Sail across the sea

Chapter 475 Another Rare Earth Mine Beneath Tokyo Bay

China has done absolutely nothing wrong in levying resource taxes.

If there's any mistake, it's that the collection came too late; resources have been sold off cheaply for years.

While there is no absolute standard for the value of resources, it is not entirely without standards either.

Rare earth elements have a wide range of applications in many fields. Using rare earth elements can effectively improve the performance of industrial products, and users are willing to pay for such improvements. This is the market value of rare earth elements.

In market value, after deducting production costs, the remaining added value should be fairly distributed between producers and resource owners, and the portion that resource owners should receive is the resource tax.

Previously, China levied only a very low resource tax on rare earths. The export price of one ton of mixed rare earths was less than US$1, most of which was for labor and raw material consumption during the mining process. The portion that could be counted as tax was only one or two thousand US dollars, and it was levied in the name of mining contract fees.

A ton of such mixed rare earth exported to Japan can fetch $11 after refining, with processing costs of only about $3 to $4. This leaves manufacturers with a profit of $6 to $7, which is clearly unreasonable.

In the past, when the government wanted to increase resource taxes, it sometimes lacked a legitimate reason because we couldn't accurately grasp the cost of rare earth refining. Foreign companies could claim that the refining cost was $10, with no profit for themselves, purely a contribution to world peace, leaving you speechless.

Of course, a more important reason is that China's own progress in high-purity rare earth refining has been too slow, and its lack of awareness of competing in the international market has resulted in rare earth exports only being available to a few foreign rare earth refining companies. When these companies unite to collectively drive down prices, we are powerless to do anything about it.

Now that we have the Zeshan Rare Earth Refinery, if Japanese companies like Yttrium Corporation really stop purchasing rare earth ore from China, we can refine it ourselves and sell it. Users of high-purity rare earths are spread across various sectors, making it difficult to form an alliance.

Moreover, Zelin's rare earth is more than $2 cheaper per ton than Yttrium Corporation's. User companies are overjoyed, so how could they possibly stand with Yttrium Corporation to boycott it?

It is precisely because of this confidence that the country introduced a special resource tax of US$2 per ton in one go. This approach would be justified even in the negotiations of the General Agreement on Tariffs and Trade.

By the way, on Earth in 1986, people were relatively reasonable and wouldn't easily withdraw from groups or break agreements.

Yttrium Corporation and other companies can distort the truth and claim that China is not following the rules. However, Japan's Ministry of International Trade and Industry (MITI) still has to consider its image, so it only discusses the matter with China and dares not escalate it to the level of international rules.

But that Dr. Qi from Renmin University, he really seemed to be thinking the Japanese's best interests at heart. He probably couldn't even pronounce the names of rare earth elements properly before jumping out to criticize China for violating regulations.

"Director Luo, can I understand it this way: the Ministry of Foreign Trade actually knows that this matter does not violate the rules of the General Agreement on Tariffs and Trade, and the Ministry of International Trade and Industry has not said so either. The pressure on the Ministry of Foreign Trade mainly comes from... certain scholars in China," Gao Fan asked.

Luo Shenrong was speechless.

That's exactly what Gao Fan said. The pressure from the foreign side is nothing more than two things. One is that Japanese companies such as Yttrium Corporation are threatening to reduce imports. But this is not too scary. The Ministry of Foreign Trade has also had people analyze it and concluded that it is more likely that the other side is bluffing. It is not easy to find a way to replace rare earth elements.

Secondly, there was the negotiation from Japan's Ministry of International Trade and Industry (MITI). Their attitude wasn't very tough; they seemed to be trying to use this as an excuse to gain some advantage, such as getting China to make concessions on certain trade terms as compensation for the rare earth issue. In layman's terms, MITI was essentially playing hard to get with the Ministry of Foreign Trade, saying, "You didn't handle this well, I'm angry, unless you buy me a candied hawthorn with walnuts, I won't talk to you anymore."

What really gave the Ministry of Foreign Trade a headache was the nagging from some people in China. Dr. Qi from the National People's Congress was just a representative, and some lower-level leaders with some authority also raised questions about the matter, so Luo Shengrong couldn't bring it up with Gao Fan.

These junior managers, of course, have their own considerations. For example, their department is negotiating a technological cooperation with relevant parties in Japan. Now, this incident has occurred, and it's said that the Japanese side is dissatisfied. The junior managers are worried that it will affect their own side, so they raised questions with the Ministry of Foreign Trade.

"If it were just a few scholars saying this, it wouldn't matter, since any policy will be controversial. The current situation is that Dr. Qi's views are not limited to one or two people, but rather a considerable number, and their social influence cannot be ignored, so we do have some concerns."

Luo Shenrong spoke carefully, believing that Gao Fan should be able to understand him.

"So, what does Director Luo want us to do?" Gao Fan asked.

Luo Shenrong thought for a moment and asked, "Could you please provide some materials as professionals to explain the necessity and rationality of levying resource tax? That way, if other organizations raise questions to us, we can have an authoritative response."

“This is not a big problem.” Gao Fan agreed readily. “When the Ministry of Geology and Mineral Resources was determining the special resource tax, they conducted in-depth research. They definitely have the materials you mentioned.”

“Okay.” Luo Shenrong made a note on the notepad, reminding himself to ask the Ministry of Geology and Mineral Resources for information in the future, and then continued, “On the other hand, could you do some publicity on the protection of rare earth resources? For example, could you invite a few experts in rare earth research to give a speech explaining the necessity of resource tax?”

"There are still some misunderstandings among the public about this issue. As the foreign trade department, it is not convenient for us to clarify it in our own name. As frontline personnel in the rare earth industry, you would be more persuasive than us in providing explanations."

"You mean this?"

Gao Fan chuckled, took a magazine from his bag, flipped to a page, and placed it in front of Luo Shenrong, saying:
"Director Luo, I have an article here. Please take a look and see if it meets your requirements."

When Gao Fan took out the magazine, Luo Shenrong had already seen the cover. It was a very popular academic publication that published various inspirational articles, with a collagen content of 4N level.

He didn't understand for a moment what Gao Fan meant by taking out such a publication, but when he turned his gaze to the article Gao Fan pointed out, he was slightly taken aback.

The title of that article was:

Another rare earth mine beneath Tokyo Bay.

(End of this chapter)