China Slashes Coal Export Tariff Amid Mining Crisis

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China will slash export tariffs for coal from Jan. 1 and adjust those for a range of other commodities as part of broader efforts to re-order trade and foster economic growth.

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The reduction in coal export tariffs comes after intense lobbying by the China National Coal Association as a slump in coal prices have put nearly 70 percent of the country's miners in the red and more than half to owe wages.

But with some sectors, such as coal and rubber, facing deep structural issues, analysts say the tariff adjustments are going to offer very limited support.

Despite the sharp drop in coal export taxes, industry experts said there was little risk of Chinese supplies flooding the Asian Pacific seaborne market as domestic prices were significantly higher than those from top exporters Australia and Indonesia.

"China's coal production costs are just too high. There is no way that they can compete with overseas miners at current prices," said Thomas Deng, a coal analyst at consultancy IHS-C1 Energy in Guangzhou.

Export tariffs for all unprocessed coal will be cut to three percent from the current 10 percent in 2015, while the current one percent import tax for ferro-nickel will be scrapped, the Ministry of Finance said in a statement on Tuesday.

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The cap for rubber import tariffs will also be lifted to 1,500 yuan ($242) a tonne, up from the current 1,200 yuan - a revision that may dent imports from Thailand but also hurt the domestic tire makers.

For rubber, experts said the upward revision to import cap value was likely aimed at supporting local farmers, but that will not reverse a broader trend where millions of rural residents abandon farming for better paid work in cities.

For more details on trade tariff changes, click on http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201412/t20141216_1168256.html

The ministry said it would also scrap import taxes for both ferro-nickel and ferro-chrome, currently set at one percent.

That would likely further hit domestic nickel pig iron (NPI) producers since many of these firms have already cut production this year on the back of weak domestic demand. Nickel pig iron is a cheaper substitute for ferro-nickel, used for making stainless steel.

The scrapping of import taxes will, however, help Chinese firms that have invested heavily in Indonesia last year to build ferro-nickel plants to skirt Jakarta's exports ban on nickel ore.

Taxes will be lowered on imports of optical fiber-equipped communication devices, advanced manufacturing equipment and electric car parts.

($1 = 6.1890 Chinese yuan renminbi) (Additional reporting by Dominique Patton, David Stanway and Chen Aizhu, editing by William Hardy)