Mechel PJSC Faces Industry Challenges Amidst Coal Production Cuts
Russia’s Mechel PJSC, a prominent player in the metals and mining sector, has recently announced significant operational changes due to the ongoing crisis in the coal industry. The company, which operates across mining, steel, ferroalloy, and power segments, has been forced to halt some of its coal operations as it grapples with worsening financial losses.
On August 28, 2025, Mechel reported that it had suspended output at one of its mines, reflecting the broader struggles faced by Russia’s coal sector. The industry is currently battling low coal prices, international sanctions, and a strong rouble, which collectively undermine the competitiveness of Russian coal exports. These challenges have placed approximately 30 enterprises, responsible for around 30 million metric tons of coal annually, at risk of bankruptcy.
In response to the crisis, the Russian government implemented measures in May to support the coal industry, including deferring tax payments. Despite these efforts, coal companies, including Mechel, experienced a dramatic increase in net losses. According to Rosstat, the combined net losses for the sector soared to 185.2 billion roubles ($2.29 billion) in the first half of 2025, up from 7.1 billion roubles the previous year.
Mechel’s half-year report highlighted the company’s strategic shift to suspend production of unprofitable product types and redirect resources toward more in-demand products. This decision includes temporarily halting operations at one mine and certain sections of open-pit coal mines, alongside substantial cuts in coal production.
Despite these challenges, Mechel’s CEO, Igor Khafizov, expressed optimism about the future of global metallurgical coal prices. In the first half of 2025, domestic Russian prices for most grades of coking coal saw significant declines. However, early in the second half of the year, international markets began to stabilize, showing signs of price growth. This potential recovery could offer Mechel an opportunity to regain its footing in the global market.
In the first half of 2025, Mechel reduced its coal production by 28%, a move that underscores the company’s efforts to adapt to the current economic realities. As Mechel navigates these turbulent times, the company’s ability to pivot and capitalize on emerging market trends will be crucial for its future success.
For more information on Mechel PJSC, visit their website at www.mechel.ru . The company is listed on the Moscow Stock Exchange, with a market capitalization of 1.48 billion RUB and a close price of 91.1 RUB as of August 20, 2025.