World leader in rare earth mineral production China will increase taxes on the valuable commodities at the start of April as global prices continues to rocket.
The Minister of Finance and State Administration of Taxation told rare earth producers that taxes on the minerals would jump from $0.07 and $0.45 per tonne to $4.5 for light rare earths and $9.1 per tonne for medium to heavy materials mined, a heady hike.
The taxes will, according to state media, be used to support research on the processing of the materials, as well as setting up environmental compensation funds and building reserves back up after authorities have displayed concern over stocks.
For production firms like the country’s leading Baotou Steel, the tax increase is thought to increase costs by around $109.7 million this year, while it will likely mean that many small to medium businesses will be forced out of the market in the place of growing large firms.
The news comes as the price for rare earths burst through the $100,000 mark for the first time last month, an increase of almost nine times the price of the previous year when a tonne was around the $14,000 price point.
This is while the volumes being traded stayed below the historical average, with China slashing its output to foreign countries, with further drops in quotas having already been planned for the future.
While there was an increase in exports from 647 tonnes in January to 750 in February this was otherwise the lowest seen since the midst of the financial crisis back in February 2009.
According to Reuters it appears that firms across the world have benefitted from increased share prices in areas such as Canada and Australia as supply has been constricted, while countries continue to seek alternative supplies away from China in Central Asia and further afield.
However fears have been raised that a lack of demand will be created for the minerals vital for the production of technology goods following the Japanese disaster slowing output of consumer goods, with the country usually accounting for 30,000 tonnes every year to meet its production needs.