UPDATE 4-Kazakhstan may impose metals export duty
(Adds Kazakhmys quotes in paragraphs 17-18)
By Raushan Nurshayeva
ASTANA, April 18 (Reuters) - Kazakhstan may impose a metals export duty to raise budget revenues, a senior government official said on Friday, triggering a barrage of criticism from key industry players in the resource-rich nation.
Deputy Finance Minister Daulet Yergozhin told reporters the government would decide on the size of the duty, to apply to all metals and other mining industry products, by the end of April.
"Some of our companies make a return of above 25 percent," he said on the sidelines of a metals conference in the Kazakh capital Astana. "We think it would be fair if they had an internal rate of return of about 20-22 percent."
Kazakhstan is a major exporter of metals such as copper, steel and uranium, with two of its main companies, Kazakhmys (KAZ.L) and ENRC (ENRC.L), traded on the main platform of the London Stock Exchange.
Shares in ENRC and Kazakhmys fell about 7 percent after the news. In an open letter to the government, Kazakh metals majors swiftly criticised the proposed duty, saying it would only make them less competitive on the international market.
The decision comes on the heels of Kazakhstan's announcement this month that it would impose an oil export duty of $109.91 per tonne from mid-May -- a move that alarmed foreign investors and potential newcomers to its booming energy sector.
Yergozhin could not say how much the duty would be.
"I think (the metals tariff) must be lower than the one for oil," he said.
"POINTLESS HYSTERIA"
Addressing reporters at the same conference, Industry and Trade Minister Vladimir Shkolnik said the size of the duty would be different for each metals product.
"You cannot impose a universal five or 10 percent duty on everything, specialists say," he said at the same conference.
In their letter, distributed to reporters on the sidelines, 16 Kazakh metals companies, including Kazakhmys and ENRC and the local subsidiary of ArcelorMittal (MT.N), urged the government to ditch the plan altogether.
"We see export duties as a barrier in the way of promoting our goods on the global markets," they said in the letter.
"The realisation of breakthrough projects will come under threat in terms of attracting investment because all of them are closely tied to exports."
Yergozhin brushed off their criticism, drawing parallels with the oil export duty which was significantly below levels origically announced by the government.
"This is pointless hysteria," he said. "Everything is being calculated the same way it was with oil export duties."
Earlier this month President Nursultan Nazarbayev called the oil export duty one of the sources of funding the government could use to avoid cutting social spending in light of a deepening global credit crisis.
A spokesman for Kazakhmys said he expected the government to consult metals companies on the introduction of any duties.
"The government has always shown a very commercial approach. If it does propose any changes to the tax regime, we are sure there will be full dialogue to ensure the industry of Kazakhstan will remain competitive globally," he said.
Kazakh economic growth has slowed greatly after a global liquidity squeeze hit the country's heavily-indebted banks. (Reporting by Raushan Nurshayeva; Writing by Olzhas Auyezov, Editing by Maria Golovnina and Daniel Magnowski)
