China to review graphite taxes

By Albert Li, Andrew Miller
Published: Thursday, 27 November 2014

Heilongjiang considers export tax adjustment; spherical subsidies encouraging mislabelling

Graphite miners, processors and Heilongjiang government officials met to review export taxes from the Chinese region at the end of Q3 2014, with a view to changing tariffs in 2015. 

With the local government keen to enforce measures that will see less flake concentrate distributed to other areas of the country and abroad, tax rises could be announced approaching the end of the year. 

The tax review adds to the ongoing programme of consolidation in the region, which is seeking to limit smaller and inefficient flake graphite. 

Plans announced in April 2014, set out by the province’s Ministry of Industry and Information Technology, saw proposals to reduce the number of flake graphite mining licences from 36 to 25 by 2020, with an escalation in industry entrance standards expected to begin in 2015. 

A change in taxes from Heilongjiang could therefore add to the pressure on supply from the region, which alone accounts for 64% of China’s total flake graphite output. 

While excess supplies are likely to prevent this from having a major impact on the market in the short term, it could limit low-cost supplies from the region in the longer term. 

Also under discussion is the current subsidy in spherical graphite prices, which was put in place to increase value-added processing in the region. 

While this has contributed to the increase in spherical capacity in China over the past year, producers have also suggested that some companies have been mislabelling flake graphite exports in order to be able to offer cut-cost products to consumers. 

IM Data sources have suggested that this has been a contributing factor to the ongoing slump in prices throughout 2014. 

Some have also stated that the subsidy has created a significant over-capacity, which is limiting the margins available from value-added processing. 

The decline in global graphite production 
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* Industrial Minerals Data forecast
Source: USGS, Industrial Minerals Data, China Ministry of Land and Resources

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LONDON, UK

Andy Miller, Analyst

amiller@indmin.com

Shruti Salwan, Analyst 

ssalwan@indmin.com

SHANGHAI, CHINA

Albert Li, Analyst

ali@indmin.com