The government is considering a proposal to levy a 35% new resource tax on the ion-absorbed-type middle and heavy rare earths in the southern areas and to a 22% new resource tax on the light rare earths in the northern areas, according to the Beijing-based Economic Information Daily reported on November 20th, citing an unnamed authoritative source. What makes this interesting is that The resource tax would be based on sales value instead of volumes.

To levy a resources tax on rare earths based on sales value instead of production volume, will increase rare earth producers’ operating costs; which will undoubtedly drive rare earth prices sharply. The rare earth tax reform will help reduce cheap rare earth exports and help boost much needed industrial upgrading towards achieving environmental goals. Additional benefits include the protections of strategic resources in the country.

The latest data from China Customs revealed that the country imported 2401.3 tons of rare earth (excluding rare earth metal ore, Customs HS Code: 25309020) in the first 9 months this year. Increasing 1.5% from a year earlier, the import value was US$51.06 million, which marked an increase of 85.9% from a year ago. Included in this number were the imports of 711.18 tons of various rare earth oxides. The various rare earth salts were 1673.26 tons and the rare earth metals and rare earth alloys were 12.74 tons, along with 4.09 tons of rare earth flints. China’s rare earth imports is likely to continue to grow in the near future, driven by the country’s higher rare earth resources tax.

The Chinese State Council on released the Circular on Promulgating the Catalogue of Investment Projects Approved by the Government (2014 Version) on November 18th. In this Circular they maintain in addition to the further scrapping or decentralizing of 38 projects that they are committed to relaxing the government approval process required for investment projects that was initially tightened to reduce corruption. Despite their action to reduce 40% of the administrative procedures and red tape over last year for rare earth investments; authorities continue to exercise strict control over of the total rare earth mining and production. For instance, when it comes to rare earth mine development, smelting and separation — these investments still need to be approved by the State Council versus the processing projects, which still need to be approved by the provincial governments.

China’s total of new materials industrial output reached 1.25 trillion yuan and a 25% year-on-year growth in 2013, The MIIT estimate the country’s consumption of rare earth in 2014 will grow at about 9% and reach 127,000 tons, according to its “China New Materials Industry Annual Development Report 2014”.

In a move to help boost China’s cooling economy, China’s State Council on November 6 issued the Opinions on Boosting Imports (the “Opinions”). The Opinions, which identified 8 specific recommendations — are intended to improve the national reserve system on resources. Additional benefits included supporting enterprises to establish their own commercial reserves and encouraging domestic firms towards overseas investment. Included in this mandate is a special fund designated for the development of foreign economic relations and trade. China is interested in securing additional strategic resources to help stabilize the supply of energy and other resources.