On July 10, 2024, the Russian State Duma approved in the third reading a bill stipulating an increase in the mineral extraction tax (MET) for coal.
If the cut-off price is exceeded, a 10% surcharge to MET will be levied. The threshold price is set at 120 USD/t for thermal coal, 167 USD/t for coking coal, and 135 USD/t for anthracite. Also, the formula for calculating MET on coal will include prices in the ports of the Far East, North-West and South. In the initial version, the cutoff was set at 100 USD/t for steam coal and 140 USD/t for coking coal.
The surcharge will be effective from January 01, 2025. MET will not be increased for thermal coal, supplied to the domestic market.
With this initiative, the government seeks to compensate for lost revenues from the abolition of export duty, nevertheless the increased tax burden on the coal industry may adversely affect production and investments.
The authorities have not yet specified the source of quotations, which will be used in the calculation.
Amid falling prices on the international market, rising production and transportation costs, exporters are already facing losses in most export directions. In recent years, the tax burden on coal miners has increased repeatedly.
In H1 2024, coal production in Kuzbass, the main coal mining region of Russia, where high-quality material is extracted, dropped to 102.5 mio t (-6.2 mio t or -5.7% vs. January-June 2023). The total rail shipments of coal for export in H1 2024 decreased to 94.9 mio t (-10.9 mio t or -10.3% vs. January-June 2023).
Source: CCA Analytics
