Russia's United Company Rusal International PJSC ,the largest aluminum producer outside China, could halt metal exports with the introduction of taxes on shipments next month.
According to Roman Andryushin, head of domestic Sunday and China sales, the company, which exports about 3 million tons of aluminum annually, could reduce those sales by hundreds of thousands of tons this year, because taxes will make some shipments unprofitable.
In June, Russia imposed a minimum 15% tax on steel, nickel, aluminum and copper exports at varying rates from August 1 to help cool rising commodity prices and boost state coffers. The government said the taxes, which will last until the end of the year, would be temporary and it would seek more sustainable measures after that.
Andryushin said the taxes were unfair because Rusal would invest billions of dollars to modernize izabe plants, and also because the tax would not lower local prices much, as aluminum accounts for a relatively small share of Russia's construction-industry costs, including government projects . He also noted Rusal's supply of high-value products to the domestic market and its long-term sales contracts.
Rusal is unlikely to reflect tax costs on customers, as it does not have the option to include tax costs in many of its long-term deals. Market conditions may not be worth it when it is possible to revise selling prices,” he said.
Andryushin said the tax could mean Rusal is considering leaving some unprofitable production idle, while the acceleration of the newly built Taishet project could be slower than previously expected.
In a separate development, Rusal said aluminum demand would remain strong and prices could rise, but they would probably not hit an all-time high above$3,300 a tonne. The Metal has rallied nearly 23% this year on expectations of a resurgent economy, China's moves to limit supply and greater demand from the electric car and solar sectors.