Moscow In Talks With Aluminium Firms On New Mineral Extraction Tax

Moscow In Talks With Aluminium Firms On New Mineral Extraction Tax

Several sources with knowledge of the situation told Reuters this week that talks between the Russian government and producers of aluminium and other metals and fertilizers have yet to yield a consensus on how best to implement Moscow’s new tax structure on the commodities.

Half a dozen separate sources told the wire service said that the meeting, which took place on Wednesday, was focused upon establishing a metal extraction tax (MET) on aluminium, bauxite, and other metals and fertilizer producers based upon global prices for the commodities.

The Russian government previously imposed a temporary import tax on aluminium, copper, nickel, and steel to be collected for the last five months of the year. Estimates of the revenue generated by the tax are at US$2.3 million, which Moscow justifies as a method to “accumulate part of the profits from these superfavourable market conditions.”

“The finance ministry still seems to tend towards raising the MET on a ‘fair’ basis – a flexible rate that takes revenue and the global prices into account,” relayed a source to Reuters who was present at the meeting. The source went on to say that no calculations have been announced as yet.

“The business proposed leaving the MET as it is and basing a ‘fair’ tax system on profits or free cash flow,” continued the anonymous source.

For its part, producers feel good at the moment regarding the direction of the talks.

“It seems that the government representatives have listened to us carefully. Whether they have heard us will be revealed in the near future. But the fact that the dialogue has finally taken place is certainly a positive development,” said Russian steel producer Severstal in a related statement.

Sources told Reuters that Prime Minister Mikhail Mishustin would make the final decision upon receiving the finance ministry’s recommendation.