Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Russian lawmakers on Wednesday approved a plan to increase taxes for some mining and oil companies as Moscow seeks to plug a budget gap left by lower oil prices and the covid-19 pandemic.
Russia announced the plan, which is expected to bring in 340 billion roubles ($4.4 billion) a year, this month against the backdrop of a falling rouble and expectations of three years of budget deficit.
The changes will triple the mineral extraction tax (MET) on metals and fertiliser producers, scrap a zero MET on high-viscosity oil and remove a lower rate of MET for mature oilfields.
In the third and final reading, the Duma lawmakers backed tax changes for oil companies, but reduced the burden for Gazprom Neft and Tatneft compared with the first reading.
The companies will each get tax breaks of up to 1 billion roubles ($12.8 million) per month, according to documents published on the parliament’s website.
The lawmakers also backed tax breaks for certain oilfields in Western Siberia, the heartland of Russia’s oil industry, with energy champion Rosneft seen as the main winner.
Rosneft will get mineral extraction tax relief in 2021 at the Priobskoye oil field of 45.960 billion roubles. For the northern Vankor field the tax breaks are seen at 36.409 billion roubles.
The tax breaks depend on the oil price. For Priobskoye, they are triggered if the oil price exceeds the breakeven level set in the country’s budget, or $43.3 per barrel for 2021.
The final reading also excluded new mining projects, protected by special investment agreements with the government, from the tax hike.
($1 = 77.9300 roubles)
(By Polina Devitt, Vladimir Soldatkin, Olesya Astakhova and Darya Korsunskaya; Editing by Jason Neely and Kirsten Donovan)
Comments