China's new environmental production tax is set to increase production costs for coal miners, 

market sources said Friday. 

"Unless a rise in coal prices offsets the environmental protection tax, Chinese coal miners will 

see  their  profits  drop and some may even suffer financial losses," according to a source at 

China Minmetals, a Beijing-based state-owned trading house. 

The  Economic  Daily,  a  government  newspaper, reported Thursday that the environmental 

production tax was at least Yuan 1.2-12/mt ($0.18-$1.85/mt) on atmospheric pollution, and at 

least Yuan 1.4-14/mt on water pollution, Yuan 5/mt on coal gangue, and Yuan 15/mt on ore 

tailings. 

A  Shandong-based  coal  trader agreed, saying the tax of Yuan 1.4-14/mt on water pollution 

will  have  a  significant  effect  on  coal  washeries  which  consume large quantities of water. 

"Prices of coal concentrates can be expected to go up as a result of the tax," he said. 

Provincial governments decide specific tax rates for air pollution and water pollution. 

The  general  trend  has  been  for  eastern  and  coastal provinces to get tougher on air and 

water pollutions while western provinces have been relatively lenient.