Russian Ministry of Finance is considering the possibility of increasing the Mineral Extraction Tax (MET) on coal production. This measure will significantly increase the tax burden on coal industry amid falling prices on the international market, which makes export of Kuzbass thermal coal unprofitable in certain directions.
The authorities considered increasing MET as early as last year, but the initiative was postponed due to the introduction of export duties, canceled by the end of 2023 following the request of the Ministry of Industry and Trade.
The tax burden on coal miners has been expanded several times in recent years. Starting from the beginning of 2022, MET on coking coal was linked to international quotations and amounted to 1.5% of the average SGX TSI FOB Australia Premium Coking Coal index instead of the previous flat rate of RUB 57/t.
In 2023, MET was raised for anthracite, coking and steam coal to 380 RUB/t, and in autumn of the same year all coal exports were subject to a 4-7% duty linked to the USD/RUB exchange rate.
The additional increase in MET raises concerns, given the regular increase in Russian Railways tariffs, higher production costs, freight and transshipment rates, as well as falling indices on the international coal market.
In 2023, coal production in Kuzbass fell to 214.2 mio t (-9.4 mio t or -4.2% y-o-y), and exports dropped to 114 mio t (-6.2 mio t or -5.2% y-o-y).
