Russian mining and metals shares have significantly underperformed the wider equity market as investors focus on dividends, capital spending, debt, regulation and currency conditions rather than commodity prices alone. The MOEX Metals and Mining Index closed at 3,608.23 on July 16, down 30.7% over one month and 40.3% over one year. The broader MOEX Index declined 18.8% and 27.2% over the same periods.
Polyus shifts focus to long-term investment
Polyus, Russia’s largest gold producer, triggered a sharp sector selloff after announcing on July 8 that it intended to recommend suspending dividends until 2030 to finance major development projects. Its shares fell 23.9% during the session. Polyus generated $8.7 billion in revenue and $6.35 billion in EBITDA in 2025, with production of approximately 2.5 million ounces. For 2026, output is expected at 2.5–2.6 million ounces, while capital expenditure is forecast at $2.2–$2.5 billion.
Much of the investment is linked to Sukhoi Log, which is expected to reach full operation in 2029 and potentially lift group production towards 6 million ounces annually by 2030. The previously approved first-quarter 2026 dividend of 29.05 roubles per share is due in August. Beyond that payment, shareholder distributions face a prolonged interruption.
Nornickel maintains relative resilience
Nornickel expects ore extraction in the Norilsk industrial district to exceed 17 million tonnes in 2026, potentially setting a record. However, guidance points to weaker production of several refined metals, while the global palladium market is expected to show a surplus of approximately 300,000 ounces. The company paid no dividend for 2025. Net profit nevertheless increased 36% to $2.47 billion in 2025, while adjusted free cash flow reached about $1.5 billion against approximately $2.6 billion of capital expenditure. Its exposure to nickel, copper, palladium and other metals provides greater diversification than some domestic peers, although renewed dividend payments remain important for any broader rerating.
Diamond and coal producers remain under pressure
ALROSA cut 2025 production by approximately 10% to 29.8 million carats and expects 2026 output of 25–26 million carats. No dividend was approved for 2025. Weak demand, inventories and sanctions continue to affect the diamond market, while Russia is preparing duties on some rough-diamond exports. De Beers is also suspending production at its Venetia mine for two years.
Russian coal producers face weak realised prices, transport costs, currency pressure and expensive financing. Raspadskaya reported negative EBITDA of 16.6 billion roubles in 2025, with revenue down 26% to 119.2 billion roubles and a net loss of 53 billion roubles. Mechel plans production of approximately 11 million tonnes in 2026 and 15–16 million tonnes in 2027, but EBITDA fell 86% to 7.7 billion roubles in 2025. Net debt reached 279.3 billion roubles, pushing net debt-to-EBITDA above 36 times. Banks have deferred some principal repayments into 2027–2030.
Rusal faces regulatory uncertainty
Rusal moved from an $803 million profit in 2024 to a $455 million loss in 2025. Revenue increased 22.6%, but cost of sales rose 32.3%, alongside pressure from sanctions, the stronger rouble, debt-servicing costs and lower production. On July 15, Russia’s Federal Antimonopoly Service opened proceedings over Rusal’s pricing in domestic aluminium contracts. Rusal is challenging the regulatory warning in court, creating additional uncertainty over domestic pricing and potential penalties.
Smaller producers show mixed developments
Seligdar has begun pilot operations at its new Khvoynoye processing plant, producing more than 200 kilograms of gold. Production is expected to reach approximately one tonne in 2026, with eventual capacity of 2.5 tonnes annually.
By contrast, UGC (Yuzhuralzoloto) faces unresolved ownership issues after the Russian state seized a 67.2% stake and two subsequent auctions failed to complete.
Rates and currency remain key market drivers
The Bank of Russia’s key rate is 14.25%, while the official exchange rate for July 17 is 78.3181 roubles per dollar. The next rate decision is scheduled for July 24. Lower interest rates could reduce financing costs and increase the present value of future mining cash flows, with heavily indebted companies such as Mechel particularly sensitive to borrowing costs. Management has estimated that each one-percentage-point rate reduction could release approximately 2 billion roubles of annual cash flow.
A weaker rouble would generally support exporters because commodity revenues are linked to foreign currencies while many operating costs are denominated in roubles. However, imported equipment would become more expensive. Across the sector, dividend policy, free cash flow, capital expenditure, regulatory intervention, sanctions and financing conditions remain central to valuations.
