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MOSCOW, July 21 (Reuters) - Rusal risks losses on exports due to an export tax set to take effect from August to December, the Russian aluminium producer’s deputy chief executive told reporters.
The government is imposing export taxes on steel, nickel, copper and aluminium which will cost producers $2.3 billion as it aims to protect its defence and construction sectors from further cost increases as global metals prices rise.
The 15% export tax on aluminium exports, or a minimum of $254 a tonne, will cost Hong Kong-listed Rusal several hundred million dollars and may make part of its production loss-making, which could then be mothballed, Rusal’s deputy CEO Roman Andryushin said, without elaborating.
Plans by Russia to impose taxes on exports of aluminium, a vital material for transport and packaging, have fuelled a surge in spot market costs for consumers in Europe and the United States earlier in July.
Rusal will not be able to transfer the tax into most of its long-term contracts as their prices are fixed, while market conditions may also prevent it from raising the price in contracts, which technically allow such a move, Andryushin said.
“Part of export sales may be loss-making ... We will have to execute contracts at a loss,” Andryushin added.
Rusal, the world’s largest aluminium producer outside China, cut its 2020 sales by 6% to 3.9 million tonnes. It exports 77% of its production to Europe and other regions.
Higher demand from the construction sector and packaging will support growth in Rusal’s sales in Russia and neighbouring CIS countries this year, Andryushin said. He expects 2021 sales in Russia and CIS to rise by 20% to 1.2 million tonnes. (Reporting by Anastasia Lyrchikova; writing by Polina Devitt; editing by Louise Heavens)