A planned customs rule change in China has triggered a significant drop in gold ore and concentrate imports, marking a potential shift in global precious metals trade flows, according to Reuters sources.
Key Takeaways
- China's precious metals ore imports fell 22.4% in September to 201,004.9 metric tons
- Proposed rule change would impose 1% import tax and 13% VAT on certain gold concentrates
- Market disruption could affect global gold supply chains worth billions
- Impact extends to copper market, particularly affecting Peruvian exports
The Tax Controversy
Chinese customs authorities are considering a significant classification change that would revolutionize how gold concentrate is taxed. Under the proposed rules, gold concentrate containing more than 58% combined iron and sulphur content would be reclassified as pyrite, triggering new tax obligations that previously didn't exist.
Market Impact
According to the Reuters report, some traders have already begun diverting their gold concentrate shipments to destinations other than China, fearing retrospective taxation. The impact was immediately visible in September's trade data, which showed imports hitting a six-month low.
Broader Implications
The implications extend beyond the gold market. Peru, as the world's third largest copper producer, exports substantial amounts of copper-bearing gold concentrate used as feedstock by Chinese copper smelters. The sources cited in the Reuters report indicate that if the classification changes are implemented, Peru's copper-bearing gold concentrate may be diverted to other countries, potentially worsening China's mined copper shortage.
Industry Response
Chinese gold concentrate importers expressed their opposition at a meeting in late September, but according to the Reuters report, customs staff refused to withdraw the proposal. Chinese customs did not respond to Reuters' requests for comment.
Looking Ahead
The situation remains fluid, with potential global implications for both precious and industrial metals markets. The proposed changes could disrupt the annual shipment of billions of dollars of gold ore and concentrate to China, the world's top refined gold producer.
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