China smelters lobbying government to allow finishing overseas tolling and processing contracts

Smelters and officials from aluminium-producing provinces, such as Henan, are lobbying the central government to allow smelters holding overseas tolling and processing contracts to finish their commitments. About 30% of China's alumina imports are bought for tolling and processing, which allows smelters to import the raw material duty-free before exporting the finished product. For non-tolling and processing business, China charges an 8% tariff on alumina imports, as well as 17% value-added tax. In order to cover a domestic shortfall, the government was also considering allowing more smelters to import alumina. At present only seven of China's more than 100 aluminium producers consistently receive permits for importing alumina. Beijing has banned smelters with capacity under 100ktpy from directly importing alumina for tolling and processing. The ban includes smelters using outdated technology or built after April 2002 without central government approval. (Reuters - 04/25/05)