Discharge Tax to Increase Costs at Zinc Smelters

SHANGHAI, Mar. 7 (SMM)--China announced at the Fifth Plenum of the 17th CPC Central Committee it will levy environmental taxes during the 12th Five-Year Plan. Su Ming, Deputy Director of Research Institute for Fiscal Science (RIFS) of the Finance Ministry, said at the Summit Forum for China’s Iron and Steel Enterprises Restructuring, that China will first transform fees charged for waste gas and water to taxes, then gradually raise the tax level while keeping it affordable to enterprises. However, in this scenario, costs at zinc smelters will still increase.

Discharge taxes are different from the current discharge fees. Discharge fees are flexible in both scope and quotas, and can sometimes be negotiated. Discharge taxes, however, are mandatory and have fixed standards and quotas.

According to SMM sources, environmental taxes paid by smelters mainly include waste water discharge fees and solid waste piling fees. Waste water discharge fees are paid according to related standards, with fees paid above or below quotas based on the waste level. Generally speaking, such fees have only limited effect on costs at smelters, with discharge fees of RMB 150 for 10,000 mt in zinc ingot output.

Different technologies result in different levels of waste water discharge, with fees varying as well. Enterprises using hydro-metallurgy techniques pay more discharge fees than those using pyro-metallurgy due to high water consumption. Different production technologies also cause zinc smelters to discharge more waste water than lead smelters.

At present, new smelters generally pay discharge fees after negotiating with the local Environmental Protection Bureau. However, if discharge fees are changed to discharge taxes,  costs at enterprises will gradually grow along with increasing tax quotas.

Solid waste fees are now charged according to piling volumes, with 1mt solid waste generally costing RMB 1,000 in fees. Enterprises do not have to pay fees if they pile solid waste elsewhere, but all enterprises will be subject to taxes once the change is implemented.