Prime Minister Mikhail Mishustin instructed to prepare and submit to the government documents on the introduction of export duties on metal products.
“I ask you to promptly prepare all the necessary documents for making decisions and, literally, urgently submit them to the government,” Mishustin said during a government meeting.
The initiative to introduce temporary export duties at a government meeting was made by the Minister of Economic Development Maxim Reshetnikov. “It is proposed to introduce temporary export duties on key products of ferrous and non-ferrous metallurgy from August 1 to December 31, 2021, that is, for five months. And during this time, we have already developed a permanent mechanism that will allow accumulating a part of the profit from this extremely favorable situation, if, of course, the situation continues in the next years, ”Reshetnikov said. He clarified that we are talking about a wide range of products: rolled products, rebar, wire, ingots, etc., as well as copper, nickel and aluminum in a low degree of processing.
Amount of duties
According to Reshetnikov, the duties will be combined and will consist of a base rate and a specific one. The base will be 15%, the specific will be calculated as the minimum rate per ton of products. “How the specific component of the duty is calculated is probably the key point. Four price corridors have been defined for ferrous metals, each of which has its own minimum cost of the duty, ”Reshetnikov said.
In particular, for pellets and other products with an estimated cost of $ 400 per ton, the minimum specific duty will be $ 54 per ton of products, for hot-rolled flat products, for rebar – at least $ 115 per ton, for cold-rolled products, wire with an approximate cost of up to $ 1,300 per ton the minimum duty will be $ 133 per ton. “And finally, stainless steel and ferroalloys are all over the threshold, which I said – $ 150 per ton,” Reshetnikov said.
According to him, the export duty for non-ferrous metals will be calculated depending on the type of metal. “Copper – $ 1226 per tonne minimum specific rate, nickel – $ 2321 per tonne, aluminum – $ 254. The calculations were made on the basis of the current pricing environment for five months of 2021, “Reshetnikov explained, noting that duties apply to exports only outside the EAEU, products will continue to be exported to the EAEU member states without duties.
Reshetnikov recalled that according to the results of the first quarter of this year, the profit of the industry amounted to 570 billion rubles, which is on average 3.5 times higher than in the same period of previous years. “According to the results of the current year, the profit of the industry, according to estimates, may amount to 2.1 trillion rubles. up to 2.3 trillion rubles, ”he said.
Issue price for metallurgists
First Deputy Prime Minister Andrei Belousov stressed at a government meeting that the introduction of duties is “not a punishment for metallurgists.” “This is part of a set of protective measures for the internal market. We must protect our domestic consumer from what is happening on the world markets now, ”he said.
According to Belousov, the duties are a temporary measure. “Its purpose is to create a source of compensation for the rise in prices for the state defense order, state investments, housing construction, road construction and a number of other construction programs,” he explained.
Belousov named the approximate amount of additional revenues to the budget due to the introduction of this duty. “This is about 113-114 billion rubles. for ferrous metals and about 50 billion rubles. for non-ferrous metallurgy products. This is an insignificant part – about 20-25% of the excess profit that companies receive from a favorable market environment, ”the First Deputy Prime Minister concluded.
Shares of the largest metallurgical companies fell on the background of news about the introduction of duties, according to trading data on the Moscow Exchange. Rusal’s quotes fell 6.51% against the close of the previous trading session to RUB 52.79. for a security (at 12:58 Moscow time). Severstal shares fell 5.66% to RUB 1,510. per security (12:59 Moscow time), Norilsk Nickel – by 4.06% to 24,414 rubles. (13:02 Moscow time), NLMK – by 4.9% to 234.78 rubles. (13:04 Moscow time), “MMK” – by 3.57% to 61.25 rubles. (13:05 Moscow time).
Since 2020, the government has been discussing the possibility of regulating prices for metal products following complaints from developers about an increase in the cost of reinforcement for construction. To stabilize prices for rolled metal products, protective duties on the export of ferrous scrap were introduced in December 2020 and increased in May 2021. At the same time, the Federal Antimonopoly Service in December proposed introducing protective duties on the export of steel products.
Earlier, Belousov spoke about the possibility of increasing the severance tax for metallurgists. According to the Federal Tax Service, the tax burden (including insurance premiums) on the extraction of fuel and energy minerals amounted to 48% in 2020, on the extraction of other minerals – 12.6%, and on metallurgical production and the production of finished metal products (except for machines and equipment) – 5.4%, said earlier Levon Hayrapetyan, head of the Tax Policy Department of the CSR. In the metallurgical industry, tax deductions are not linked to the dynamics of prices for ore and steel, the investment strategist of Arikapital Sergei Suverov told Vedomosti earlier.
On May 31, Belousov, in an interview with TIme, said that metallurgists “pushed on” the state by about 100 billion rubles. in terms of state investments and state defense orders. Belousov then promised that the government would find a way to return the excess profits received by metallurgical companies to the budget. According to him, against the backdrop of the coronavirus pandemic in 2020, metallurgists significantly increased their incomes, including due to higher prices in the domestic market following the rise in world prices.
Vladimir Potanin, president and co-owner of MMC Norilsk Nickel, then said that metallurgical companies could enter into direct agreements at subsidized prices with developers in order to reduce pressure on housing prices. On June 1, the Ministry of Industry and Trade and the heads of Russian metallurgical companies held a meeting at which they agreed to provide the executors of the state defense order with metal products at the price fixed in the contracts, as well as to conclude direct long-term contracts with metallurgists on state construction projects with formula pricing, the ministry’s press service reported.