Russia struggles against US coal

RUSSIA’S coal mining companies suffered major losses last year as they struggled to compete with cheap American exports.

Sadie Davidson

Cumulatively, the industry lost 22 billion rubles ($A649 million), as opposed to the 60 billion rubles profit that the companies earned in 2012.

Russia is the sixth-largest coal exporter globally after Indonesia, Australia, Colombia, South Africa and the US.

Coal became cheaper in part due to higher exports of coal out of the US, where increased output of cheap shale gas put the squeeze on demand for other energy resources.

Last year, Russia focused on exporting coal to Asia. China is one of the world's largest coal importers. Its thermal power plants generate 70% of the country's electricity.

Despite a downturn in process, the Russian government back an initiative that boosts Russian exports to Asia over the next 15 years.

It is hoped that deposits that will be tapped in the country's east will be more profitable than existing coal mines, as their proximity to eastern ports will reduce transport costs.