China Resource Tax Expected to Buoy

up Tech-Metal Prices in 2015

Last year, the Chinese government made clear its intention to increase
Resource tax on technology metals in 2015. The government was
considering this option to counter the WTO ruling that Chinese export tariffs
and quotas on rare metals violates its WTO obligations.
According to Du Shuibling, an analyst associated with Bachman Informat,
an increase in resource tax this year would raise production costs and
thereby international prices of tech metals.
Last year, the World Trade Organization (WTO), acting on a joint complaint
put forward by the U.S., E.U., and Japan, issued a ruling that the Chinese
export tariffs and quota infringe its trade charter. The Chinese government
imposed restrictions on rare metals in 2010 to limit pollution and prevent
over mining its technology metal resources. However, these trade
restrictions provided undue advantage to the Chinese tech companies,
according to the complaints filed in the WTO against the government.

China had argued that the trade restrictions on the tech metals was
allowed under general expectation of the GATTs (General Agreement
on Tariffs and Trade), a multilateral trade agreement put forward in 1994 to
eliminate trade barriers. The WTO, however, ruled that the minerals in
question did not fall under the scope of general exceptions. And,
therefore, the trade restrictions violated Chinas trade obligations.

Chinese Counter Move Would Result in Increased Tech Metal Prices

The Chinese government countered by announcing its plans to impose
increased tax on the tech metals in 2015. The shift will result in higher
cost of extracting the minerals, which the government believes will
more accurately reflect the scarcity of these precious resources. Their
policy aims to prevent selling of tech metals at cheap prices and
thereby conserve the precious resources.
The increase in resource tax bill will greatly appreciate international
metal prices. The move would significantly change the supply/demand
balance. The government believes it will cut illegal trafficking of the
tech metals and discourage countries from stockpiling them.
The higher tech metal prices would also discourage excessive profits of
the tech metal mining companies. In addition, the increased prices
would directly hit the metal smelting and other firms associated with
processing of the tech metals.

Technology Metals Could Prove to Be Investors Gold Mine in 2015

The red dragons wrath on technology metals could prove to be a blessing
for traders who invest in these precious metals. As technology continues to
proliferate the homes consumers, the demand for technology metals is
expected to increase in the coming years.
Leading the charge would be dysprosium, europium, terbium, neodymium,
and yttrium. Chinese new tax along with supply restrictions would be
enough to spike their prices in the international market.
World demand of these metals is expected to grow by 7% this year. Chinas
demand alone represents about 34% of the annual global demand. In
order to satiate this increasing appetite for technology metals, the supply
must increase substantially both from both Chinese and Non-Chinese
sources.
With the impending increase in Chinese resource tax, tech metals extracted
outside China must increase to 50,000 tons per year. Until now, the annual
production of tech metals was 20,000 tons per annum. This means that the
tech metal extracted from non-Chinese sources must double for the
international prices to remain at current levels, which seems highly unlikely
at the moment.

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