In order to establish a fair market environment for domestic equipment competing with imported products, the Ministry of Finance issued a notice on January 23, urging domestic manufacturers to develop and produce large-scale open-pit mining mechanical shovels and coal mining equipment. The policy stipulates that import duties and value-added taxes on key components and raw materials will be collected upfront, while tax exemptions for complete machines and systems will be phased out. This move is intended to ease the financial burden on companies developing large-scale domestically produced equipment, particularly in the mining machinery sector.
The Ministry of Finance recently released two notices titled “Circular on Adjusting the Import Tax Policy for Large Open-pit Mining Machinery Shovel Excavators and Their Key Components and Raw Materials†and “Notice on Tax Policy for Import of Raw Materials for Large-scale Coal Mining Equipment and Their Key Components.†These documents clarify that as of January 1, 2007, enterprises importing key components for large-scale mining machinery and coal mining equipment must pay import duties and value-added taxes. The collected taxes will be treated as national investment and allocated to state capital, primarily used for new product development.
The notices also specify the types of equipment affected, including electric haulage shearers, scraper conveyors, hydraulic supports, large crushing stations, and more. Additionally, they outline the conditions and procedures for companies eligible for the import tax policy. Since this year, certain newly approved internal and external investment projects involving shovel-type excavators, electric haulage shearers, and other large-scale equipment will no longer enjoy import tax exemptions.
Industry experts note that China is the world's largest coal producer and consumer, yet its coal machinery industry remains at a low level. The current situation shows a lack of high-end products, an oversupply of low-end ones, and limited middle-range options. Large-scale mines with annual output exceeding 5 million tons are dominated by foreign firms. A major challenge for the domestic industry is weak production support capabilities and poor competitiveness. Moreover, the reliability and performance of domestic equipment often fall short of the requirements of high-yield mines, leading to reduced market competitiveness.
The issuance of these notices aligns with the "Circular on the Import Taxation Policy on Implementing Several Opinions of the State Council on Accelerating the Revitalization of the Equipment Manufacturing Industry," issued last year by the Ministry of Finance and other departments. Experts believe that Taiyuan Mining Machinery Group, currently the largest R&D and manufacturing base for coal mining equipment in China, stands to benefit the most from this policy, with other manufacturers also gaining advantages.
Ma Dongjun, deputy chief economist at Taiyuan Mining Machinery Group, mentioned that the company imports about 15% of its parts annually, such as bearings and electrical switches, costing around 12 million yuan. While the official document has not been received yet, it is estimated that the policy could save over 5 million yuan per year. Although the policy may not directly benefit end-users, major coal companies with their own manufacturing subsidiaries might still gain through them.
Wu Dezheng, general manager of Tiandi Technology Co., Ltd., noted that while the company uses few imported components, users like Shenhua Group may need to replace parts, which could also benefit from the policy. Senior industry insiders observed that domestic and foreign component manufacturers have formed a complementary market. While imported components like bearings are more expensive, their quality makes them preferred by major manufacturers. General components, however, are cheaper and often sourced domestically.
For domestic part manufacturers, the impact may not be direct, but the policy could lead to a natural selection process, favoring those who can meet the growing demand for reliable and high-quality components.
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