Russian Prime Minister Mikhail Mishustin has ordered government ministries to find new domestic uses for surplus coal after exports plunged, according to newspaper Vedomosti.
Under a directive issued as part of Russia's national energy strategy through 2050, authorities must draft proposals to redirect unwanted fuel into other sectors. The initiative focuses on finding viable commercial markets for coal that foreign buyers no longer purchase.
The Ministry of Energy, the Ministry of Industry and Trade, the Ministry of Economic Development, and the administrations of coal-mining regions are responsible for preparing the measures. The four authorities must present their formal proposals to the government by March 31, 2027.
Officials have also been instructed to devise ways to improve the quality of domestic coal products in a bid to stimulate higher demand. By the end of 2027, the government plans to introduce state incentives for homegrown processing technologies that can manufacture a wide range of goods with high added value.
Proposals for alternative industries
The government directive identifies coal chemistry and power generation for digital data centres as two potential avenues for soaking up the excess supply. Data centres house computer servers running cloud networks, corporate systems, and digital infrastructure, which require vast quantities of uninterrupted baseload electricity around the clock.
Coal chemistry, often called carbo-chemistry, involves processing coal through chemical refining rather than burning it in power plant boilers. The method can convert raw coal into synthetic fuels, methanol, plastics, and other industrial feedstocks, creating higher-margin products for manufacturing sectors.
Industry analysts, however, expressed scepticism about whether these proposed sectors can absorb the surplus. Finam analyst Yegor Vershinin said that the development of coal chemistry would require far more favourable economic conditions than Russia can currently offer. He noted that while China supports its coal-chemical industry with extensive state funding, advanced manufacturing infrastructure, and an immense domestic market, Russia is not yet in a position to match those conditions.
Market specialists also described the proposal to power data centres with coal-fired electricity as an interesting concept, but stressed that it cannot compensate for the sharp decline in coal exports.
Falling exports and domestic contraction
The search for fresh domestic demand comes amid a severe downturn in overseas deliveries. Russian thermal coal exports collapsed by 18.6 percent to 42.5 million tonnes during the first three quarters of 2026. That drop was the worst percentage decline recorded among all major international coal exporters.
Thermal coal is primarily burned by utilities to generate electricity and heat. Despite the collapse in thermal shipments, overall Russian coal exports grew by seven percent during the same nine-month period, lifted by stronger international sales of coking coal. Coking coal, also known as metallurgical coal, is heated in industrial ovens to produce coke for blast furnaces in steelmaking.
At the same time, domestic consumption within Russia is shrinking. An informed source familiar with Ministry of Energy statistics told Vedomosti that domestic coal deliveries contracted by 1.5 percent during the first half of the year. Supplies delivered to power stations fell by six percent, while shipments to metallurgical factories dropped by 16 percent.
Long-term energy production goals
Alexander Kotov, a consulting partner at Neft Research, said that he sees no reason for Russian coal consumption to increase in the coming years. Kotov attributed the bleak domestic outlook to Russia's social gasification programme, which is steadily connecting residential communities and regional heating plants to the natural gas grid. The gasification drive was expanded to absorb excess domestic gas after pipeline exports to European markets fell away.
The combination of falling domestic use and shrinking export demand threatens the targets laid out in Russia's official energy blueprint. Under the baseline scenario of the national energy strategy, coal production is projected to expand to 530.1 million tonnes by 2030, before rising to 662 million tonnes by 2050.
Recent performance has moved in the opposite direction. Total Russian coal extraction fell to 440 million tonnes in 2025, and industry figures show that the decline continued throughout 2026. With major international buyers cutting thermal coal purchases and domestic consumers switching to gas, the four designated ministries face a challenging timeline to formulate practical solutions before the March 2027 deadline.
