Ministry of Finance 5 Moon 10 A notice was released today on comprehensively advancing the reform of the resource tax, effective from... 2016 Year 7 Moon 1 Effective from the date of issuance.

　　For the items and tax rate ranges listed in the “Table of Resource Tax Items and Rates” 21 Other metallic minerals not listed under specific resource categories shall be subject to value-based taxation, with the tax base adjusted from the original ore sales volume to the sales revenue of either the original ore, refined ore (or processed products derived from the original ore), primary sodium chloride products, or gold ingots. At the same time as implementing the reform of value-based resource taxation, the rate of the mineral resource compensation fee for all resource categories will be reduced to zero, the collection of the price adjustment fund will be discontinued, and all locally established fee and fund programs that illegally levy charges on mineral resources will be abolished.

　　Meanwhile, the resource tax will be reduced for mineral resources extracted using backfill mining methods that meet the relevant criteria. 50% The resource tax is reduced for mineral resources extracted from mines in the depletion phase that meet the relevant criteria. 30% According to the table of tax items and tax rate ranges for the resource tax, the tax rate range for iron concentrate is: 1%–6% 。

　　Currently, the new regulations have not yet been implemented. At present, mining enterprises’ resource tax is levied based on quantity. China’s resource tax on iron ore was first introduced starting from... 1984 Year, 1994 After the new year, the tax will be adjusted to a fixed-rate levy based on quantity, with the levy applicable per ton. 2-30 The tax rate will vary depending on the different types and grades of mines.

　　Since the implementation of the resource tax, there have been several adjustments over the years, including last year from... 5 Moon 1 Starting from today, the tax rate for iron ore resources has been reduced to a lower percentage of the prescribed tax amount. 40% Collection. At that time, the iron ore industry was experiencing a prolonged downturn, with many mines operating at a loss. Although the reduction in resource taxes brought some benefits to the mines, it did not significantly improve their cost situation.

　　Previously, the resource tax was levied based on quantity. As is well known, the grade of raw ore in China is relatively low, averaging approximately... 3 It takes one ton of ore to produce one ton of refined powder, which means you need to pay... 3 A resource tax of one ton—some mines with even lower-grade raw ore may even pay a tax of one ton for refined powder. 4 ton, 5 A resource tax of tons—or even more—regardless of market conditions, its tax rate remains constant and is unaffected by fluctuations in market prices.

　　However, once the ad valorem tax is implemented, changes in market conditions will also cause real-time fluctuations in the company’s costs. Taking the current sales price of iron concentrate powder in the Tangshan region as an example, the market selling price... 530 Yuan / Ton, according to the latest tax rates 6% Calculation: The resource tax is 31.8 Yuan / ton, if the tax rate is based on 1% Calculate the amount payable 5.3 Yuan / tons; while at the beginning of this year, the sales price in the Tangshan region was 390 Yuan / Tons, resource tax is payable. 23.4 Yuan / ton, if the tax rate is based on 1% The calculation only requires payment of 3.9 Yuan / Ton.

　　Therefore, based on the above-mentioned points, several potential benefits may emerge. Obviously, when market conditions are poor, mining taxes and fees will be reduced; conversely, when market conditions are favorable, the taxes and fees paid will increase accordingly.

　　From another perspective, as mentioned above, the resource tax is reduced for mineral resources extracted using the filling mining method by entities that meet the relevant criteria. 50% Previously, China has offered substantial preferential policies to enterprises that have adopted backfilling technology in domestic mines. The continuation of these preferential policies will undoubtedly encourage domestic mining enterprises to further upgrade their technologies in areas such as safety and environmental protection.

　　In addition, the adoption of value-based taxation may lead to an overall increase in the average grade of domestic iron ore fines. Previously, under the volume-based taxation system, it was difficult for low-grade mines to improve their ore quality. The higher the ore grade, the more raw ore required—and consequently, the higher the tax burden would be. However, after switching to value-based taxation, taxes will be levied based on sales revenue, ensuring that the proportion of tax costs remains consistently stable. 1%–6% Meanwhile, taxes and fees account for a relatively stable proportion of the sales price. Moreover, Chinese steel mills have a fairly stable demand for high-grade iron ore concentrates domestically. Since most high-grade iron ore concentrates are ultimately processed into pelletized ore for use, this will encourage mines to select and sell higher-quality iron powders. It will also become a new avenue for companies that have long been engaged in producing lower-grade iron ore powders.

　　From a broader perspective, this tax reform adjustment will be beneficial for mining costs, as it will lead to lower expenses. However, the actual impact on the costs of China’s mining enterprises will be limited. “ A drop in the bucket. ” First, China’s mining sector is burdened with a wide variety of taxes—so many that they’re virtually impossible to count. Moreover, the average grade of Chinese ores is low, enterprise operating costs are high, and government agencies frequently intervene in the production and operations of Chinese mines. These factors represent the greatest vulnerabilities for China’s mining enterprises.