0645GMT//Azerbaijani arrests Russian journalists; Russian coal mine closes; Iran wants to buy Russian Caspian Sea port
AZERBAIJAN ARRESTS RUSSIAN "JOURNALISTS": Police in Azerbaijan raided the office of the Kremlin-sponsored Sputnik news agency on Monday, intensifying a conflict between Russia and Azerbaijan. Two Sputnik journalists were arrested for spying. The Kremlin responded by calling in Azerbaijan's ambassador. (COMMENT: The arrests follow a raid by Russian police on Friday in Yekaterinburg in which two Azerbaijani men were killed. Azerbaijan-Russia relations have fractured since the shooting down by Russian air defence systems of an Azerbaijani airliner on Christmas Day. Azerbaijan has become an important cog in the Kremlin's North-South Transport route to Southeast Asia. Azerbaijan tried to close the Sputnik office in Baku earlier this year.)
COAL MINE CLOSES: A large Russian coal mine has suspended operations because it has run out of cash. The Interfax news agency reported on Monday that the Shakhta Spiridonovskaya coal mine in Kemerovo Region, Siberia, had stopped work in June because it had "no funding". Around 900 workers have been laid off without pay, Interfax reported. (COMMENT: Russia's coal mining sector is in crisis. Mines that support cities across the country are closing. The regional head of Kemerovo, Russia's coal mining centre, has warned that 20 more coal mines are on the brink of closing. There are roughly 150 coal mines in Kemerovo. The Kremlin announced more state support for coal mines in June but it was considered a weak package. Coal mines are facing rising costs as well as a loss of overseas markets. This is a major problem for the Kremlin as coal mining is one of the cornerstones of its economy, employing hundreds of thousands of people.)
COAL MINE DEFERS TAX PAYMENT: Mechel, a large Russian producer has become one of the first coal mining companies in Russia to be granted a deferral on a massive tax bill that it owes the central government. It will now have another three years to pay tax and social security bills of 13 billion roubles ($166 million). Even so, the CEO of Mechel said that the outlook for the industry was "grim" and that sales were down by another 25% this year. (COMMENT: Analysts and coal mining executives have called the collapse in the sector, "the worst since the 1990s". For Russians, the post-Soivet Union 1990s was a time of serious economic decline and chaos.)
MANUFACTURING OUTPUT CONTRACTS: Russia's manufacturing sector output contracted by its sharpest amount in June since March 2022, immediately after the Kremlin's invasion of Ukraine, S&P Global Purchasing Managers' Index reported. It said that Russia's PMI score measured 47.5 in June, down from 50.2 in May. A score below 50 shows a contraction. (COMMENT: This is more bad news for Russia's civilian economy which could tip into a recession. The pace of job losses in Russian industry is the fastest since April 2022.)
TAXES ON DRIVERS MAY RISE: To plug gaps in the state budget, Russia's government has proposed increasing fees for drivers registering new cars and driving licences. (COMMENT: These proposals show how desperate the Kremlin is to claw in more revenue. The car industry is already lobbying against these proposed new taxes.)
METAL INDUSTRY WOES: Chelyabinsk Electrometallurgical Plant (CHEMK), the largest producer of ferroalloys in Russia, is putting 1,200 admin and management staff on a four-day week from Sept. 1 to save costs. It said that "excessive strength of the Russian rouble and "unfavourable" conditions in the global ferroalloy market have hit demand for its products. (COMMENT: The plant was nationalised in 2024 as part of the wartime reorganisation of Russia's industry, so its problems are now the Russian government's problems.)
BANK PAYS MASSIVE DIVIDEND TO KREMLIN: Sberbank, Russia's largest lender, on Monday approved a record dividend payout of 786 billion roubles ($10 billion), more than half its total profit, to help fund the Kremlin's war in Ukraine. The Russian government owns a majority stake in Sberbank. It has ordered majority-owned government companies to pay large dividends. (COMMENT: Dividends from profitable companies have provided an important source of cash for the Russian government since the start of its war in Ukraine. Sberbank reported record profits in 2024 because of a growth in its loan portfolio. The Kremlin's insistence that profitable government-linked companies give away half of their profits is creating a weakness in the Russian economy.)
IRAN WANTS TO BUY CASPIAN SEA PORT: An Iranian company, Nasim Bahr Kish, has offered to buy the 46.3% stake in Russia's Astrakhan Caspian Sea port that it doesn't already own, according to reports in the Russian media. (COMMENT: Astrakhan is the main port used to transfer Iranian drones and missiles to Russia. It is also the main port for timber, grain and oil supplies sent from Russia to Iran. Iran may want to secure the viability of the port, considered Russia's largest on the Caspian Sea.)
NEWS MATRIX:
Four important stories on the News Matrix today. The most surprising is that Iran wants to buy 100% of Russia's largest Caspian Sea port. The continued fracturing of Russia-Azerbaijan relations is important to watch. The economic and business news coming from Russia highlights the Kremlin's dire prospects.