Re: China puts ceiling on 2009 output of tungsten, antimony, rare earth

China's coal enterprises all appealed to the government for halting the resource tax reform considering the general gloomy economic situation and growing burden in coal production cost, according to market source.

Instead, coal enterprises asked for subsidy to value added tax to alleviate their production cost.

In a symposium held by Research Office of the State Council on March 18, coal enterprises claimed that the rise in cost pressure is the main reason for their reluctance to drop the coal price.

So far, domestic coal enterprises haven't conceded to China's five power giants on contractual coal price because of their high production cost.

Nevertheless, the ongoing research on resource tax reform plan has triggered coal producers' concern over further cost increase.

Meanwhile, coal enterprises are more likely to see a drop in coal price as some small coalmines resume production and the international coal price is in decline.

According to a coal enterprise source, many local coal enterprises especially those mainly producing power coal, are living a tough life and even incurred loss.

Earlier, market rumor went that the government would charge resource tax at 10 percent of sale revenue, much higher than the market guess at 3-5 percent.

Shi Yu, analyst with China Merchants Securities hold that China's coal industry has entered the recession period due to the great impact of international financial crisis on China's economy, and it is expected to take 3-5 years to walk out of the trough.