China is said to be considering a move to cut tax for iron ore mining companies in a bid to reduce input costs for the nation’s steel industry. The country’s Ministry of Industry and Information Technology is reportedly working with the Finance Ministry and other parties on a proposal to reduce the current corporate tax rate of 25% by 10% to a rate of 15% for iron ore mining firms.
China is the world’s top consumer of iron ore but domestic iron ore miners have been burdened by high production costs and have failed to compete with Australian miners including Rio Tinto and BHP Billiton, forcing the country’s big steel makers to rely heavily on imported ore.
It is said that the average cost of producing domestic iron ore, most of which is of a grade as low as 20%, ranges between USD90-100 per ton, compared with around USD30-50 per ton for Australian miners.
Taxation of the resources sector has become an increasingly important issue for China, and the central government is increasingly using tax policy to pursue its environmental goals and to preserve domestic supplies.
