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called "spectacular." "In total, the border regions attracted 325,000 tourists from China, which is 45% more than in the previous year. The Primorye Territory attracted 190,000 tourists from China (up 58%), in the Irkutsk region attracted 43,500 Chinese citizens (158% more than in 2015). We are constantly expanding the geography of travel and range of offerings to meet the needs of Chinese tourists,” said the head of department Oleg Safonov in a statement. Russia appeals to tourists from China with "The Great Tea Road" and "The Red Route", said Safonov. The ministry noted the potential "red tourism" in connection with the anniversary of the October Revolution, which should affect the tourist flow from China. According to the Tourist Association "The World without Borders", last year 48% of all trips of tourists from the PRC occurred in Moscow and St. Petersburg. These cities are visited by almost 365,000 Chinese tourists, which is 40% more than last year. Women account for 60% of the tourist group, the average age of tourists was 52 years last year. The two governments signed an agreement on visa-free group tourist trips in February 2000, without visas, tourists can travel to Russia and China as part of an organized tour group from five to 50 people to up to 15 days.
9.1.10 Metallurgy & mining sector news
Minister of Finance Anton Siluanov has suggested urgently introducing Excess Profit Tax (EPT) instead of Mineral Extraction Tax (MET), according to Vedomosti, but no decision has been made. The introduction of EPT at pilot projects might lead to budget revenues decreasing RUB50-60bn ($0.8-1.0bn). And adding Rosneft’s Samotlorneftegas to the pilot projects might double the budget loss, the paper reports. The potential decrease in the pilot projects’ oil production (which is subject to EPT) from 15mmt to 10mmt is being discussed by the ministries, as well as a potential decrease in the costs threshold available for deduction when calculating the EPT base. MinFin suggests increasing MET in order to compensate for the estimated loss to the budget, while Ministry of Energy opposes the initiative. In order to collect an additional RUB50bn ($0.8bn) from the oil industry, the budget might need to increase the MET rate by RUB 104/t ($0.2/bbl), analysts calculate, implying an average 1.1% decrease in oil majors’ 2018F EBITDA. It is unclear at this point if the potential increase is in addition to that stipulated by the current tax legislation, which proposes increasing MET by RUB357/t ($0.8/bbl) in 2018. That already implied a $2.3bn withdrawal from oil majors’ 2018F EBITDA, or 3.9% on average, analysts calculate. The EPT might lead to a lack of incentive among oil companies over cost efficiency. Moreover, undermining the stability of the tax regime is generally negative for oil companies. In December, the Ministry of Economic Development suggested not increasing MET for all oil companies if EPT is implemented. It was suggested that MET might only be increased in regions with fields under EPT.
Russia’s coal producers expect an increase in coal exports of 10mn tonnes to 175mn tonnes in 2017, an expert of Energy Ministry’s Department of coal mining and peat industry Valery Grishin said on February 10. "In 2017, we expect an increase of 10mn tonnes," he said, adding that last year’s coal exports amounted to 165mn tonnes. Overall, coal production totaled 385mn tonnes in 2016.
Moody's Investors Service (Moody's) changed its outlook on the Russian steel industry to stable from negative on stabilising demand, growing consumer confidence (as indicated by PMI growth) and an anticipated return to
98 RUSSIA Country Report February 2017 www.intellinews.com