China to impose new tax on rare eath minerals

09:41, March 25, 2011      

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China will impose a tax on rare earth minerals from April 1, the Ministry of Finance and the State Administration of Taxation has told rare earth producers.

Zhang Zhong, general manager of the Baotou Steel Rare-Earth Hi-Tech Co, the country's leading rare earth producer, said the tax will increase the company's production costs by about 720 million yuan (US$109.7 million) this year.

Zhang also said the tax, imposed to protect rare earth resources, will benefit the company in the long run.

He said the statement about the tax that the company received said the rate for mined light rare earths is to be 60 yuan per ton, while that of medium and heavy rare earths is to be 30 yuan.

The company, headquartered in north China's Inner Mongolia Autonomous Region, is currently the world's biggest producer of rare earth magnets widely used for making electronic products such as computer hard drives and cordless tools.

Yang Wanxi, director of a rare earth expert panel of the Baotou Municipal Committee of Sciences, said taxes of rare earth minerals were currently levied under the category of ordinary non-ferrous metals, whose tax rates were between 0.5 and 3 yuan per ton.

Baotou Steel Rare-Earth does not pay tax to mine the minerals as its parent company Baotou Steel Group pays it along with other minerals such as iron ore, Yang said.

He said prices of rare earths have been soaring since February, sometimes by 10,000 yuan per ton a day. The price of neodymium, a rare earth mineral used for making rare-earth magnets, increased to 600,000 yuan per ton this week from 300,000 yuan per ton at the end of last year.

The government will use the tax to support research on rare-earth processing and application technology, set up environmental compensation funds or build rare earth reserves, Yang said.

The tax is one in a series of new measures unveiled this year by the Chinese authorities to upgrade the industry. The Ministry of Environmental Protection announced earlier this month that tougher rules on emission limits for producing rare earths will take effect in October.

The rules are expected to drive small and medium enterprises out of the industry or force them to merge with big players, thus promoting industry consolidation.

Source:Shanghai Daily
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