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between citizens and government agencies; technological breakthrough on renewing critical sectors of the economy; and state for citizens on making the government more responsive to citizens’ needs.
Work already began on most of the projects during the summer. Results will be evaluated in 2024 and again in 2030. Until 2024, the projects will cost RUB4.6 trillion ($64bn).
However, Prime Minister Mikhail Mishustin emphasized that the vast majority of this financing will come from resources already budgeted, funds from private investors, and money from state-owned companies.
This means that “new” costs for the initiatives will only amount to RUB740bn ($10.3bn) by 2024. After 2025, the initiatives are predicted to add 0.3% to GDP annually, a goal that Deputy Director of the HSE Development Center Institute Valery Mironov says could only be reached if the projects are “super effective”.
The new excise and MET for Russia’s steel and mining industry is expected to generate RUB522bn over 2022-24.
The new taxes will likely add $15-19/t to production costs for pig iron, although domestic steel producers and miners should be able to pass that marginal increase on to their customers, we believe. We also note that the new excise and updated MET are based on realistic median-cycle pricing expectations.
Russia’s Ministry of Finance (MinFin) is budgeting for RUB522bn in tax revenue from the new mineral extraction tax (MET) and other excises over 2022-24, Interfax reports. Of the announced amount, the new excise on steel production should account for RUB179.5bn, while the new MET should bring in RUB114.8bn from iron ore producers and RUB27.7bn from coking coal producers.
The new 2.7% excise on steel production is expected to generate RUB179.5bn over 2022-24. The tax should be pegged to the slab price (FOB, Black Sea) and be applied to all steel produced in Russia, including EAF (electric arc furnace) steel. Based on the stable steel production outlook for 2022-24, we estimate that the new excise will translate into an extra $11-12/t in taxes for Russian steel producers.
Coking coal production is expected to face an MET of 1.5% benchmarked to HCC (FOB, Australia). The new MET should be applied to all coking coal production and is expected to bring in RUB27.7bn over 2022-24. Based on the stable outlook for coking coal production, we estimate that Russia’s coking coal sector will pay an additional $1.1-1.5/t in MET over 2022-24. We are surprised by the choice of benchmark, as most Russian coking coals are classified as either semi-soft coking coal (SSCC) or semi-hard coking coal (SHCC).
80 RUSSIA Country Report November 2021 www.intellinews.com