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Chinese silver sector urges reinstatement of export tax rebate

Hong Kong (Platts)--1Jun2009
Six major Chinese silver producers are urging China's Ministry of
Commerce to either reinstate the export tax rebate for silver, or scrap the
value-added tax now imposed on imported lead/silver concentrate, to help
alleviate companies' current financial difficulties, the producers said
Monday.

The six producers are Yuguang Gold and Lead Group, Shuikoushan Mining
Administration, Anyang Yubei Gold and Lead, Shenzhen Zhongjin Lingnan
Nonfemet, Zhuzhou Smelter Group and Yunnan Copper.

China canceled the 17% export tax rebate for silver in mid-2008 in a bid
to control exports of scarce resources. On January 1 this year value-added tax
on imported lead/silver concentrate was raised to 17% from the previous 13%.

"The removal of the 17% export tax rebate has weakened Chinese silver
producers' competitiveness overseas, so we wish the state to resume it so as
to help lower export costs," said a source with Henan-based silver producer
Yuguang Gold and Lead Group. "China's silver output has exceeded domestic
consumption, so local producers have to seek outlets in other countries," he
added.

Chinese domestic silver consumption in 2008 hit 4,500 mt, up 10% from
2007, figures from the China Nonferrous Metals Industry Association showed.
But total silver output by China reached 9,587 mt in 2008, up 5.45% from 2007.

China issued a total silver export quota of 4,800 mt in 2008, but it only
exported 4,043 mt last year, down 9.8% from 4,484 mt exported in 2007, customs
figures showed.

Meanwhile, industry insiders in China said even if the state reinstated
the export tax rebate, it might not immediately boost local producers' silver
exports. A source with Shuikoushan Mining Administration in Hunan Province
said: "Even if the government restores the export tax rebate, we have to
compare the price gap between Chinese domestic silver prices and export values
so as to decide on our future export volume."

Officials from Zhuzhou Smelter were unavailable for comment.
--Joshua Leung, [e-mail]

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