Signature Sponsor
Russian Miners Say Sanctions Hurting Coal, Diamond Exports



June 5, 2022 - Some Russian natural resource companies said exports are falling due to Western sanctions and they may need to cut workers, according to a report by the country's central bank.

The Kemerovo region in Western Siberia posted a 20 percent drop in coal exports in April while inventories rose 13 percent, the report said.

Kemerovo is Russia’s largest coal-producing region.

One coal company in Eastern Siberia estimated the probability that it would need to halt production and lay off workers as “high,” the report said.

The European Union in April agreed to completely phase out Russian coal imports by August 1 as part of a series of sanctions aimed at punishing Russia for its invasion of Ukraine.

Russia had been the largest exporter of coal to the EU prior to the war.

Russian companies are now trying to redirect their coal sales to Asia but have not been able to fully offset the loss of the EU markets, according to the report.

However, the sharp surge in coal prices over the past year has helped Russian companies maintain profitability amid declining sales volumes.

Meanwhile, in the nation’s Far East region, a diamond-mining company said many traders are refusing to buy its output due to financial sanctions imposed on the country.

Banks in India, one of the largest markets for diamonds, did not process payments to the Russian miner, the report said.

An energy producer on the Far East island of Sakhalin failed to sell as much oil as originally planned in April and the first half of May after it could not find enough transportation companies willing to accept its output.

Russia’s economy may contract as much as 15 percent this year as Western sanctions reduce demand for the country’s commodity exports and block imports of critical technology necessary for manufacturing.

Commodity exports account for the lion's share of Russia's federal budget revenues.