China to Impose New Tax on Rare Earth Minerals

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March 29, 2011

According to GOV.cn reports, the Chinese government will begin imposing a tax on rare earth minerals on April 1, 2011. Producers of rare earth minerals will be taxed at a rate of 60 yuan (approximately 9.1 U.S. dollars) per ton for mined light rare earths and at 30 yuan per ton for medium and heavy rare earths. Rare earth minerals were previously taxed as ordinary non-ferrous metals, with a tax rate between 0.5 and 3 yuan. While the high prices of rare earth minerals since February may help to ease the impact of the new tax, industry consolidation is expected. The combination of emission limits established in October 2010, and the new taxes are expected to increase industry consolidation by driving small and medium rare earth companies to either leave the industry or merge with larger enterprises.

 

Last October, China’s rare earth export policies became a significant diplomatic issue when China temporarily ceased exporting raw rare earth minerals to Japan, the European Union, and the United States. China produces 95-97 percent of the world’s rare earths, which are used in the production of clean energy technologies, computers, and electronics.

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