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It is reported that the Treasury Department of the State Administration of Taxation of China decided lately to raise resource taxes on tungsten, lead zinc and copper ores since August 1st. It is the first big tax correction of the three materials since the launch of resource tax in 1994 in China. The announcement will be published in days to come, as learned from the Administration.
As per report amid this correction, lead zinc ore and copper ore from first grade mines will be lifted to CNY 20 per tonne from CNY 4 per tonne and CNY 7 per tonne from CNY 1.6 per tonne respectively and tungsten ore from third grade mines will be hiked to CNY 9 per tonne from CNY 0.6 per tonne. This upward correction is fueled by the pressure from energy saving and pollutant reduction.
An analyst in the industry said that "These three ores are very short in China. This move is a clear sign that the government intends to protect the environment and resources and restrain the fast growing supply of resources to the upstream sectors."
He said that the correction will definitely increase the prospecting cost of the ore resources. He added that lead zinc and tungsten enterprises will not be impacted too much, while copper companies will get affected, an insider observed. The tax increase may push the cost of copper making up by CNY 1000 per tonne. But the profits of these mining enterprises will not be reduced a lot because of the comparatively higher returns of this sector.
Currently, China's domestic copper output is about 650,000 tonnes while home demand reaches 3.8 million tonnes, most of which are met by import. As nowadays international prices of minerals stand stable, so the cost gains of copper miners will basically not pass on to the downstream sectors.