News & Reports News Year 2012 February ,2012 Resource tax on minerals up

Resource tax on minerals up

CHINA has raised the resource tax on six minerals, including iron and tin ores, in a bid to conserve reserves. Analysts, however, said the hikes won't have a big or long-lasting impact on costs given already high mineral prices.

The resource levy on iron ore, the key ingredient used in steel making, was raised to 80 percent from 60 percent of a benchmark rate, according to a joint circular issued by the Ministry of Finance and the State Administration of Taxation. The benchmark tax ranges from 2 yuan to 30 yuan (US$4.76) per ton depending on ore grade.

New rates became effective on February 1.

The resource tax on top-grade tin ore was lifted to 20 yuan per ton, the circular said. This represents a 20-fold jump and is the biggest increase among the six minerals affected in the latest hike. Tin is used to package food and solder electronic products.

China International Capital Corp analysts said in a note that the tax hike will adversely affect tin producers, such as industry leader Yunnan Tin Co, but the rising cost will gradually be passed through to downstream due to the scarcity of tin. Tin ore with 40 percent content is quoted above 120,000 yuan a ton in Yunnan Province.

"Tin price will remain high due to cost increase and seasonal recovery of the electronics industry," wrote CICC analysts, led by Cai Hongyu.

China also raised the tax on molybdenum, magnesium, talc and borax ores.

The government last year increased the resource tax on rare earths and coking coal and also expanded a regional resource tax reform to countrywide that includes a change in the tax mode for crude oil and gas - from volume-based levy to tax based on sales price.

Last Updated (Saturday, 18 February 2012 16:20)