The Russian government is returning export duties on coal. The new duties will be effective from March 1, 2024 to February 28, 2025. The tax will range from 4% to 7% depending on the ruble exchange rate, but will not apply at the exchange rate of less than 80 rubles per dollar. Similar duties on coal exports were in effect from October 1 to December 27, 2023, but were canceled to support the economics of coal exports.
The abolition of exchange rate duties on coal lasted only two months as the government decided to bring them back on March 01 in order to replenish the government’s budget. Meanwhile, the Finance Ministry’s proposal to increase the mineral extraction tax (MET) on coal, which originally emerged as an alternative to the export duty, remains on the table. Currently, it is unclear whether the plans to increase MET will be canceled.
The return of duties will worsen the economics of thermal coal exports being hurt by lower global market prices. Exports of thermal coal grades from Baltic and Black Sea ports may come to a complete halt resulting from the increased tax burden.
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