Russia shutting down its mines as Putin woos Trump with minerals

Russian President Vladimir Putin is touting a cooperation with the Trump administration over rare earth minerals, but in reality his domestic mining industry is facing a growing crisis.

In the Kemerovo region, where coal mining is an economic mainstay, eight mines have suspended operations as they struggle with debt, plummeting demand and the impact of sanctions, according to business newspaper Kommersant.

Putin has vaunted the potential of its critical minerals for a deal between Moscow and Washington as its push for Ukraine’s resources founders, following the White House spat between Donald Trump and Volodymyr Zelenskyy.

Newsweek has contacted the Kremlin for comment.

Why it matters

Russia is the world’s sixth biggest coal producer and the industry is crucial for around 30 single-industry towns where the coal mining industry is the lifeblood for hundreds of thousands of workers. The endangered industry could pose a political problem for Putin and is a further symptom of the economic turbulence caused by his war. Western-imposed sanctions have hit coal production harder than other energy sectors.

Putin’s hope that Russia’s other resources and rare earth metals in Ukrainian regions he claims to have annexed could spur the Trump administration to make a business deal which could bring Moscow and Washington closer. He would also be able to publicize new markets for his mining industries to exploit.

What to know

Kemerovo regional governor Ilya Seredyuk told the local parliament that production had been suspended at eight coal mines which employed 591 workers, most of whom had not been paid for months, business newspaper Kommersant reported.

He said that Western sanctions, a fall in global prices and infrastructural problems with imports and exports had posed a serious challenge for the industry.

Europe imposed a full embargo on Russia’s coal in April 2022, which included a ban on imports. Last month, two of the country’s biggest firms—Mechel and Raspadskaya—posted huge losses in 2024.

Isaac Levi, from the Centre of Research on Energy and Clean Air (CREA) told Newsweek that the problems have continued into 2025 with Russian coal exports shrinking year-on year by 12 percent in the first seven weeks of 2025, with a slump in sales to its largest purchaser China, as well as to South Korea and Taiwan.

Adding to woes are issues with transporting coal via rail and the Russian central bank’s record high key interest rate of 21 percent aimed at curbing soaring inflation of 9.5 percent.

Levi said unlike the oil and gas sectors, sanctions have hit Russia’s coal miners hard due to a complete embargo, and major companies like SUEK and Mechel being added to the U.S. sanctions list.

Minerals and rare earths

An anticipated deal between the U.S. and Ukraine over the latter’s rare earth minerals has foundered following last Friday’s White House clash between Trump and Zelensky.

Kyiv had hoped that the bones of a deal could be agreed in exchange for security guarantees which were not offered and talks ended acrimoniously with Trump accusing the Ukrainian president of gambling with World War Three.

That week, Putin had told Russian state media that Moscow could potentially strike a deal with the U.S. and that Russia had more to offer Trump than Kyiv did.

He referred to mineral reserves in the country’s north, the Caucasus, far east as well as Ukraine’s Donbas region which Moscow occupies but does not fully control.

What people are saying

Kemerovo region governor Ilya Seredyuk: “We are working in the most difficult conditions. Due to the sanctions of Western countries, the structure of our export and import supplies is being transformed.”

Isaac Levi, Centre of Research on Energy and Clean Air (CREA) told Newsweek: “Rocketing interest rates, colossal domestic inflation and a strong ruble are damaging Russian coal exports. Sanctions have severely impacted coal miners, unlike oil and gas, which Europe still purchases from Russia.”

Russian president Vladimir Putin: “We would be ready to cooperate with our American partners (on minerals)… if they showed interest in working together.”

What happens next

Levi said that Russia’s coal industry will continue to face hardship this year and that Western sanctions have proved rather successful at crushing the sector.

It is unclear whether Moscow will provide more details to Putin’s offer while in the meantime, Kyiv has suggested that the prospect of a deal with the U.S. on Ukrainian minerals is still possible.

Konstantin Sonin, a Russian-born economist and Putin critic who is a professor at the University of Chicago, told Newsweek that any deal are not like contracts between private firms and so if it was not good for Ukraine in the future, “it could be unsigned in a matter of minutes.”

He said whatever Ukraine sign, it would need to provide certain security guarantees from future Russian aggression.