Criteria For Collecting Domestic Rare Earth Resource Tax will be Raised Sharply

On May 19th, the State Council promulgated“Several Opinions on Promoting Continual and Healthy Development of Rare Earth Industry”(The Opinions), which mapped out a plan for the development of rare earth industry. According to this document, China will develop a basic structure for rare earth industry dominated by large enterprises within 1-2 years, and the industry concentration degree of top three enterprise groups in South China ion-type rare earth industry will reach above 80%. China will spend another 3 years to further improve system mechanism, and develop an industry structure characterized by rational development, orderly production, high-efficiency utilization, advanced technology, and intensive development in order to achieve a continual and healthy development of the rare earth industry.

In order to accomplish this goal, the State Council has decided that the Ministry of Industry and Information Technology will assume chief responsibility for the development of rare earth industry, as well as managing the industry, drafting mandatory production plan, ensuring rare earth production order, and guiding the organization of rare earth industry association.The Ministry of Industry and Information Technology will set up a Rare Earth Office to coordinate the management of rare earth industry, which is responsible for coordinating and compiling plans for rare earth mining, production, reserve, import and export etc. Such plans will be incorporated into the state government’s national economy and social development annual plan, and the Office will take the initiative to ensure the implementation of annual plan, industry access, and the development and promotion of rare earth new materials.

According to the Opinions, it is necessary to strictly control the management of rare earth industry access standard. The Opinions also claims to improve the management of rare earth mandatory production plan, and further raise the qualification criteria of rare earth export enterprises. Based on relevant policies on restricting the export of “high energy-consuming,high polluting and resource-based industries”product, there will be a stringent control on rare earth mining and aggregate production volume,as well as a strict control on the export of primary products including rare earth metals, oxides, salts and rare earth iron alloys. The relevant restrictive regulations related to mining,production, consumption and export shall be enforced at the same time.

The Opinions clearly declared that it is necessary to significantly raise the criteria for collecting rare earth resource tax, in order to restrain excessive profit in resource mining. It is also necessary to change the price formation mechanism of rare earth products, and make more efforts in policy regulation so as to make the price of rare earth consistent with its value.Meanwhile, it is required to strictly control the management of rare earth mining right, which will basically continue to suspend the handling of any registration application for new rare earth prospecting and mining, and prohibit the existing active mines from expanding production capacity. It is also required to strictly control the aggregate volume of rare earth smelting and separation. During the “Twelfth Five Year Plan” period, except those merger & restructuring and deployment optimization projects approved by the state government, the government will no longer give any approval to the new construction of rare earth smelting and separation projects, so as to prohibit existing rare earth smelting and separation projects from expanding its production scale.

The State Council indicated that it would speed up the integration of rare earth industry, adjust and optimize industry structure, and positively promote merger and restructuring in rare earth industry. The State Council will also support large enterprises so as to promote the organization of resources, and finally significantly reduce the number of enterprises engaged in rare earth mining and smelting and separation by means of conglomeration, merger and restructuring. The Ministry of Industry and Information Technology and relevant departments must make their joint efforts to draft implementation plan for promoting rare earth industry merger and restructuring as soon as possible.

Furthermore, the government will raise the reserve of rare earth resource, and speed up the development of rare earth application industry.It will also set up strategic systems for rare earth reserve, coordinate the planning of iontype rare earth mining in South China and light rare earth resource mining in North China, and designate some state-planned mining zones as strategic resource reserve zones.

According to the requirements of the State Council on division of labor, the NDRC will take the initiative to ensure the control of rare earth investment scale and aggregate export volume. NDRC, the Ministry of Finance, and the Ministry of Land and Resources will jointly take the initiative to set up rare earth strategic reserve. The Ministry of Finance will take the initiative to investigate and compile financial and taxation support policy. The Ministry of Land and Resources is responsible for prospecting and mining of rare earth resources,controlling and managing aggregate volume,rectifying the order of mining industry order, as well as reserving resource land. The Ministry of Environmental Protection is responsible for special rectification concerning environmental protection; it will also impose stringent environmental access standard, and strengthen pollution prevention and treatment. The Ministry of Commerce is responsible for export quota management, and proper coordination of trade relation with other countries.