Vice Minister of Industry and Construction Iran Sharkan announced that starting in 2025, junior exploration companiesthat have already discovered and confirmed reserves of solid minerals will be transitioned from the mineral extraction tax (MET) to royalties. Sharkan explained that the MET has become outdated and cumbersome, necessitating a shift to a universally understood international royalties system. The phased transition will begin with junior companies and eventually include all entities.
At the AMM-2024 forum, Sharkan emphasized that the transition to royalties marks the logical conclusion of the mining reform initiated in 2017. The Ministry, in collaboration with colleagues from the Ministry of National Economy and the Ministry of Finance, aims for a smooth, environmentally friendly transition. Discussions will be held with the industry to define what constitutes a junior company, which Sharkan described as a new player in mining that has confirmed reserves and is moving to the extraction stage.
Sharkan also mentioned that Kazakhstan will continue adopting modern standards. While old deposits protected by the State Reserves Committee (SRC) standards will remain in force, new projects will adhere to the international reporting system. In October 2023, Maxim Kononov, the first deputy executive director of the Republican Association of Mining and Metallurgical Enterprises (AMME), suggested setting the MET for technogenic mineral formations (TMFs) at 0.1 of the existing rate to encourage investment in TMF processing.
Kononov advocated for synchronizing sectoral and tax legislation, noting that TMFs not classified as subsoil should not be taxed under the MET. He proposed a reduced coefficient, such as 0.1 of the current MET rates, for TMFs owned by the state. These measures would boost large-scale processing of TMFs in the country. Kononov criticized the current tax regime for making TMF extraction projects unprofitable and called for clearer taxation norms for solid minerals in TMFs.
Since January 2023, MET rates have increased by 50% for exchange-traded metals and by 30% for others. Kononov warned that any further tax increases would be detrimental to the industry.
