Russia considers measures to tap mining profits once export tax ends
Russia is considering longer-term measures to grab a bigger slice of mining companies’ profits once a temporary export tax finishes at the end of this year, according to people familiar with the matter.
The government last month announced duties of at least 15% on steel, nickel, aluminum and copper exports from August 1 -- with varying rates -- to help cool surging commodities prices and boost state coffers. It said the move would be temporary and that it would seek to develop more sustainable measures.
Officials are now mulling changes to mineral extraction taxes, with rates likely linked to raw-material prices so that levies rise when the market does, the people familiar with the matter said, asking not to be identified as the information isn’t public. That would probably replace export taxes from 2022, with a final decision taken after parliamentary elections in September. Other options of tapping mining profits may still be discussed, they said.
Countries around the world have taken steps to cool inflation in commodities and other key goods as economies plot a path out of the Covid-19 pandemic. Yet the temporary measures Russia announced in June risk altering exports if companies stockpile metal, and could see costs passed onto consumers. Raising mineral extraction taxes would probably mean producers bear most of the new costs.
“Regulating the market through a mineral extraction tax would be less painful for the metals industry and the global market, as it may be more predictable,” said Kirill Chuyko, an analyst at BCS Global Markets. The “export tax was unexpected and affected markets like aluminum, where price premiums increased.”
Russia’s Finance Ministry didn’t immediately respond to a request for comment. Major producers Polyus, MMC Norilsk Nickel and United Co. Rusal International declined to comment.
Vedomosti newspaper on July 5 reported that a new mineral extraction tax could raise 100-billion rubles ($1.35-billion) a year, and increased levies may include precious metals producers. The government has already more than tripled the tax for this year for most metals and fertilisers to help shrink a budget deficit, though coal, gold and silver were excluded from the changes.
“We are ready for dialog with regulators in order to find a solution that will provide the industries with confidence in the future and reduce the risks related to loosing export markets,” Andrey Leonov, government relations director at steelmaker Severstal and a vice president at a lobby group for the top producers.
Comments
The
content
you are trying to access is only available to subscribers.
If you are already a subscriber, you can Login Here.
If you are not a subscriber, you can subscribe now, by selecting one of the below options.
For more information or assistance, please contact us at subscriptions@creamermedia.co.za.
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation