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MET might be lifted for Russian coal and iron ore miners


According to Interfax, the government is considering lifting the MET for Russian coal and iron ore projects in hard-to-reach regions for a 25-year period as partial compensation for infrastructure capex.

Even though potentially lifting the MET is positive for sentiment, it would only be marginal for Russian mining companies’ financials, given the insignificant share in total cost structure. To recap, Mechel paid only c. USD 25mn of MET in 2011, and it is the largest payer among Russian coal and iron ore mining companies. Nevertheless, Russian miners had previously asked the government either to remove MET payments or partially decrease them (by the level of infrastructure capex). We would not overestimate any limited positive effect that lifting the MET might have on the companies’ financials.

Igor Lebedinets, Victor Drozdov
VTB Capital analyst

Russia, coal

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