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Russia may scrap nickel, copper export duty in 2014


Post Date: 17 Dec 2013    Viewed: 367

Russia may scrap a 5 percent export duty on nickel and copper in 2014, two years earlier than planned, to support indebted metals and mining companies struggling with weak prices, business daily Vedomosti reported on Tuesday.


The move, which will benefit Russian mining giant Norilsk Nickel, the world's biggest nickel producer, is one of 13 measures that Vedomosti said Russian Prime Minister Dmitry Medvedev would order his ministries to work up by Dec. 23.


Medvedev met the steel and mining companies, including aluminium producer Rusal, coal miner Mechel and steelmaker Evraz, to discuss their debt loads and ways to boost industrial growth on Nov. 25.


The metals industry is under pressure globally due to sustained weak prices, but the three Russian firms are particularly vulnerable due to their high debt levels.


Mechel is undergoing debt restructuring negotiations. The firm's debt to core profit ratio was 9.0 in the first quarter, while one of its covenants states the ratio should not have exceeded 7.5 in the first half of 2013.


Net debt to core profit (EBITDA) ratio, a measure of a company's ability to pay off debts, stood at 11.8 at Rusal in the first six months of the year, and 4.0 at Evraz.


According to Vedomosti, which cited draft minutes of Medvedev's meeting, other proposed measures to support the industry include subsidising costs related to the idling of plants and an improved mechanism of state guarantees for refinancing debt built up during large-scale investment programmes.


Rusal shares outperformed the broader market to rise 0.9 percent by 0822 GMT, while Mechel's Moscow-listed shares were trading at the bottom of the index, down 2.6 percent with New York yet to open. Evraz's London-listed stock was also down 2.6 percent.


The government also wants state companies such as Gazprom , Rosneft and Transneft, to speed up their payments for supplies of metal products, the paper wrote.


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