Weekly Intelligence Report on the Russian Mining Sector: January 26 - February 1, 2026

Bottom Line

Investors should increase exposure to gold mining companies, particularly in the Republic of Sakha (Yakutia) and Chukotka, where record results have been achieved, while reducing weight in shares of metallurgical enterprises exposed to rising environmental payments and declining domestic demand. Note the structural shift in the coal industry towards Asian markets and the associated logistical opportunities, and monitor opportunities in technological innovation and junior exploration.

Key Developments

1. Record Gold Production in Yakutia and Chukotka — The Republic of Sakha (Yakutia) set a historical record for 2025, producing 56.9 tonnes of gold, double the 2018 figure and 2% higher than the 2024 result. The Chukotka Autonomous Okrug maintained production at 24.5 tonnes, with 64.2% provided by the "Areal" group (formerly Highland Gold). Portfolio implication: Increase the portfolio share of leading gold miners in these regions, such as "Polyus" (via "Polyus Aldan"), "Seliger", "UVGC", and "Areal", considering their operational efficiency, reserve growth, and potential against the backdrop of high global gold prices and favorable geological foundations.

2. Decline in Nornickel's Production of Key Metals in 2025 — The company published operational results, showing a decline in nickel production to 198.5 thousand tonnes (-3.2% y/y), copper to 425.3 thousand tonnes (-1.7% y/y), and palladium to 2.725 million ounces (-1.3% y/y). However, growth was recorded in the fourth quarter, indicating a possible recovery. Portfolio implication: Exercise caution regarding Nornickel shares in the short term due to operational challenges; consider strategic accumulation on corrections for long-term investors, anticipating the effects of modernization and favorable market conditions for nickel and palladium.

3. Sharp Increase in Environmental Fees for Industry — The Russian Ministry of Natural Resources has approved an increase in payments for negative environmental impact for metallurgical companies by 9–20 times, and for gold mining companies by 15–25 times by 2030. The base rate will increase gradually, starting in 2026. Portfolio implication: Reassess financial models of companies with high environmental risks, especially in ferrous and non-ferrous metallurgy; prioritize those already implementing "green" technologies and with low specific emissions, and reduce exposure in the coal sector and steel plants without clear modernization programs.

4. Structural Shift in the Coal Industry and State Support Measures — Coal mining is shifting to the East for supplies to Asia: from 2018 to 2025, production in the Far East grew by 72%. Deputy Prime Minister Alexander Novak instructed the development of additional logistical and financial support measures for the industry. Portfolio implication: Consider investments in coal companies focused on Asian markets (e.g., "Yakutugol", planning to increase production by 1.5 million tonnes per year), and in logistical assets in the Far East, such as port operators and railway companies, which will benefit from state infrastructure projects.

5. Active Development of Junior Exploration and Technological Innovation — A demo day of the First Junior Accelerator was held, systematically connecting startups with major mining companies ("Nornickel", "Polyus", UMMC) and investors. Concurrently, "KMA Ruda" set a record for daily iron ore concentrate production (9,825 tonnes), and "Severstal" and "Innotech" signed an agreement to implement a robotic complex. Portfolio implication: Monitor venture opportunities in exploration through specialized funds or direct investments in partnership with major players; increase exposure to companies implementing innovations to reduce costs and improve efficiency, such as "KMA Ruda" after successful modernization and LNG equipment manufacturers (BELAZ).

Sector Pulse

Risk Watch

• Risk of Tightening Regulatory and Tax Pressure — Increased environmental fees, the possible introduction of an excise tax on steel imports at the request of metallurgists, and the continuation of the wave of nationalization of strategic assets (as in the cases of "Terney Zoloto" and "Dalpolymetal") could significantly reduce the profitability and investment attractiveness of the sector. A trigger could be the publication of specific legislative initiatives or government decisions. Probability: High. Impact: High.

• Operational and Market Risks for Key Producers — The decline in production at Nornickel for key metals and a 17.7% drop in ferrous metal loading on Russian Railways in 2025 indicate structural problems in metallurgy and demand volatility, which could negatively impact financial results. An additional factor is dependence on the Chinese market for coal and metals. Probability: Medium. Impact: High.

• Geopolitical and Logistical Challenges — The shift of coal mining to the East for supplies to Asia requires large-scale infrastructure investments, while the risk of changes in Chinese trade policy or logistical disruptions due to weather conditions or capacity shortages persists. Triggers could be data on coal stocks in Asian ports or statements from Chinese authorities. Probability: Medium. Impact: Medium.

Outlook

Key events and indicators to monitor next week:

• Publication of Nornickel's full financial results for 2025 and the management teleconference, which will provide production and CAPEX forecasts for 2026.
• The expected decision by the Ministry of Industry and Trade on introducing an excise tax on steel imports and further steps to implement logistical measures for the coal industry announced by Deputy Prime Minister Novak.
• Monitoring global prices for gold (especially in connection with record production in Russia), copper, and coal, with a focus on the divergence between the European (price above $102/t) and Chinese markets.
• Updates on the Agylkinskoye deposit project in Yakutia, where "Polymetal" and "Sakhavol'fram" are developing a tungsten-copper complex, and possible news on securing financing or approval from local communities.

Positioning consideration: Increase weight in the gold mining subsector, focusing on companies with low costs and strong projects in Yakutia and Chukotka (e.g., "Polyus Aldan", "Seliger"), while simultaneously reducing exposure to metallurgical assets with high environmental risks and unclear modernization prospects. Monitor opportunities in the coal and logistics sectors related to the Eastern shift, as well as in innovative companies and junior exploration projects supported by major industry players.