Two months after a WTO ruling said that China had violated international trade rules regarding its imposed measures on rare earths exports, the country plans to increase the export taxes of its precious metals and minerals this year, 2014
"The Ministry of Industry and Information Technology, State Administration of Taxation and the Ministry of Finance are mulling to adjust the tax on rare earth resources again. The heavier taxes on rare earth producers and a formal document on the new tax rates will probably be released in the second half of this year," the Economic Information Daily under Xinhua News Agency, citing an unidentified source, said on Tuesday.
Rare earths are a group of 17 rare metallic elements highly essential to manufacture many hi-tech goods including consumer electronics, advanced medical equipment and military hardware.
The level of adjustment of the rare earth resources tax would be imposed based on the value of the minerals, rather than on volume, the daily added.
"That shift will mean higher prices at the producer level, which the government hopes will reflect the scarcity of these resources and the environmental costs of their extraction," an authoritative source told the state-backed newspaper.
The source said the plan was primarily meant to boost prices at the producer level, which "will alter the supply-demand balance, undercut the smuggling trade and reduce high inventories of rare earths overseas."
China supplies more than 90 per cent of the world's demand for rare earths. Its reserves account for 23 per cent of the global total.
Prices of rare earths in the global market slumped heavily in 2013, affecting Chinese producers.
Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co Ltd, China's leading rare earth producer, said net profit dropped 71.7 per cent year-on-year to 69.38 million yuan in the first quarter of 2014.