Berlin Happy is whoever has them: The exporters of raw materials that are currently in great demand. And Russia has plenty of it. Whether steel, aluminum, iron ore, platinum, copper, gold or nickel – between Kaliningrad and Kamchatka there are tons of raw materials that the country exports. Steelmakers, mining companies and smelting companies have been earning splendidly so far because of the ongoing raw material super cycle.
The downside: The sharp rise in world market prices for metals and other raw materials are also making the huge infrastructure projects of the gigantic empire more expensive. And so the Russian government has decided on special tariffs with which the economic extra profits of the metal exporters are to be skimmed off and construction projects to be subsidized.
From August 1 to the end of the year, Russian metal exporters have to pay special tariffs: $ 115 to $ 150 per ton of exported steel, $ 2,321 for nickel, $ 126 for copper and $ 254 for aluminum.
The Russian state wants to earn the equivalent of 2.2 billion dollars, said First Vice Prime Minister Andrei Belousov. He recently accused his country’s metal corporations of “shitting” the state by keeping the huge extra revenue for their products in the current commodity super cycle on their own. “You understand, of course, that you have to pay it back,” he threatened a few weeks ago and now took action. However, due to the special tariffs on exports, only “an insignificant proportion” of 20 to 25 percent of the special profits would be skimmed off, according to Belousow.
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“In the five months of this year, the export prices for ferrous metals rose by 30 percent compared to the previous year and for non-ferrous metals by 50 percent,” said Minister of Economics Maxim Reshetnikov. The rise in world market prices leads to higher prices for metal products in the domestic market, and “so there is an increase in the cost of building plants”. The income is to flow, among other things, into the expansion of the Trans-Siberian Railway.
Russian corporations react indignantly
“The introduction of the tariff is not a punishment for metallurgists”, said Belousow and justified the project with the protection of domestic consumers from “what is happening now on the world markets”.
But Russian industrialists, who are already offering bulk buyers of metal products discounted supply contracts, are in a storm: The punitive tariffs are a “dead end,” said Vladimir Potanin, President and co-owner of Norilsk Nickel. “An increase in the export tariffs for metals, which have risen in price, only makes our companies more vulnerable and less competitive compared to foreign companies,” said the head of one of the world’s largest platinum and palladium producers.
Alexej Mordaschow, majority owner of the steel company Severstahl and major shareholder in the travel company Tui, even warned of the impending price increases for steel. Foreign analysts would already “thank our government for such a gift to the European metallurgists,” said Mordashov. They also stated that world prices for steel “will only increase as a result of this initiative”. Russian companies, on the other hand, have to fear that their products will have more difficult access to global markets.
More: Commodities Super Cycle – These countries are the big winners.
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