Russia’s mining and metals stocks are facing a sharp sector-wide selloff driven increasingly by dividend suspensions, heavy capital spending, high interest rates, debt and regulatory uncertainty, rather than commodity prices alone.
The MOEX Metals and Mining Index closed at 3,608.23 on July 16, down 30.7% in one month and 40.3% over the past year. The broader MOEX Index fell 18.8% and 27.2% over the same periods, highlighting the mining sector’s significant underperformance. Investors are increasingly applying a risk discount to Russian producers of gold, aluminium, nickel, copper, coal and diamonds, reflecting sanctions, a strong rouble, expensive borrowing and uncertainty over shareholder returns.
Polyus loses dividend appeal as Sukhoi Log absorbs capital
The sharpest reaction followed Polyus, Russia’s largest gold producer, announcing on July 8 that it plans to recommend suspending dividends until 2030 to fund major development projects. The stock fell 23.9% in one session as investors reassessed the value of future shareholder distributions.
Polyus remains highly profitable. Revenue reached US$8.7 billion in 2025, while EBITDA was approximately US$6.35 billion, despite production declining to around 2.5 million ounces. The company expects 2.5-2.6 million ounces of gold production in 2026 and plans capital expenditure of US$2.2-2.5 billion, much of it directed toward the massive Sukhoi Log project.
Sukhoi Log is expected to reach full production in 2029 and could help push Polyus’s output toward 6 million ounces annually by 2030. The growth potential is substantial, but investors must now wait several years for the expected production increase while accepting construction, cost and execution risks. The previously approved 29.05-rouble first-quarter dividend is still expected to be paid in August, but dependable future distributions have effectively disappeared from the near-term investment case.
Nornickel remains relatively resilient
Nornickel offers a stronger operating profile than many Russian mining peers, although its dividend outlook remains uncertain. The company expects ore extraction in the Norilsk district to exceed 17 million tonnes in 2026, potentially setting a record. Higher ore extraction does not automatically mean higher refined-metal production. Nornickel also expects a global palladium surplus of around 300,000 ounces this year.
The company paid no dividend for 2025, extending the suspension of a historically important source of shareholder income.
Still, Nornickel remains financially stronger than many peers. Net profit increased 36% to US$2.47 billion in 2025, while adjusted free cash flow reached about US$1.5 billion. Its exposure to nickel, copper, palladium and other metals also provides greater diversification. A sustained share-price recovery will likely depend on stronger free cash flow after capital expenditure and a credible path toward dividend restoration.
ALROSA remains trapped in the diamond downturn
ALROSA faces particularly difficult conditions as the global diamond market struggles with weak demand and high inventories. The company reduced production by approximately 10% in 2025 to 29.8 million carats and expects another decline to 25-26 million carats in 2026. No dividend was approved for 2025.
Sanctions, weak demand and elevated inventories continue to pressure the company, while Russia is also considering duties on certain rough-diamond exports. Supply reductions by international producers, including De Beers, could eventually help rebalance the market, but they currently demonstrate the severity of the downturn rather than confirming a recovery. ALROSA’s prospects therefore depend heavily on higher rough-diamond prices, lower inventories and stronger jewellery demand, particularly in China.
Coal producers face prices, currency and debt pressure
Russian listed coal producers are dealing with a difficult combination of weak realised prices, a strong rouble, high transport costs and expensive financing. Raspadskaya reported negative EBITDA of 16.6 billion roubles in 2025, while revenue fell 26% to 119.2 billion roubles. The company recorded a net loss of 53 billion roubles.
International coking-coal prices have recovered from 2025 lows, but Russian producers do not necessarily receive benchmark prices because of sanctions, logistics constraints, discounts and currency effects. Mechel faces an even more serious financial challenge. Its EBITDA fell 86% to 7.7 billion roubles in 2025, while net debt reached 279.3 billion roubles. The company’s reported net-debt-to-EBITDA ratio exceeded 36 times, making Mechel particularly sensitive to interest rates and refinancing conditions. Banks have postponed some principal repayments into 2027-2030, providing temporary liquidity relief but not resolving the underlying leverage problem.
Rusal faces growing regulatory risk
Rusal is confronting problems that extend beyond aluminium prices. The company moved from an US$803 million profit in 2024 to a US$455 million loss in 2025. Although revenue increased 22.6%, cost of sales rose 32.3%, reflecting higher expenses, sanctions-related costs, currency effects and debt servicing.
A new regulatory dispute has added another layer of uncertainty. Russia’s Federal Antimonopoly Service opened proceedings over Rusal’s domestic aluminium pricing on July 15. The company is challenging the regulator’s position in court. The case could affect domestic pricing and potentially expose Rusal to a turnover-based penalty. As a result, the company increasingly looks like a regulatory and restructuring play rather than a straightforward bet on aluminium prices.
Smaller gold producers offer mixed opportunities
Among smaller producers, Seligdar has delivered a more positive operating signal. The new plant provides a tangible production catalyst, although Seligdar carries greater financing and liquidity risks than larger producers. By contrast, Yuzhuralzoloto (UGC) faces substantial governance uncertainty after the Russian state seized a 67.2% stake in the company. Two attempts to auction the stake subsequently failed, leaving ownership unresolved and highlighting the growing importance of property-rights and state-intervention risk for Russian mining investors.
Interest rates and the rouble could drive the next market move
Macroeconomic conditions will remain crucial. The Bank of Russia’s key interest rate stands at 14.25%, while the official exchange rate for July 17 was 78.3181 roubles per US dollar. Lower interest rates would benefit mining companies by reducing borrowing costs and increasing the present value of future earnings. The impact could be particularly significant for heavily indebted companies such as Mechel. Management has estimated that every one-percentage-point reduction in the key rate could improve annual cash flow by approximately 2 billion roubles.
A weaker rouble would also generally support exporters because commodity revenues are linked to foreign currencies while many operating costs are denominated in roubles. Currency depreciation would simultaneously increase the cost of imported equipment and machinery.
Russian mining stocks now require a higher risk premium
The recent selloff could produce sharp technical rebounds if interest rates fall, the rouble weakens or commodity prices strengthen. But a sustainable recovery will require more than favourable commodity markets.
Nornickel appears relatively well positioned because of its diversified metals portfolio and cash-generation capacity, although its lack of dividends remains a weakness.
Polyus retains significant long-term growth potential, but its investment case now depends heavily on the successful development of Sukhoi Log and future production growth.
Seligdar offers an immediate production catalyst, while Rusal remains exposed to regulatory risks. ALROSA, Raspadskaya and Mechel continue to face difficult industry and financial conditions, while UGC carries elevated ownership and governance risk.
For investors, Russian mining stocks have therefore become less of a pure gold, copper, nickel, palladium or aluminium price play and more a bet on balance-sheet strength, capital allocation, regulation and political risk. The decisive catalysts will be sustainable free cash flow, disciplined capital spending, lower financing costs and, most importantly, a credible return of dividends. Sanctions, settlement restrictions and the ability of international investors to access or repatriate capital must also be assessed separately. In the current environment, regulatory and geopolitical risk can outweigh even strong commodity fundamentals.
