China’s Ministry of Industry and Information Technology (MIIT) has announced that it has drawn up a plan to cut the tax rate for Chinese domestic iron ore enterprises and will start negotiations on the plan with the relevant departments of China’s Ministry of Finance and State Council. The MIIT stated that its goal is to cut the tax rate for domestic iron ore enterprises from 25 percent to 10-15 percent.
According to the MIIT, Chinese iron ore enterprises are facing a heavy burden with the current tax rate of 25 percent, aggravated by the high VAT rate on fuel. At present, minimum iron ore production cost levels as high as $90-100/mt have reduced domestic iron ore enterprises’ enthusiasm to carry out production operations, while also providing an advantage for overseas suppliers.
China’s demand for iron ore concentrate is expected to reach 1.1 billion mt this year, with around 60 percent expected to be supplied by imports. In January-October, China imported 607 million mt of iron ore, up 8.9 percent year on year. The value of iron ore imports reached $80 billion in the given period.