China drops taxes on copper, cobalt and nickel concentrate...

China drops taxes on copper, cobalt and nickel concentrate imports

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China will allow tax-free imports of copper, nickel and cobalt concentrate from Feb. 1, as long as the finished products are re-exported, and will also allow duty-free exports of refined copper, unwrought nickel and semi-finished aluminium products.

Posted: Monday , 05 Jan 2009

HONG KONG (Reuters) -

China will allow tax-free imports of copper, nickel and cobalt concentrate from Feb. 1, as long as the finished products are re-exported, a statement on the Ministry of Commerce's website (www.mofcom.gov.cn) said, reversing a two-year old policy of taxing these flows.

China will allow duty-free exports of refined copper, unwrought nickel, semi-finished aluminium products such as profiles, rods, bars and billets, and cobalt powder.

The move could increase China's exports of copper and nickel and imports of primary aluminium, traders said.

The policy will allow smelters such as Jiangxi Copper (0358.HK)(600362.SS) to import concentrates duty-free as long as they export the finished product.

Copper concentrate imports are currently subject to a 17 percent value-added tax, and exports of refined copper are taxed at 10 percent.

Pan Qifang, Jiangxi Copper's spokesman, said the policy would allow the firm to hedge imports of concentrate on the London Metal Exchange and to export refined copper if LME prices were higher than domestic market.

"The gap between LME and domestic prices would be narrowing," Pan told Reuters.

The duty-free policy would also reduce the cost of financing imports, which may boost small smelters' operations, he added.

The policy on exports of semi-finished aluminium products could increase imports of primary aluminium ingots for the manufacturing of such duty-free exports, traders and smelter officials said.

Exports of such products are also expected to rise.

"Fabricating plants will have another channel to sell their products," a trading manager at one large smelter said.

China is the world's top copper and aluminium consumer. (Reporting by Polly Yam; Editing by Michael Urquhart)