Platts quoted Chinese smelter officials said China's lead and zinc industry is urging the Chinese government to grant it preferential value-added tax, or VAT treatment for lead and zinc concentrate imports to trim sourcing costs.
An official with 100,000 tonnes per year key Chinese lead producer Lingbao Xinling Lead Industry Co based in Henan Province said that owing to tight domestic concentrate supplies, it had to buy some materials from overseas every year for production.
The Xinling source said "If the state can lower or even cancel the 17% VAT currently imposed on concentrate imports, it can help us to trim sourcing costs. The source said in 2008, Xinling imported 20,000 tonnes lead concentrate. If the state grants us preferential VAT treatment for concentrate imports this year, we may consider raising our lead concentrate imports to 30,000 tonnes in 2009. Meanwhile, the Shanghai-listed key Chinese lead and zinc producer Henan Yuguang Gold and Lead Co. also wanted the state to grant preferential VAT treatment for its concentrate imports as the company relies a lot on imported materials due to insufficient local supplies.
Yuguang declined to reveal its lead or zinc concentrate import volume in 2008, but one official said "How much we will import this year depends on the price gap between Chinese domestic materials and imports. Meanwhile, Shanghai-listed Chinese zinc and lead producer Western Mining Group in Gansu Province said that "since 100% of our lead and zinc concentrates are supplied by the company's own mines in Gansu, we are not affected by the VAT imposed on imported materials."
The source added "Our lead and zinc concentrates have lead and zinc content of 78%, and 48%, respectively, much higher than that of the medium and small Chinese mines, so we are much less affected by the local concentrate shortage problems."
Separately, an analyst with Beijing-based Galaxy Securities said many Chinese lead and zinc smelters depended heavily on imported concentrates due to insufficient Chinese domestic materials supplies.
Based on Galaxy's estimates, roughly 60% of China's lead, zinc mines have shut since mid-2008 on weak lead and zinc prices.
(Sourced from Platts)
