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Ministry of Finance of Ukraine to triple CO2 tax and increase rental payments

Mining industry / Ukraine

In search of additional funds to fill the budget, not hoping for help from the IMF, the President of Ukraine decided to look into the pockets of the richest citizens of the country, whose business is somehow connected with the metallurgical and mining industries.

Ministry of Finance of Ukraine to triple CO2 tax and increase rental payments

To triple - from 10 to 30 hryvnia per ton - the rate of the environmental tax on carbon dioxide emissions (CO 2 ) is proposed by the Ministry of Finance of Ukraine, the corresponding norm is contained in the so-called "resource bill" developed by him. According to the document, the Ministry of Finance will also initiate a step-by-step - until January 1, 2029 - 10-fold increase in the rates of this tax on emissions of pollutants into water bodies.

It is assumed that from July 1 of this year, when this bill may come into force, they will be doubled, and from January 1, 2022, they will increase annually by another 100% of the current level (or 10% of the final level) .

In addition, from July 1, 2021, the Ministry of Finance proposes to pay rent for the extraction of iron ore not from the cost price, but from the market price. It is proposed to establish the following gradation of the size of the rent:

  • if the price is less than USD 65 per tonne - 0.1%;
  • if the price is from 65 to 85 US dollars per ton - 3%;
  • if the price is from 85 to 120 US dollars per ton - 8%;
  • if the price is from 120 to 150 US dollars per ton - 12%;
  • if the price is from 150 to 180 US dollars per tonne - 14%;
  • if the price is more than USD 180 per tonne - 16%.

On April 20, the cost of one ton of iron ore rose by $ 3.82 - to $ 178.54. That is, if the new rules were in effect today, the rate of 14% would be applied. At the same time, in fact, the budget would receive almost $ 25 per ton instead of the current $ 3.

The government proposed adopting a similar resource bill (No. 4101-d) in a package with the law on the state budget-2021, but the deputies refused to do so. In that bill, there was a similar provision on a phased increase in the environmental tax on discharges. As for the tax on CO emissions 2 , it was also proposed to increase it in stages - by UAH 5 per tonne - until 2024 in the fall of last year.

The bill has already been called anti-Akhmetov, as it deals a tangible blow to the empire of the main owner of the Dutch mining and metallurgical holding Metinvest B.V. Rinat Akhmetova.

At the same time, there are about a dozen enterprises in Ukraine that are engaged in the extraction of iron ore. In addition to Akhmetov's interests, the financial balances of PJSC "Sukha Balka" (part of the DCH group of Alexander Yaroslavsky) will be affected; Poltava GOK and Eristovsky GOK (part of Konstantin Zhevago's Ferrexpo). The wallets of foreign investors ArcelorMittal Kryvyi Rih, owned by the global metallurgical giant - the ArcelorMittal group of Indian businessman Lakshmi Mittal, will also suffer.

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