Russian gold refining companies want value-added tax (VAT) on metal processing abolished and the deadline for abolishing a zero import duty on raw materials that contain precious metals extended to make their operation profitable.
Sergei Belov, a deputy CEO for gold refining at Krastsvetmet, said that gold refining plants had import duties on raw materials temporarily lifted in January – for secondary raw materials with precious metals until the end of 2019, and for mineral raw materials until the end of 2017. These materials account for the bulk of refining.
The world’s combined refining of precious metals stands at about $150 billion with four Swiss plants accounting for 80%, while all Russian plants account for 4%. Stimulation measures will allow Russia to raise the share to 5-7% on the expense of medium-sized subsoil users in Latin America and Africa, although it will be “a tough fight, as we have no free market, and large gold producers mainly transport their raw materials to Switzerland,” Belov said.
Only the absence of VAT will allow Russian plants to become competitive, as now the margin in refining and trading of precious metals is only 0.5-1%. In March, Deputy Finance Minister Alexei Moiseyev said that the ministry was discussing zero VAT on gold with a 999.9 purity, or investment gold bars. The government now is discussing zero VAT for mineral and secondary raw materials, but the issue is complicated, Belov said.
In 2016, Russia’s fine gold output amounted to 288.55 tons, and 8.84 tons were exported. Oleg Pelevin, head of an interregional union of precious metals producers, said that capacities of Russia’s Soviet-built plants were only loaded 30-40%. Discussion of zero VAT is very difficult as it covers the whole production chain, and it has only just begun, so a decision here will not come soon, he said. (Prime/Ukrainian metal)