Russia may change tax for steel raw materials, fertilisers, Nornickel

MOSCOW: Russia may set a new mineral extraction tax (MET) linked to global prices for the country’s producers of iron ore, coking coal and fertilisers, as well as complex ore mined by Nornickel, four sources at companies familiar with talks told Reuters.

Moscow has been searching for additional proceeds for the state budget and has been concerned about rising costs of defence and state construction projects amid high inflation and increasing prices for metals.

The talks to fine tune the formulas for each product took place at the finance ministry on Thursday, but the final decision on the proposal will be taken by Prime Minister Mikhail Mishustin, the sources added.

The finance ministry, the government, Nornickel, and the main producers of steel and fertilisers all declined to comment.

Iron ore and coking coal are raw materials for steel production. Nornickel’s complex ores contain nickel, copper and platinum group metals. It remains unclear how much the MET change would bring to the state coffers.

The producers are still trying to change the tax plan. At a meeting on Wednesday, they asked the finance ministry to leave the MET as it is and base the tax system on their profits.

Russia raised the MET for metals firms from 2021 and then imposed temporary export taxes on Russian steel, nickel, aluminium and copper that will cost producers $2.3 billion from August to December 2021.

The current talks about the new MET formulas are part of government efforts to find a permanent mechanism for metals producers to “accumulate part of the profits from these super favourable market conditions” amid high global prices.