They will still pile on coal – Newspaper Kommersant No. 177 (7378) of 09/26/2022

The Ministry of Finance decided to ease the burden on the steel sector, which has lost its marginal European market and is trying to find new export directions. The cut-off price for levying an excise tax on steel will be increased to 30,000 rubles. per ton instead of the previous $300 retroactively from 1 August. But at the same time, the load on the coal sector will be increased – in addition to the introduction of export duties, the mineral extraction tax on coal will also increase, which will allow collecting an additional 30 billion rubles from the industry. in year. This creates new risks for Russian coal companies amid prospects for lower export prices.

The Ministry of Finance has prepared amendments to the Tax Code, which correct the fiscal burden on the mining and metallurgical sector, Kommersant’s sources say. The adjustment concerns metallurgists and coal miners.

First, the Ministry of Finance is adjusting the cut-off price for levying excise duty on liquid steel from August 1, 2022.

Now the excise tax is reset to zero if the average export price of a slab falls below $300 per ton, which is about 18,000 rubles at the current exchange rate. Now the cut-off price will be 30 thousand rubles. In August, according to the FAS, the price of a slab was $433 per ton (about 26.1 thousand rubles). According to the Ministry of Finance, due to this change, the budget this year will miss 29.4 billion rubles. income. For the period from 2023, the Ministry of Finance expects excise taxes in the amount of 38 billion rubles. in year.

Kommersant’s source among metallurgical companies says that adjusting the excise tax on liquid steel is an important measure, but the risks still remain, since it is not a fact that at the current cost of production of a strip of 30 thousand rubles. will be sufficient to ensure profitability. The Ministry of Finance, metallurgical and coal companies did not provide comments.

The tax burden on the coal industry is changing most significantly.

As already wrote “Kommersant”, an export duty on coal is introduced, although the exact parameters have not yet been disclosed. However, the Ministry of Finance also plans a temporary increase in the MET on coal from January 1 to March 31, 2023: rates for anthracite, coking coal and thermal coal will increase by 380 rubles. per ton. This will attract an additional 30 billion rubles to the budget. in year. Thus, rent taxes on the mining and metallurgical complex, including the mineral extraction tax, export duties on coal and fertilizers, as well as excise on steel, will amount to 270 billion rubles. in 2022, 217 billion rubles. in 2023, 226 billion rubles. in 2024 and 232.2 billion rubles. in 2025.

The Russian authorities did not give forecasts for the level of coal production in 2023. The negative forecast of the Ministry of Energy, which takes into account the entry into force of a complete EU embargo on the import of coal from the Russian Federation, suggests a drop in production in 2022 by 17%, to 365.1 million tons. Exports may decrease by 30%, to 156 million tons. Kuzbass, the main mining region, may reduce production by 12%, to 215 million tons of coal, Interfax reported on September 22, citing Oleg Tokarev, Minister of the Coal Industry of Kuzbass. Already in August, production in Kuzbass fell by 11.2% in annual terms, to 18.2 million tons. In August, Kuzbass shipped 17 million tons by rail, which is 11% less than a year ago.

The profitability of coal companies is already under attack, and next year the situation will worsen against the backdrop of an expected decline in world coal prices. Kommersant’s interlocutors in the coal market say they continue to sell coal for export at a significant discount. At the same time, the cost of production in ruble terms increased significantly (in some cases by more than 60%) due to higher logistics costs, as well as prices for fuel and explosives. According to Renaissance Capital estimates, the introduction of an export duty on coal in the range of 5-10% in the event of a drop in prices for hard and semi-soft coking coal FOB Australia to $160 and $110 per ton, respectively, will reduce Raspadskaya’s net profit by 18-36%, ” Mechel” — by 10–23%. The Fitch Ratings forecast assumes a halving of the price of coking coal in 2023, to $200, while thermal coal from Australia could fall in price by 33%, to $240 per ton.

Evgeny Zainullin, Dmitry Kozlov