussions with creditors to secure further deferrals on principal debt repayments.
According to the Rosstat statistics service, the combined net losses of Russian coal companies surged to Rbs185.2bn in H1 2025, up from Rbs7.1bn in the same period last year.
Industry officials have warned that around 30 enterprises with a collective annual output of approximately 30mt are at risk of bankruptcy.
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