China has used VAT to both control illegal production and to establish a lower domestic price for finished REO against that exported ROW, a honey trap for international manufacturing.
VAT is applied all the way from primary production thru to finished product with the State sanctioned producers then receiving VAT permits to wash it out, in direct proportion to their production quotas.
Intent should be obvious, tracking legal production all the way thru the system via VAT invoicing, producing a paper trail to qualify VAT permits. Illegal production is assumed to be caught at some point in the VAT net, but not eligible for VAT permits.
VAT permits are not issued to production for export creating a two tier pricing structure, lower value "legal" domestic vs 17% impost ROW. Lynas takes full advantage of this premium with direct sales into Japan magnet materials & others.
For NTU con to enter the "legal" stream it will be charged VAT on import.
Probably more importantly it is also highly likely to be levied the concentrate tax that was imposed post ROW tariffs, set by region and LRE/HRE. Baotou & Sichuan LRE were levied 11% & 15% from memory & sth HRE 27%. Anecdotally it appears many producers have been avoiding/fudging this tax impost but high chance this will be far more difficult for imported con passing thru an international customs point with all the required documentation.
Regardless, DyO values inside China are 16% (value of VAT permit) less than quoted retail prices, and only relatively tiny quantities are finally exported.
Aside from all that, trying to work back from retail values, China has an active mkt for various grades of HRE concentrate from various provinces, the one that NTU best matches is 92% TREO Jiangxi which has been quoted @ $18kg, presumably incl VAT & con tax.
Difficult to see how a 52% con could realise half that ex Darwin, which would explain the total lack of any indication re sales values from NTU, let alone production costs.
Enthusiasm here quite bizarre given none appear to have the vaguest clue basic economics of "project".
NTU Price at posting:
8.6¢ Sentiment: Sell Disclosure: Not Held
(20min delay)
