China's new environmental production tax is set to increase production costs for coal miners, market sources said Friday.
"Unless a rise in coal prices offsets the environmental protection tax, Chinese coal miners will see their profits drop and some may even suffer financial losses," according to a source at China Minmetals, a Beijing-based state-owned trading house.
The Economic Daily, a government newspaper, reported Thursday that the environmental production tax was at least Yuan 1.2-12/mt ($0.18-$1.85/mt) on atmospheric pollution, and at least Yuan 1.4-14/mt on water pollution, Yuan 5/mt on coal gangue, and Yuan 15/mt on ore tailings.
A Shandong-based coal trader agreed, saying the tax of Yuan 1.4-14/mt on water pollution will have a significant effect on coal washeries which consume large quantities of water. "Prices of coal concentrates can be expected to go up as a result of the tax," he said.
Provincial governments decide specific tax rates for air pollution and water pollution.
The general trend has been for eastern and coastal provinces to get tougher on air and water pollutions while western provinces have been relatively lenient.
