PRESS: Finance Ministry may raise MET on coal in Oct–Dec

MOSCOW, Apr 10 (PRIME) -- Russia’s Finance Ministry plans to raise the mineral extraction tax (MET) on coal production in October–December instead of introduction of export duties if the coal companies demonstrate good financial performance since the beginning of 2023, Kommersant business daily reported on Monday citing a ministry spokesperson.

“We continue monitoring the situation in the coal industry. If the first quarter ends with great financial results, we will suggest an increased MET for the fourth quarter instead of introduction of export duties,” the spokesperson told Kommersant.

The Russian government has raised coal taxes several times over the past years. For instance, the tax on coking coal previously was set at 57 rubles per tonne, but at the beginning of 2022, the government tied the tax to the international coal prices, with the rate set at 1.5% of the average coal price as per the SGX TSI FOB Australia Premium Coking Coal index.

The government also discussed imposition of an export duty if the export coal price exceeds U.S. $150 per tonne, the business daily said.

Also, the government raised the MET temporarily for January–March 2023 to 380 rubles per tonne for anthracite coal, coking coal, and steam coal, but coal companies were exempt from the one-time contribution to the budget that all other large companies have to pay, Kommersant reported.

Coal companies did not comment on the Finance Ministry’s plans. Given the fact that almost all of them do not disclose their financial reports, one could assess the financial situation of the companies only judging by the rare statements and data of the Federal State Statistics Service, the business daily said.

Sergei Grishunin from the National Rating Agency told Kommersant that the financial situation in the sector is not great because the coal prices in Europe fell to $135–140 per tonne from record highs of 2022, while the prices in China stand at around $160 per tonne.

At the same time, the cost of freight and insurance have grown, and the current geopolitical situation forces companies to introduce additional discounts, Grishunin said, adding that there were no prospects for the MET on coal to grow taking into account the fact that coal companies also have to repay debt.

(82.3988 rubles – U.S. $1)

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