China's State Council, the country's cabinet, last week approved a plan to implement a 3% tariff on lignite imported from countries under the most-favored nation trade status. The new tax rule came into effect on August 30, 2013.
China the largest Importer of coal in the world, has announced a 3% tax on imports of steam coal with low calorific value but is yet to spell out details of its applicability, leading to uncertainty whether shipments from Indonesia will be subjected to the tariffs.
China imported 187 MnT of coal, in the first seven months of 2013. Total lignite shipments stood at 35.97 MnT during the period, which is increased by 12% in compare of last year.
With imported lignite currently priced at about $ 47 a tonne on a landed basis, the newly imposed tariff would add about 8 Yuan ($ 1.31) a tonne to its cost.
China is a signatory of the FTA and Beijing has promised zero import tariffs for all ASEAN member countries and Non-ASEAN countries that export lignite to China include North Korea, Russia and Mongolia. They account for about 4% of China's lignite imports
Indonesia is the biggest Exporter to China of lignite, a form of low-grade coal, China has Imported 97% of Coal from Indonesia in 2013 up to end of July. Indonesians are still seeking clarity on the matter. Moves by China, the world's top coal buyer, to slap an import tariff on lignite may dent sales of Indonesian miners.
Beijing's move to tax imports comes after the domestic coal association lobbied the government in May to ban imports of all low-grade coal, citing the impact on local miners.
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