‼️ “"The worst crisis in 30 years": Russia's coal mining industry begins to collapse”
There are several things I want to point out about this situation
moscowtimes.ru/2024/10/07/sam…
There are several things I want to point out about this situation
moscowtimes.ru/2024/10/07/sam…
First of all, this isn’t a “surprise” but rather a series of events that are leading to this outcome.
But…as it falls, I want to give you some things to think about because it’s possible it will lead to some unexpected outcomes EVERYWHERE in Russia.
But…as it falls, I want to give you some things to think about because it’s possible it will lead to some unexpected outcomes EVERYWHERE in Russia.
So to begin with, Russian Railways wasn’t able to provide all the shipping that the coal companies required. The system was overloaded.
No Transport led to a shut down in production.
The railways & coal are heavily tied together.
No Transport led to a shut down in production.
The railways & coal are heavily tied together.
https://twitter.com/prune602/status/1780023876258238939
To make a long story short, a series of bad decisions by Russian Railways YEARS ago followed by the repercussions of the 2022 invasion has put Russian Railway it a bad position.
They were likely going to end up here anyway, but the events of 2022 likely accelerated things.
They were likely going to end up here anyway, but the events of 2022 likely accelerated things.
Years ago Russian Railways - a monopoly - eliminated their ENTIRE MAINTENANCE DEPARTMENT .
In the time since then, locomotives have not been properly maintained. In addition about half of their locomotives are over 20 years old, and parts are no longer made.
In the time since then, locomotives have not been properly maintained. In addition about half of their locomotives are over 20 years old, and parts are no longer made.
The older locomotives take longer to repair, something that took a very painfully long study for the leadership to comprehend (like duh, old stuff takes more upkeep) plus finding the parts also is challenging.
On top of that, their maintenance staff is become overloaded
On top of that, their maintenance staff is become overloaded
People like to point out the Russia is getting new locomotives without recognizing the scale of the problem.
It’s like saying you’re running, but you’re running from an avalanche. Can you run fast enough to keep from being buried?
It’s like saying you’re running, but you’re running from an avalanche. Can you run fast enough to keep from being buried?
Russia often does this, they operate large companies with small business mentalities. You can expect for someone to manufacturer or sell you all the locomotives you need immediately for a country the size of Russia.
THEY SHOULD HAVE KNOWN THAT!
THEY SHOULD HAVE KNOWN THAT!
This is just one of MANY problems weighing down an overextended system.
Which helps explain why loading is shrinking. In this thread, I discussed some things to keep an eye on, it something to look at as we move forward.
Which helps explain why loading is shrinking. In this thread, I discussed some things to keep an eye on, it something to look at as we move forward.
https://twitter.com/Prune602/status/1841192822692520191
As you can see from this pie chart, coal is a significant part of Russian Railways transportation mix.
And coal is heavily reliant rail (like almost everything in Russia) to be able to get their goods to market.
And coal is heavily reliant rail (like almost everything in Russia) to be able to get their goods to market.
https://twitter.com/Prune602/status/1841200194680930544
And we’ve already seen one example of the Railways restricting coal production.
So I’m going to show you an example of why more people need to be critical of any Russian “projections”
So I’m going to show you an example of why more people need to be critical of any Russian “projections”
“Russian government is basing its energy strategy on a constant increase in coal production — from the current 438 million tons per year to 482 million tons in 2030 and 556 million in 2050”
Why? I just showed you how the Railway was limiting shipments. AND ITS GETTING WORSE.
Why? I just showed you how the Railway was limiting shipments. AND ITS GETTING WORSE.
But that’s not the only problem. *sigh*
I wrote this long thread about several stages the Russian Government has gone through since the 2022 invasion.
Worth reading for lots of details and sources because things have changed
I wrote this long thread about several stages the Russian Government has gone through since the 2022 invasion.
Worth reading for lots of details and sources because things have changed
https://twitter.com/prune602/status/1806437879645634991
In a nutshell:
Phase 1: Russia is using up all the stuff that they had stockpiled for the war and still had from the USSR days. Expenses were relatively low (2022)
Phase 1: Russia is using up all the stuff that they had stockpiled for the war and still had from the USSR days. Expenses were relatively low (2022)
Phase 2: Russia has to start spending money because they ran out of their stockpiles, things get expensive. Think of things like artillery shells and Iranian drones, also refurbish some of the older Soviet Equipment (2023)
Phase 3: Secondary Sanctions causes chaos. (2024)
Why do I bring this up? Well, in Phase 2 when expenses REALLY started skyrocketing, the Ministry of Finance ran around looking for funds to pay for it.
Like a “One time” tax
Like a “One time” tax
https://twitter.com/prune602/status/1687687013187694592
If you read the agriculture thread you’ll remember this is the time when the Russian government took all the profits from what should have been a profitable year.
Now there’s no savings and agriculture is NOT doing well.
Now there’s no savings and agriculture is NOT doing well.
https://twitter.com/prune602/status/1791572354482520446
Coal was not immune to this. And when you read this next part, it may begin to make sense why tarot has become popular in Russian businesses
https://twitter.com/Prune602/status/1827370310204555669
Read the excerpt from a May 2024 article about the way the Ministry of Finance kept treating duties.
No warning at all, they were able to essentially do what they wanted.
But that not all…
No warning at all, they were able to essentially do what they wanted.
But that not all…
https://twitter.com/Prune602/status/1790880821227745768
See, margins everywhere were already low on coal. But, not only were they getting hit with duties from Russia, they were ALSO getting hit with duties from CHINA.
See China has free trade agreements with several countries, but not Russia.
See China has free trade agreements with several countries, but not Russia.
So coal from Australia doesn’t have to pay duties, coal from Russia does. Which means their profitability drops even further.
But wait…THERE’S MORE!
But wait…THERE’S MORE!
The cost of transportation is a huge expense for coal. An expense that they can’t really negotiate anywhere but at the port. They’re stuck with Russian railways costs and limitations.
Things were going bad in a hurry.
Things were going bad in a hurry.
Even with the worsening state of the coal industry, it took a court order to get the Ministry of Finance to stop going after it for funds to feed Russia’s war addiction.
https://twitter.com/prune602/status/1827770929046286518
Russian Ministry of Finance:
And remember how they unveiled their new tax plan for 2025?
🇷🇺: NOW BIGGER AND MORE EXPENSIVE TAXES!
🇷🇺: NOW BIGGER AND MORE EXPENSIVE TAXES!
But even with their new plan, the coal prices are so low that the Ministry of Finance STILL won’t be able to extract funds from them,
(Something they may or MAY NOT have accounted for in the new projected budget)
(Something they may or MAY NOT have accounted for in the new projected budget)
https://twitter.com/prune602/status/1827772048543715658
Russian Railways is also projecting more price increases!
https://twitter.com/Prune602/status/1839074361489178718
I often remind people not equate the state of the
👉 Russian Government’s Budget
With the state of the
👉 Russian Economy
As you’ve seen, the Russian government has a lot more power to take what it wants than other countries.
👉 Russian Government’s Budget
With the state of the
👉 Russian Economy
As you’ve seen, the Russian government has a lot more power to take what it wants than other countries.
For that reason, I also remind you to think about the Russian Economy like an ecosystem.
But the Russian government acts as predator that is out of control with little to know checks on it’s consumption.
In this ecosystem, coal is like a keystone species.
But the Russian government acts as predator that is out of control with little to know checks on it’s consumption.
In this ecosystem, coal is like a keystone species.
If coal in Russia collapses, then major portions of the country may begin accelerated depopulation.
This Kemerovo Oblast, also known as Kuzbass because of the Kuznetsk
Basin, which is a huge coal mining region.
Coal is huge here.
en.m.wikipedia.org/wiki/Kemerovo_…
This Kemerovo Oblast, also known as Kuzbass because of the Kuznetsk
Basin, which is a huge coal mining region.
Coal is huge here.
en.m.wikipedia.org/wiki/Kemerovo_…
If these people leave, they are unlikely to return, and it will be even more difficult to rebuild the industry.
If the area is unpopulated, Putin is worried he may lose it.
If the area is unpopulated, Putin is worried he may lose it.
And to give you an idea of HOW important it is, one of the lowest rate preferential mortgages you can get is for the Far East.
Now, if coal begins to collapse, suddenly there’s going to be a lot more available railway capacity.
Now, if coal begins to collapse, suddenly there’s going to be a lot more available railway capacity.
Which is one of the topics I discussed in the railway thread.
Right now, Russian Railways is still the limiting factor Railways Loading numbers.
That means Demand for shipping is greater than supply…and the supply continues to shrink because of their locomotive problems.
Right now, Russian Railways is still the limiting factor Railways Loading numbers.
That means Demand for shipping is greater than supply…and the supply continues to shrink because of their locomotive problems.
https://twitter.com/Prune602/status/1841192822692520191
But I warned you that it was possible that the economy begin to tank faster that Russian Railways loading does.
That means that suddenly, even with Russian Railways shrinking shipping capability, the demand plummets even lower.
This means things got much worse!
That means that suddenly, even with Russian Railways shrinking shipping capability, the demand plummets even lower.
This means things got much worse!
And coal is a massive source of loading.
(Keep in mind also, that Russian Railways won’t be able to replace all this weight with other loading because you can move a lot more tons of coal in 1 gondola car than you can with a likely substitution: 1 container car.)
(Keep in mind also, that Russian Railways won’t be able to replace all this weight with other loading because you can move a lot more tons of coal in 1 gondola car than you can with a likely substitution: 1 container car.)
https://twitter.com/Prune602/status/1841200194680930544
The collapse of the coal industry in Russia will massively unbalance Russia, and a lot of things will begin to shift with it as the country tries to rebalance things.
However, the magnitude of the *POSSIBLE* collapse remains to be seen. But it’s important to look at just how far reaching this changes will be.
No matter what happens things are bad now and…
IT WILL GET WORSE
~ The End ~
No matter what happens things are bad now and…
IT WILL GET WORSE
~ The End ~
I thought about something else and I wanted to add some more supplemental data.
https://twitter.com/Prune602/status/1742615920302846263
One of the ways Russian Railways wants to deal with increased costs, is to NOT give their employees raises…when everyone else already pays more
Yes they are that dense.
Yes they are that dense.
https://twitter.com/Prune602/status/1839074374315630975
Guess who has been the head of the Board of Directors since 2020 🙃
https://twitter.com/prune602/status/1811853982148755727
I wanted to give you an entry point into the tangled web of giant railway threads.
You can spend a significant amount of time working your way back through a lot of data on Russian Railways.
This is how I began forecasting that railway loading would likely decline (and it has)
You can spend a significant amount of time working your way back through a lot of data on Russian Railways.
This is how I began forecasting that railway loading would likely decline (and it has)
https://twitter.com/prune602/status/1795928099210613181
I’ve tried to streamline some of these threads, but I wanted you to have access to sources because I have written and studied this situation significantly.
In particular, if you want to understand how bad the management of Russian Railways is, I recommend read from here and the associated materials.
Because the fact that some of this stuff has to be EXPLAINED in this level detail TO RUSSIAN RAILWAYS is frankly embarrassing.
Because the fact that some of this stuff has to be EXPLAINED in this level detail TO RUSSIAN RAILWAYS is frankly embarrassing.
https://twitter.com/Prune602/status/1780997995426672749
Their dispatch system and understanding of the problems are so bad, that the system could not adequately predict or report when a locomotive would be available to pick up a load.
💻: This locomotive is available to pick up you load
🚂: NO I’M NOT, I’M STILL IN THE SHOP!
💻: This locomotive is available to pick up you load
🚂: NO I’M NOT, I’M STILL IN THE SHOP!
This meant that everything in freight practically had to be decided on the fly. And all the surprises, like relay boxes catching on fire, and derailments, and have to raise fuel supplies around because drones were hitting refineries just made things worse.
The other big problem is the traffic jam in the Far East. Theres just not enough railway infrastructure.
Now, many would like you to believe that this is just because of the invasion and an unexpected outcome of shifting the economy toward Asia instead of Europe.
Now, many would like you to believe that this is just because of the invasion and an unexpected outcome of shifting the economy toward Asia instead of Europe.
Wrong, they knew it was a problem before they invaded Ukraine. They knew it, and they knew it was likely to get worse due to invading, BUT THEY DID IT ANYWAY!
In addition to this long build up to the problem
The Ministry of Economy NEVER contemplated that lack of transportation may be a limiting factor for the Russian Economy!
THEY ARE HEAVILY RAIL DEPENDENT! YOU HAD 1 INDUSTRY TO WATCH AND THE RUSSIAN GOVERNMENT OWNS IT!
The Ministry of Economy NEVER contemplated that lack of transportation may be a limiting factor for the Russian Economy!
THEY ARE HEAVILY RAIL DEPENDENT! YOU HAD 1 INDUSTRY TO WATCH AND THE RUSSIAN GOVERNMENT OWNS IT!
https://twitter.com/Prune602/status/1779920541773672563
Russian Railways is a monopoly with one shareholder 👉 the Russian government.
Does ANYONE in the Russian Government understand logistics?
🤦♀️ sometimes I wonder if they could find their way out of a wet paper bag
Does ANYONE in the Russian Government understand logistics?
🤦♀️ sometimes I wonder if they could find their way out of a wet paper bag
This is why I keep reminding people that they shouldn’t read too much into to any of Russia’s projections for anything. They clearly are incompetent at making even reasonable forecasts and/or are just disingenuous.
This isn’t rocket science.
🇷🇺: Don’t you dare mention Luna-25
This isn’t rocket science.
🇷🇺: Don’t you dare mention Luna-25
When I say that there is volatility in Russia, this is what I mean. What is actually occurring in Russia can be significantly different than what the Russian government projects or reports, and it’s not hard to notice if you actually investigate.
This is happening everywhere.
This is happening everywhere.
I think I’ll stop ranting now 😂
~ The End: Part Duex ~
~ The End: Part Duex ~
@Bad_cmpany It would be like asking a bakery to build a giant massive factory is a small town just to supply an event that only occurs once.
@PatrickSchuess1 And all the indications I’ve seen, including the decline in loading and multiple reports on the issue support that the locomotive availability is a huge problem that’s getting worse
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