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Chinese export tax to be raised on rare earth

China Daily quoted the China Ministry of Finance said taxes will be increased on rare earth exports starting next year as the country, the largest producer of the precious minerals moves to protect the environment and its resources as well as regulate exports.

Rare earth a group of 17 minerals are a vital component in most of the world's new technologies and are used in high tech processes ranging from wind turbines and hybrid cars to missiles.

The ministry did not specify which of the 17 minerals would be subject to the tax increase. Rare earth exports are currently subject to taxes ranging from 15% to 25%.

A senior manager of Ganzhou Rare Earth Mineral Industry Co in Jiangxi province who declined to be named said "Our company will cut rare earth exports next year, but not on a large scale. The higher tariff will affect our exports.”

Mr Lin Donglu secretary general of the Chinese Society of Rare Earths and also chairman of Baotou Steel Rare-Earth Hi-Tech, the largest producer in the world said the CSRE has proposed tariff adjustments to relevant ministries but declined to give details.

China said the move was due to environmental concerns, as rare earth is usually found in underdeveloped regions and too much extraction has damaged the environment. Since 2006, the country has imposed temporary taxes on rare earth exports and set limits on quotas.

Industry sources said exports of 10 of the heavy rare earths which have dwindling reserves are likely to be affected more by increased taxes.

The Ministry of Commerce said in November that China still needed to improve the management of rare earth exports by using a combination of measures including export quotas, tax and regulation of exporters. The country now has 32 licensed exporters.

The ministry set higher environmental standards for producers and exporters and also said that the government will crack down on those who lack the required qualifications to work in the industry.

The ministry said in the first nine months of this year, China exported 32,200 tons of rare earth with half going to Japan and 19% to the United States.

Mr Zhou Shijian an early advocate of controlling rare earth production and member of a think tank appointed by the Ministry of Commerce agreed with the tax increase. He said that "The decision is wise and I strongly suggest that the government take more measures to control exports of rare earth."

He added that "It is not wise for China to randomly produce rare earth and sell at cheap prices. It is time for China to protect rare earth and protect the environment. Foreign nations do not make sense when they blame China for reducing exports. Some of them can produce rare earth themselves. Nations that own rare earth resources should take the responsibility of producing and help supply global demand."

Mr Chen Gong chairman of Anbound Group a private industry think tank said the latest move by the Ministry of Finance protects precious resources. He said that other options may include further limiting export quotas or levying resource taxes.”

Decreasing exports from China have forced countries to seek alternative sources in Mongolia, Australia and India.

(Source:China Daily)