“Russian Platinum” cut taxes – Newspaper Kommersant No. 209 (7410) dated 11/11/2022

Musa Bazhaev’s Russian Platinum will be able not to pay MET for 12 years from its flagship project to develop the Chernogorskoye field. The relevant amendments were proposed by the Ministry of Finance, explaining them by the effect of sanctions. As a result, the company, which is going to launch the mining and processing plant in 2024, can save at least 18 billion rubles. in year.

The government is going to propose to nullify the mineral extraction tax for Musa Bazhaev’s Russian Platinum deposits being put into operation in the Krasnoyarsk Territory. The corresponding bill prepared by the Ministry of Finance, published at regulation.gov.ru. The company intends to build a mining and processing plant and develop the Chernogorskoye deposit and the southern part of the Norilsk-1 deposit near Norilsk. Russian Platinum did not provide comments.

As the Ministry of Finance explained to Kommersant, “external restrictions of unfriendly countries in relation to Russia and Russian mining companies have led to a significant increase in the cost of equipment necessary for the implementation of investment projects.”

The ministry clarified that the zero severance tax rate is set from 2026 for 12 years with the possibility of an extension for another eight years, depending on the price situation.

At the same time, the investor is obliged to invest at least 89 billion rubles in 2023-2029, which is fixed in the investment agreement between the company and the Ministry of Finance.

Originally “Russian Platinum” planned to contribute the Chernogorsk and southern parts of the Norilsk-1 field as part of a joint venture with Norilsk Nickel Arctic Palladium. Norilsk Nickel’s contribution would be a license for the nearby Maslovskoye field. The volume of investments was planned in the amount of $15 billion, and the annual production was 120 tons of platinoids. However, SP did not take place because of the position of Rusal, the second largest shareholder of Norilsk Nickel. Now Russian Platinum intends to implement the project on its own, although it has entered into an operational partnership agreement with Norilsk Nickel. The agreement will allow Russian Platinum to use Norilsk Nickel’s transport and energy infrastructure, as well as sell nickel and copper concentrate to it at an agreed price.

VEB.RF and VTB in February 2022 issued “Russian Platinum” syndicated loan for 180 billion rubles. for the construction of the first stage of the GOK on the basis of the Chernogorsk deposit. The commissioning of the GOK was then planned for 2024. The cost of the first stage of the project is 240 billion rubles. The reserves of the Chernogorsk deposit amount to 131 million tons of ore. At the first stage, production will amount to 7 million tons of ore per year, which will be processed into copper and nickel concentrate with a high content of palladium and platinum.

Now the MET for multicomponent ores is calculated according to the formula. The final value depends on the dynamics of prices for platinum, nickel, copper and palladium on the world market, but cannot be lower than 2.5 thousand rubles. per ton of ore.

Thus, zeroing the MET will allow Russian Platinum to save at least 18 billion rubles. in year.

At the same time, Musa Bazhaev, at a meeting with Russian President Vladimir Putin in November 2019, estimated the total tax burden at that time of Arctic Palladium at 40 billion rubles. in year.

The platinum group metals market remains promising despite challenges from supply and demand this year. On the supply side, the potential disruption of Russian platinum and palladium supply chains could lead to market disruptions. On the other hand, industrial demand, especially for palladium, is weakening, including due to a decrease in car production (palladium is used as a catalyst in internal combustion engines). In May, Norilsk Nickel in its review assumed a significant increase in demand for platinum from hydrogen energy (this metal is used in electrolyzers), but it will take at least another five years for this industry to become a major consumer of platinum.

Evgeny Zainullin