China to increase resource tax on ores
Updated: 2007-07-18 10:51
China will raise the resource tax on lead and zinc mines, copper mines and tungsten mines as of August 1 this year, according to a State Administration of Taxation (SAT) announcement released recently, the Securities Times reported today.
According to the policy, there will be five new tax brackets for lead and zinc mines, ranging from 10 yuan (US$1.32) per ton of lead and zinc ore to 20 yuan per ton of lead and zinc ore, up roughly 400 percent from the previous resource tax on lead and zinc ore, established at the end of 1993, ranging from 2 yuan per ton to 4 yuan per ton.
The five new tax brackets for copper mines range from 5 yuan to 7 yuan for per ton of copper ore. Tungsten ore resource tax brackets will range from 7 yuan per ton to 9 yuan per ton.
The SAT introduced a resource tax on nonferrous metal mines at the end of 1993, ranging from 1.2 yuan to 1.6 yuan for per ton of copper ore, and 0.5 yuan to 0.6 yuan for per ton of tungsten ore.
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Insiders said the tax adjustment signals government desire to control excessive supply of the three kinds of ores and protect environmental resources as well.
Securities insiders said that some listed companies specialized in exploiting these three ores will suffer as a result of the policy.
These listed companies include Western Mining Co Ltd, Shenzhen Zhongjin Lingnan Nonfemet Co Ltd, Sichuan Hongda Co Ltd, Yunnan Chihong Zinc & Germanium Co Ltd, and Xiamen Tungsten Co Ltd.
But according to Jiang Yukun, an analyst with Everbright Securities Co Ltd, the new policy will have limited impact on those companies' overall performance because prices of nonferrous metals have grown in recent years.
Because of stable international prices of minerals and generous profits of the three mining sectors, the additional cost due to the resource tax hike won't impact these enterprises too much, Li Qin, a nonferrous metal analyst with China Jianyin Investment Securities said.
Furthermore, two listed mining enterprises said the resource tax raise will increase their costs, but it is acceptable for them.
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