Russia prepares to hit metals firms with $2.3bn in export taxes

Russia’s metal shipments are falling and buyers are “hesitant in the context of sanction uncertainty and escalation,” Goldman Sachs Group Inc. analysts said in a note. (Credit: Wikipedia)

Russia is preparing new export taxes for steel products, nickel, aluminium and copper which will cost their producers $2.3 billion between Aug. 1 and Dec. 31, its officials told a government meeting on Thursday.

Moscow wants to protect its defence and construction industries from further growth in raw materials costs as prices for metals rise at a global level.

“Our economy is not ready for the kind of avalanche-like shock transfer of global prices to the domestic market that we have seen over the past year,” First Deputy Prime Minister Andrei Belousov said.

“The increase in domestic prices for certain metals ranged from 60% to 100%.”

Moscow will use the August to December period, while the extra taxes are in place, to prepare a permanent mechanism to “accumulate part of the profits from these superfavourable market conditions”, the economy minister Maxim Reshetnikov said.

Taxing ferrous metals such as steel will bring in 114 billion roubles ($1.6 billion), and base metals such as nickel and aluminium 50 billion roubles, Belousov said, adding that that represents 20%-25% of the “excessive income” firms will get from a favourable market.

He said he believed the size of metals exports from Russia would remain unaffected by the tax.

The expected tax take is above Belousov’s previous estimate. He said in May that Russian metals producers could face a demand to pay 100 billion roubles in additional tax to the government for what he termed ‘screwing the state’.

Russia’s Nornickel, the world’s largest producer of refined nickel, and Rusal, the world’s largest aluminium producer outside China, as well as the main steel producers did not reply to a Reuters request for comment.

($1 = 72.2430 roubles)

(By Darya Korsunskaya, Anastasia Lyrchikova and Polina Devitt; Editing by Jason Neely and Jan Harvey)


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