Chinese High Export Duty on Manganese Metal to Be Reviewed

TEX reported that rumors are spreading that the export duty on manganese metal (cathodes and flakes) may be totally abolished or lowered within this year. The root of the rumors is that the World Trade Organization gave a ruling this spring that the high export duties on rare metals and cokes that have been imposed since January 2008 by Chinese government were breaching the international free trade rules and that the government is obliged to take measures to ease the restrictions sooner or later especially for manganese metal, silicon metal and coke.

Meantime, some Chinese government officials have mentioned on several occasions that the government has no intention to change its basic policy to protect environments and to save energy. This could mean that, even if the export duties are abolished/eased, other types of restriction than the current one, i.e. the export duty will be introduced over the production of manganese metal and silicon metal, such as higher environmental tax and or value added tax.

For the producers of manganese metal, if the current export duty of 20% is abolished or eased, it must be a good news, although even now the exports of manganese metal briquettes, classified under different HS Code, are not subject to the high export duty, and the importers of the briquettes (Korea and India) have been mostly unaffected.

However, once the current export duty on the manganese metal is removed or eased, and replaced by some new taxes for example, such a change could affect the overall manganese metal industry in China, not only the exporters but also the domestic producers, distributors as costs will anyway rise. For reference the domestic demand for the metal during 2011 was 1.4 million tonnes.

There are some serious issues surrounding the manganese metal industry in China, beside the review of the current export duty and its potential results, i.e. the price of nickel, the rival metal for Mn in stainless steel production has been low, production of 200 series stainless steel (high in Mn content) is not growing, the manganese metal is being substituted by the refined ferromanganese (high in Mn content), production costs inevitably rise by adopting the environment friendly selenium free refining method as power consumption doubles, and the price of the raw material, manganese carbonate ore, is rising as its output dwindles requiring smooth shifting to the imported ore.