• Norilsk slides most since May, Rusal plunges to two-month low
  • Government has only discussed change to oil-extraction tax

GMK Norilsk Nickel PJSC dropped the most since May, leading declines among Russian metal and mining stocks, as investors speculated the government will increase taxes on the industry to boost budget revenue.

The shares of Russia’s largest mining company fell 5.4 percent to 10,114 rubles by 5:05 p.m. in Moscow. Metals and mining stocks on the Micex Index slumped 3.8 percent on average, compared with a 0.9 percent retreat for the benchmark gauge. Aluminum producer United Co. Rusal declined 3.8 percent, while fertilizer maker Uralkali PJSC lost 5.5 percent.

The selloff was triggered by President Vladimir Putin’s call on Tuesday for ministers to study the possibility of redirecting some revenue from exporters to the budget after the ruble’s slide boosted their foreign-currency earnings. While he didn’t specify how this would happen, speculation mounted that it could imply mining companies may be next in line as the Finance Ministry considers boosting levies on crude producers.

"Investors are worried the government, which is discussing a tax burden increase for oil producers, may think of similar ideas for the metals and mining sector," said Kirill Chuyko, the head of research at BCS Financial Group.

The government’s press service didn’t immediately respond to a request for comment on the speculation. The Finance Ministry isn’t proposing to increase the metal extraction tax, its press service said Wednesday.

Russia’s biggest oil companies, Rosneft OJSC and Lukoil PJSC, retreated for a third and seventh day, respectively.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE