Page 64 - UKRRptJul21

Ukraine’s parliament might set the highest mineral resource royalty rate at 10% for iron ore mining companies, according to a June 2 law draft. The 10% rate will apply if a CFR China index for fines with 62% iron content averages above $200/t for the payment month. If the index is between $100/t and $200/t, a 5% rate will apply. For index monthly averages below $100/t, a 3.5% rate is proposed. The June law draft also introduces an adjustment coefficient of 0.9x for iron ore mining rent payments. Recall, in April media reported Ukrainian government’s intentions to set the highest royalty rate at 16% if the CFR China index is above $180/t. In March, media reported plans to set the rate at 5% flat. The royalty payment base in the June law draft will change to the value of the 62% CFR China index itself, the same as what was reported in April and March. Presently, the base is essentially the cost of iron ore mined before enrichment and pelletizing, and amounts to $20-30 per ton of the final goods. The current rate is 12% for a price index for 58% iron fines CFR China above $70/t and 11% otherwise.
Prices for ore and metal products have peaked, Yury Ryzhenkov, general director of Metinvest, Ukraine’s largest integrated metals company, told reporters on June 23 at a press conference marking the company’s 15th anniversary. “Prices peaked at the end of May-June,” he said. “Now we are already seeing a decline in the market price for ore and metallurgical products. Most likely, the decline in prices for metallurgy will continue in the coming months.”
64 UKRAINE Country Report July 2021 www.intellinews.com