May 14, 2020 / 5:54 AM / 11 days ago

China's Jiangxi rolls out fiscal support for coronavirus-hit copper industry

BEIJING (Reuters) - China’s Jiangxi province on Thursday unveiled measures including tax breaks and preferential loan terms to help copper producers after the coronavirus outbreak hit demand and prices for the metal used widely in power and construction.

FILE PHOTO: Trucks are seen at a copper mine of Jiangxi Copper in Dexing, Jiangxi province, China December 16, 2015. REUTERS/Stringer

Jiangxi, which borders the virus epicentre of Hubei, is home to top copper firm Jiangxi Copper Co (600362.SS) (0358.HK). Its support comes after Yunnan province announced a year-long non-ferrous metals stockpiling drive to relieve pressure on producers.

Gansu province is considering a similar scheme.

The Jiangxi provincial government, in a posting on its official Wechat account, made no mention of stockpiling but announced 16 other measures to support stable development of its copper industry.

These include allowing firms that sell copper and copper products made from “renewable resources” - or scrap metal - to pay income tax on only 90% of their earnings and reclaim 30% of value-added tax paid.

Minerals extracted from depleting mines are also entitled to a 30% reduction on resources tax. Jiangxi Copper operates the Dexing mine in Jiangxi, which was discovered in the 1950s, although a company spokesman noted the deposit’s output remained stable and it was not classed as depleting.

Meanwhile, banks should extend the deadline for principal and interest repayments on loans to small- and medium-sized copper companies in difficulty up to June 30 and should not levy penalty interest, the provincial government said.

Severely-hit but promising firms could negotiate further extensions, it added.

The province would also expand copper consumption by broadening sales channels, and encourage businesses to give priority to key enterprises amid a tight market for raw materials such as scrap and copper concentrate.

China has been restricting imports of copper scrap as part of a campaign against foreign solid waste, while pandemic-related mine closures around the world are leaving smelters worried about concentrate supply.

The Jiangxi government said it would “revitalise” scrap import quotas and transfer any quotas held by traders to actual copper processors.

The province will also grant a 5% discount on electricity prices - excluding for copper smelting and rolling - from Feb 1. to June 30, 2020 and accelerate work to develop capacity for 1.5 million tonnes of refined copper and 3 million tonnes of copper products annually, it said, without providing a timeframe.

Jiangxi Copper produced 1.56 million tonnes of refined copper in 2019, although that includes production in Guangdong, Zhejiang and Shandong.

Reporting by Tom Daly; editing by Richard Pullin

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