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Russia's Ministry of Finance to reduce tax on PGM producers

25 september 2023

The Ministry of Finance of the Russian Federation has developed a draft amendment to the Tax Code on platinum group metals (PGM) production, as reported by TASS with reference to the press service of Boris Titov, Commissioner under the President of the Russian Federation for the protection of the rights of entrepreneurs.

The amendments imply a reduction in the rental coefficient used in calculating the tax on the extraction of concentrates containing PGMs from 3.5 to 1. The project is currently undergoing approval.

It should be noted that the rental coefficient for calculating the tax on the extraction of certain minerals was increased from 1 to 3.5 in June 2021. At the same time, an exception was made for concentrates containing gold, for which a coefficient of 1 was applied.

In addition, the coefficient was reduced for projects developed under the agreement on the protection and promotion of capital investments, as well as for deposits with a degree of depletion of less than 1%.

As Titov explained, after the introduction of the coefficient, platinum mining enterprises faced the problem of unprofitability of production. In particular, the company CJSC Kosvinsky Kamen, which is mining gold-platinum concentrate in the Sverdlovsk region, announced the shutdown of production at enterprises due to the unprofitability of production.

"The price of gold is about twice as high as platinum from year to year. However, under the new conditions, the tax burden for subsoil users extracting platinum and platinoids concentrate turned out to be several times more significant than for their colleagues extracting concentrate with a predominant gold content," the business Ombudsman explained.

"And if, when introducing the rental coefficient, the task was set to bring the mining rent for individual ores to the global average of 2-3%, then platinum miners had previously exceeded 6%, and with the use of an increasing coefficient it reached almost 22% of revenue."

Alex Shishlo for Rough&Polished