China to resume coal import tariffs

Move likely to bring relief to struggling mining sector

China, the world's top coal importer, will restart levying import tariffs on the commodity starting Wednesday after nearly a decade, according to a statement posted on the Ministry of Finance's website on Thursday.

The move by China to levy import tariffs of between 3 percent and 6 percent from October 15 is set to affect miners in Australia and Russia - among the top coal exporters into the country.

Traders said Indonesia, the second-biggest shipper of the fuel to China, will be exempt from the tariffs since a free trade agreement between China and the Association of Southeast Asian Nations means the Chinese government has promised the signatory nations zero import tariffs for some resources.

China had set import taxes for all coals, with the exception of coking coal, at 6 percent prior to 2005 before they were gradually reduced and scrapped in 2007. Coking coal import taxes were set at 3 percent before being abolished in 2005.

The ministry said in the statement that import tariffs for anthracite coal and coking coal will return to 3 percent, while non-coking coal will have an import tax of 6 percent. Briquettes, a fuel manufactured from coal, and other fuels will see their import tariffs return to 5 percent.

Domestic coal prices have dropped to a six-year low recently partly due to the influx of imported coal.

The China National Coal Association, which had submitted proposals to reduce domestic output, reduce tax burden and regulate imports, had urged the government to act swiftly to support the sector, where 70 percent of the miners were making losses and more than half were owing wages.

Analysts noted that the new move will help ailing domestic miners to cut losses.

The central government said last month it will ban the import and local sale of coal with high ash and sulfur content starting from 2015 in a bid to tackle air pollution.

But Australian miners were left unscathed by that regulation as the most stringent standards did not apply to power plants.

"Having a 6 percent import tax for thermal coal is very high and that will easily snuff out any price advantage overseas suppliers can offer," said a Shanghai-based coal trader.

"It is also puzzling that they have resumed tariffs for coking coal, since China has a shortage of quality coking coal."

Coking coal is largely used in steel-making.

China, also the world's top coal producer and consumer, imported 327.1 million tons of coal in 2013, accounting for about 10 percent of the country's total consumption.