With 173 billion short tons, Russia holds the worlds second largest recoverable Coal reserves, behind only the United States, which holds roughly 274 billion short tons. However, years of poor management during the Soviet era, and a sharp decline in demand for coal during the early 1990s, significantly undermined the Russian coal sector.
Between 1996 and 2001, Russia worked with the World Bank to restructure the countrys coal industry. As a result, the state monopoly, formally known as RosUgol, has been dissolved, and roughly 77% of domestic coal production comes from independent producers. Russian coal production began a three-year upswing in 1999. After a slight decline in 2002, production rebounded in 2003, and in 2004 Russian energy ministry sources estimate total coal production was 308.6 million short tons (roughly one-third of U.S. coal production). According to the governments energy strategy, Russia should produce between 441 and 496 million short tons by 2020. The government has high hopes for the future of the coal industry. Exports of coal and coke from CIS countries to non-CIS countries rose a staggering 60% between 2002 and 2003, and recent articles in the trade press expect rising coal demand (especially in Asia) to continue. However, various problems may hinder the industrys development potential. Russias agreement to the Kyoto Protocol may lower utility sector demand for coal. In a recent BBC interview, the governor of the Kemerovo Region, which is responsible for over half of the countrys coal production, voiced concerns over his regions ability to sustain coal production growth. He noted his region had already seen almost 200 rivers ruined after being used for mining activities. These environmental problems may hinder Russias desire to keep increasing coal production.