Russia may peg tax on mining firms to global metals prices in 2022 to protect sector from price spikes

Russian authorities are mulling the idea of pegging a mineral extraction tax (MET) levied on metals producers to the global price of their products as soon as next year, according to Deputy Finance Minister Aleksey ​Sazanov.

The measure will reportedly allow the withdrawal of the super-profits the industry commonly generates when global prices for the produce spike.

“There’s an idea that some excess profit should be withdrawn in the period of a surge in prices caused by the commodity ‘super-cycle,’” the official said. “We are talking about tying the MET rate to the price of the product.”

Sazanov said the commodity super-cycle was unlikely to extend beyond 2022. The uptick, in his view, would be mainly attributable to the ending of lockdowns across much of the world.

“After full demand, saturation occurs and we can expect the completion of super-cycles,” he said.

In a broader attempt to protect the country’s defense and construction sectors from a further increase in raw-materials costs as metals prices rise globally, the Kremlin has introduced new export taxes for steel, nickel, aluminum, and copper, which came into effect on August 1 and will be operational until the end of the current year. The measure is set to maintain domestic prices for metal products amid the worldwide prices spike.

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