The Mining Law Review: China
i Government policy on mining in general and on international investment
China has continued to make great efforts in recent years to push forward its open-door policy and its reforms in mining law to streamline administration and improve services, such as the inclusion of mineral resources with proved reserves in the pilot work of the unified registration of rights with respect to natural resources, the promotion of reform of the systems of mineral rights transfer and mineral resources royalty, and the implementation of the publication system for information on the exploration and exploitation of mineral rights, so as to improve mineral resource management.2
To implement the State Council's reform requirements of 'decentralisation, supervision and service optimisation' and to further improve the mineral rights approval management system, the Ministry of Land and Resources (MOLAR) issued four normative documents in 2017:
- the Mineral Rights Transfer Rules;
- the Notice on Further Standardising Approval, Registration and Management of Mineral Resources Exploration;
- the Notice on Further Standardising Mineral Rights Application Materials; and
- the Notice on Improving Issues Related to Approval, Registration and Management of Mineral Resources Exploitation.
These normative documents should further standardise mineral rights transfer; standardise and improve the approval, registration and management of mineral exploration rights and mining rights; streamline and combine mineral rights application materials; and continuously improve the business environment in mineral exploration and development. In addition, the royalty system for mineral resources was established and improved, and the competitive transfer of mineral rights in six pilot provinces was comprehensively promoted.3
In 2018, a new ministry, the Ministry of Natural Resources (MNR), was established to replace MOLAR, to consolidate the responsibilities of MOLAR and other departments in respect of the ownership of natural resource assets, and to take over responsibility for regulating national land use, and ecological protection and restoration.
Since the establishment of MNR in 2018, MNR has actively carried out green mineral exploration and ecological restoration of mines, vigorously promoted the reform of mineral resources management system, continued to put more efforts into the strategic mineral survey and evaluation, continued to promote the research on geological theories to improve comprehensive minerals development and utilisation, and further expanded the 'Belt and Road Initiative'4 international cooperation in geology and mineral resources.5
In particular, China has been striving to further open up the mining sector; for example, by replacing the approval regime with a record-filing system in oil and gas project cooperation with foreign companies. On 30 June 2019, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) issued the Catalogue of Industries for Guiding Foreign Investment (2019 Version) and the Special Management Measures for the Market Entry of Foreign Investment (Negative List) (2019 Version) (the 2019 Negative List), which, as of 30 July 2019, removed foreign investment restrictions on the exploitation of rare kinds of coal, the exploitation of graphite, the smelting and separation of rare earth, and the smelting of tungsten. Thus, the types of mineral resources that are open to foreign investment have been greatly expanded.
On 23 June 2020, NDRC and MOFCOM issued the Special Management Measures for the Market Entry of Foreign Investment (Negative List) (2020 Version) (the 2020 Negative List) which became effective on 23 July 2020 and made no changes to the mining provisions stipulated in the 2019 version.
ii Risk factors
China's legislation on mineral resources is undergoing a relatively fast transformation with some old laws superseded by newly enacted laws. For example, according to the Notice on Further Enhancing the Supervision and Management of Exploration and Construction Activities in Natural Protection Areas, jointly promulgated by 10 ministries, exploration and construction activities or production or operation facilities in the core area or buffer area of a natural protection area are prohibited, and any exploration or exploitation activities that have been started shall be terminated on the condition that the legal benefits of the exploration licence holder and exploitation licence holder are safeguarded.6 The change of laws or regulations may create risks or uncertainty for investors in mineral projects.
iii Description of the industry
China is the world's largest producer of coal, gold and most rare earth minerals, and the world's leading consumer of most mining products, particularly for commodities such as thermal coal and iron ore. Historically, China's mining industry has been fragmented, with many companies operating in the same mining areas. Consolidation has been encouraged in an effort to increase efficiency and to improve safety and environmental performance. The reduction of energy dependence on fossil fuels could be a key challenge for the mining sector. Important goals within the Five-Year Plan (2016–2020) include developing western regions, protecting the environment and improving energy efficiency.7
iv Investment and development
Alongside the Belt and Road Initiative, bilateral and multilateral cooperation in the fields of geology and mineral resources has been comprehensively promoted. Through international exchange platforms such as China Mining and the China – ASEAN Mining Cooperation Forum, geological survey cooperation projects have been actively carried out, and mining exchanges and cooperation with relevant countries have been further expanded. The outcomes of the Forum on China-Africa Cooperation (FOCAC) Beijing Summit were implemented, the cooperation with African countries, such as Tanzania, Mali, Morocco, Nigeria, Sierra Leone and Sudan, was actively propelled, and the practical project cooperation was carried out. In the intergovernmental bilateral cooperation framework, the high-level coordination mechanism in the mineral fields was densified unceasingly with the countries, including Chile, Argentina, Canada, Pakistan, Kazakhstan, Tajikistan, Turkey, Papua New Guinea and Indonesia, and the cooperative relationship was further progressed in the fields such as geoscience research, geological survey, mineral resource management, mine environment protection and mineral investment cooperation. Eight cooperation agreements were signed with foreign geological survey agencies. More efforts were made to promote key bilateral cooperation projects between China and other countries, such as USA, Germany, Canada, Australia, Italy and South Korea. The cooperation covered basic geological survey, deep exploration, marine geology, natural gas hydrate, shale gas, geological disasters, karst geology, hydrologic geology, geothermal development, wetland protection and other fields. Until now, 230 memorandums of understanding or project cooperation agreements have been signed with geologic surveys, scientific research institutes or universities from 63 countries.8
The legislation provisions governing the minerals and mining industry are as follows: the Constitution; laws such as the General Principles of the Civil Law and Property Law; relevant regulations of the State Council and rules of ministries; relevant local regulations; and regulatory documents published by regulatory agencies.
ii Regulatory agencies
The ministry in charge of geology and mineral resources under the State Council is the MNR,9 which is responsible for the supervision and administration of exploration and exploitation of mineral resources throughout the country, with the assistance of other agencies under the State Council. The departments in charge of geology and mineral resources under the people's governments at provincial level are responsible for the supervision and administration of exploration and exploitation of mineral resources within their respective administrative areas.
iii Mineral reporting requirements
China has not set up any systems in connection with the disclosure of information relating to mineral projects.
Mining rights and required licences and permits
According to the Constitution, mineral resources belong to the state.10 Under China's Mineral Resources Law, the right of state ownership in respect of mineral resources belongs to the state, and state ownership, either near the earth's surface or underground, will not be altered by ownership, or the right to the use, of the land to which the mineral resources are attached.11 The state may transfer the right to possess, use and benefit from the mineral resources to a qualified natural person, legal person or other economic organisation (holder). After obtaining the exploration right or exploitation right (mining right), holders may conduct exploration and exploitation of mineral resources and sell the mineral products.
ii Surface and mining rights
Method and process of obtaining mining rights
Mining rights may be obtained through a bidding process. The registration agency determines the scope of the mining zone for bids, publishes the invitation for bids, sets forth bidding rules, organises the evaluation of the bids and determines the winning bidder based on merit. The winning bidder will pay the licence fee for the mining right and, in the case of a mining right resulting from a state-funded exploration, also pay the price determined through a valuation for that mining right, then complete the registration procedures and obtain the exploration or mining licence. The scope of the mining zone for bids from overseas will be determined by the MNR.12
Mining rights may also be obtained through a transfer agreement. Since 2015, however, China has implemented a policy to strictly control and regulate the transfer of mining rights by agreement. Currently, mining rights may be directly transferred by agreement only under the following circumstances:13
- key mineral resources development projects approved by the State Council and the mineral producing areas providing supporting resources for the key construction projects approved by the State Council;
- mineral resources development projects with large or medium-sized reserves approved by the people's governments at provincial level;
- prospecting projects looking for substitute resources for old mines (crisis mines) that have been listed as a national special project;
- areas adjacent to the range of exploration and mining under a mining right that will need to expand through integration or use of the existing production system; or
- scattered surrounding resources involved in the range of exploration under an exploration right that will need to expand through integration or as a result of comprehensive exploration.
To obtain mining rights, the applicant should first apply to the registration agency for demarcating the scope of the mining zone, complete the relevant procedures for setting up a mining entity based on the demarcated scope of the mining zone and obtain approval for the mining entity. The registration agency will make a decision to approve or reject the application and notify the applicant within 40 days of receipt of the application documents. When an application is approved, the applicant must pay the licence fee for the mining right within 30 days of receipt of the notice. In the case of applying for a mining right resulting from a state-funded exploration through which the location of mineral reserves has been verified already, the applicant should pay, in addition to the licence fee, a price determined through a valuation of the mining right resulting from the state-funded exploration, then complete the registration procedures, and obtain the exploration or mining licence.14
Surface rights for holders
Exploration licence holders are granted the following surface rights:15
- installing electricity power facilities, water supply pipes and communication lines in the exploration area and in neighbouring areas; however, they must not affect or damage the original electricity power, water supply facilities or communication lines;
- passing through the exploration areas and neighbouring areas; and
- using the land temporarily as may be required for construction work.
In the event, however, that an exploration licence holder during its temporary use of the land causes damage to the property of other people, it should make restitution according to the law.16
Mining licence holders are granted the following surface rights:17 (1) constructing within the mining area such production and living facilities as may be needed for mining; and (2) obtaining the land-use right according to the law required for production.
After completion of the construction land procedures, the land for mining may by agreement be transferred, leased or leased with an option to transfer. If the land-use right is obtained by way of grant, the land user may, depending on the mining production phase, the term of the mining right and other factors, choose the land-use term within the maximum number of years allowed by law and may pay the land-use fee by instalments.18
Conditions for maintaining mining rights
Exploration licence holders should:19
- start the exploration operation within the prescribed time limit and complete the exploration within the time limit stipulated by the exploration licence;
- report the commencement of operations, and other related issues, to the exploration registration authorities at the beginning of exploration work;
- conduct the exploration in accordance with the exploration construction designs; any unauthorised mining activities are not allowed;
- conduct a comprehensive exploration and evaluation of any co-product minerals or by-product minerals while ascertaining the primary minerals;
- compile a mineral resources exploration report and submit it to the relevant departments for examination and approval;
- submit the mineral resources exploration achievement files in accordance with the relevant regulations of the State Council;
- comply with the relevant laws and regulations regarding labour safety, land reclamation and environmental protection; and
- upon completion of exploration work, immediately block the wells and fill in the holes left by the exploration, or adopt other measures to eliminate potential dangers.
Furthermore, to maintain the exploration right, the exploration licence holder should satisfy the minimum capital input requirement for exploration according to law. Currently, the requirements are as follows:20
- 2,000 yuan per square kilometre for the first exploration year;
- 5,000 yuan per square kilometre for the second exploration year; and
- 10,000 yuan per square kilometre for each exploration year from the third onwards.
If the licence holder's capital input for exploration for a given year exceeds the minimum requirement, the surplus may be factored into the capital input for the following exploration year. In this respect, the mining licence holder should:
- conduct mine construction or mining within the approved term;
- conduct efficient protection, rational mining and comprehensive utilisation of mineral resources;
- pay the resources tax and the mineral resources compensation fees pursuant to the law;
- comply with the applicable laws and regulations regarding safety of workers, water and soil conservancy, land reclamation and environmental protection; and
- accept the supervision and administration of both the competent departments in charge of geology and mineral resources and other relevant competent authorities, and complete and present the mineral reserve forms and mineral resources development and utilisation statistics reports according to the relevant regulations.21
Terms of validity of mining rights
Currently, the valid term of an exploration licence is three years; however, the valid term of an exploration licence for petroleum or natural gas is seven years. To extend the exploration period, the licence holder should apply to the registration agency, no later than 30 days prior to expiry of the term of the exploration licence. Each extension should not exceed two years.22
Under the current law, the valid term for a mining licence will be determined according to the construction scale of the mine: for a large-scale mine or above, the term of the mining licence is 30 years, for a medium-scale mine, 20 years, and for a small-scale mine, 10 years. If a project involves progressive exploration and development of petroleum or natural gas, the longest term is 15 years. To continue the mining operation after expiry of the licence term, the licence holder should apply to the registration agency for an extension, no later than 30 days prior to expiry of the term of the licence.23
Protection of mining rights
The exploration licence fee or exploration right price may be deducted or exempted upon application by the licence holder and approval by the competent authorities, if the exploration is encouraged by the state for certain minerals or in certain regions.24
The mining licence fee or mining right price may also be deducted or exempted upon application by the licence holder and approval by the competent registration authorities, if, among other circumstances, the mining of mineral resources is in a remote or poor area, or the mining is for minerals urgently needed by the state, or if a mining enterprise is suffering severe losses and has to suspend production owing to a natural disaster or other force majeure event.25
After issuing a mining licence, the registration agency should notify the relevant people's government at the county level where the scope of the mining zone is located. The county government should, within 90 days of receiving the notice, publish the scope of the mining zone and may organise the erecting of boundary poles or land markers at the request of the mining licence holder.26
The Chinese government implemented a system for publicising exploration and mining information for mining right-holders in 2017, which is now the public platform for publishing mining right-related announcements, including (1) the release, transaction and transaction results, (2) a continuous reminder service flagging up those exploration or mining licences with fewer than 120 days remaining on their term of validity, and (3) a timely warning for any abnormal mining right-related transactions that violate Chinese laws and regulations.27
During the process of development and integration of mineral resources, the Chinese government might require the closure of some mining enterprises and cancellation of their mining rights. For those holders whose mining right is cancelled, they should be refunded the proportion of licence fees and other costs corresponding to the remaining mineral reserve.28
Restrictions for foreign investors
Mineral resources in China are open to foreign investors for exploration or mining, subject to specific prohibitions. Previously, foreign investment in the exploration and development of oil and natural gas (except for coal-bed gas, oil shale, oil sand and shale gas) was allowed only by forming a joint venture or cooperation with a Chinese party. That restriction was, however, removed. Moreover, the prohibition of the exploration of molybdenum, tin, antimony and fluorite was cancelled. According to the 2019 Negative List (and also the 2020 Negative List), foreign investors are prohibited from exploring or developing only certain kinds of mineral resources, such as investment in the exploration, mining and ore dressing of rare earth, radioactive minerals and wolfram.29
As the Negative List may be amended or updated from time to time, it is advisable that investors pay attention to any possible changes in the limitations on foreign investment in mineral resources.
iii Additional permits and licences
In addition to an exploration or mining licence, other permits and licences may be required for certain mining-related activities, such as approval from the competent authority for the design documents for a mine construction project.30 Special permits or licences may be required for certain kinds of mineral resources, such as petroleum or natural gas, which will need the State Council's approval for establishing a petroleum company or consent for the exploitation of petroleum or natural gas, and a qualification certificate relating to the mining enterprise as a legal person.31
iv Closure and remediation of mining projects
To close down a mining project, a mining enterprise must submit an application and a geological report to the departments that originally gave approval for starting up the mine, one year prior to completion of mining. After the geological report is approved by the competent departments, the mining enterprise should prepare and submit for approval a report on closing the mine to the competent departments and other relevant authorities.32 After approval of the report on closing the mine, the mining enterprise should complete the following work: (1) classifying and filing the geological, surveying and mining documents, and presenting the geological report on closing down the mine, the report on closing the mine and other relevant material; (2) finishing the work regarding safety of workers, water and soil conservancy, land reclamation and environmental protection, or paying the costs for land reclamation and environmental protection in accordance with the approved report on closing the mine. Based on the approved report on closing the mine and the document issued by the relevant authorities evidencing completion of the aforementioned work, the mining enterprise should apply to the authority that originally issued the mining licence for revocation of that licence, and complete the procedures for closing down the mine.33
According to a notice issued by the State Council in 2017, a deposit for environmental control and restoration of the mine should be paid into an environmental control and restoration fund to be used by the mining enterprise for carrying out the necessary work.34
Environmental and social considerations
i Environmental, health and safety regulations
Legislation for protecting the environment is enacted by the state and local governments. The state creates the laws and administrative regulations on environmental protection, and local governments may, to an extent not violating the state law, enact their own respective regulations and rules on environmental protection according to their own specific situations. The laws and administrative regulations on environmental protection in relation to mining activities include the Environmental Protection Law, the Regulations on Environmental Protection Management for Construction Projects and Measures for the Control of the Soil Environment of Land for Mining and Industry (For Trial Implementation), effective as of 1 August 2018.
In conducting mining activities, mining enterprises must comply with the Work Safety Law and the state regulations on production safety.35 A mining enterprise should set up an organisation to manage production safety or assign full-time persons to safeguard production safety.36 A mine construction project should undergo safety assessment according to the relevant regulations of the state.37 Before the commencement of any operations at a constructed mine, the construction entities are responsible for making arrangements for an inspection of the safety facilities according to the law, and a mining project may start production operations only after the safety facilities pass that inspection and have been approved for production operations.38
In recent years, to address the frequent occurrence of coal mining accidents, the Chinese government has tightened the regulations on mining safety and has taken measures to control potential risks to safety, such as closing a colliery with annual production not exceeding 90,000 tons and without safe production conditions, encouraging advanced colliery enterprises to reorganise or merge small coal mines, strictly tightening safety standards for colliery work, and no longer approving new collieries with an annual production capacity of less than 300,000 tons or new coal-gas outburst mines with an annual production capacity of less than 900,000 tons.39
Mining operations must abide by laws and regulations regarding labour and health issues and protect workers' life and health. China's Labour Law prohibits any work assignment for female workers to engage in underground mining work and for underage workers (over 16 but younger than 18) to engage in underground mining work or poisonous or harmful work.40 There are also special requirements relating to certain types of mining that may cause serious damage to human health, such as coal mining, whereby coal mining enterprises are required to organise regular occupational health examinations and to strengthen pneumoconiosis prevention work for their workers.41
ii Environmental compliance
An approved environmental impact report is mandatory before any mining project can commence construction. The report should be submitted to the competent environmental protection authority for approval, which will make its decision within 60 days of receipt of the report.42
In the event of any material changes to the nature, scale, location, production techniques, or measures of pollution prevention or ecological protection of a mining project after the environmental impact report has been approved, the mining construction entity should submit a new environmental impact report for approval.43 Upon completion of a mining construction project, the mining construction entity should follow requirements for inspection and acceptance of the environmental protection facilities of the construction project in accordance with the standards and procedures stipulated by the environmental protection authorities under the State Council.44 Except for those reports that need to be kept confidential as required by law, the mining construction entity should make the report on the inspection and acceptance requirements public, according to the law.45
iii Third-party rights
China is a multi-ethnic country and implements regional minority autonomy systems in its five autonomous regions. If the mining of mineral resources is in a minority autonomous area, the state should take into consideration the local interests of the region and make arrangements favourable to the region's economic development and to the production and well-being of the local minority people. The government authorities in the autonomous regions are required to regard it as a priority to develop and utilise in a rational manner the mineral resources that may be developed by the local authorities in accordance with the law and the national plan.46
Operations, processing and sale of minerals
i Processing and operations
The import of equipment and machinery for exploration and mining is permitted and should comply with relevant import and export regulations.
There are no special rules or regulations on the processing of extracted minerals.
ii Sale, import and export of extracted or processed minerals
An exploration licence holder is entitled to sell the mineral products recovered during the exploration operation in accordance with the approved project design, and a mining licence holder is entitled to sell the mineral products, except for those minerals which should be sold only to the designated purchaser as stipulated by the State Council, according to the Mineral Resources Law and its implementation regulations.47
The import or export of mineral products is permitted except for those mineral products that are forbidden to be imported or exported under the Catalogue of Commodities Prohibited from Processing Trade and the relevant adjusted catalogue promulgated by the Ministry of Commerce and General Administration of Customs.
iii Foreign investment
Foreign investors may remit overseas their lawful profits distributed by foreign-invested enterprises (FIEs) in accordance with the regulations on foreign exchange administration. There are no special restrictions regarding the movement of capital and currency exchange applicable to mining industry.
The Chinese government has been trying to open up the nation to foreign investment. The Notice of the State Council on Several Measures for Expanding the Opening-up and Active Use of Foreign Investment, promulgated in January 2017, requires an easing of the restrictions for foreign investment with respect to oil shale, oil sand, shale gas and other unconventional oil and gas and mineral resources in the mining industry. The 2019 Negative List has removed some of the restrictions on foreign investment in the mining sector and the 2018 Negative List and the Catalogue of Industries for Guiding Foreign Investment (2017 Revision) were both repealed. The 2020 Negative List became effective on 23 July 2020, which has replaced the 2019 Negative List. As mentioned above, the 2020 Negative List made no revisions to the mining section provided in the 2019 Negative List.
To establish a foreign-invested mineral exploration enterprise, investors should follow the Measures for the Administration of Foreign-Invested Mineral Exploration Enterprises. Upon approval of a project for the exploration or mining of mineral resources with foreign investment, the MNR will issue an exploration licence or a mining licence; when Chinese and foreign parties cooperate in a mineral resources exploration or mining project, the Chinese party should file the signed contract with the original licence issuing authority.48
The mining of mineral resources is subject to resource tax in accordance with the relevant regulations. All entities and individuals engaged in the exploitation of mineral products or in the production of salts within the Chinese territory and the sea areas under Chinese jurisdiction are liable to pay resource tax. The taxable items and the rates payable are determined in accordance with the Table of Taxable Items and Tax Rates of Resource Tax and relevant rules of the Ministry of Finance.49
Other taxes to which an FIE is liable are the same as those that Chinese domestic enterprises should pay, such as corporate income tax, value added tax (VAT) and stamp duties.
Enterprise income tax
Enterprises and other organisations that earn income within the Chinese territory are subject to a corporate income tax. Currently, the rate is 25 per cent.50
Value added tax
All organisations and individuals engaged in the sale of goods, the provision of processing, repair or replacement services, or import of goods within the Chinese territory should pay VAT. The rate is variable; for example, the VAT on the sale of goods, labour services, leasing services of tangible movables or importing goods is 17 per cent, and the rate for selling services or intangible assets is 6 per cent.51
All entities and individuals who execute or receive, within the Chinese territory, documents in the categories specified in the relevant regulations are subject to stamp duty. The rate is variable; for example, the stamp duty on survey and design contracts for engineering and construction projects is 0.05 per cent of the receipt.52
Urban and town land-use tax
Organisations, entities and individuals using land within the scope of a city, county, administrative town, industrial or mining area will need to pay urban and town land-use tax. Currently, the annual rates of land-use tax per square metre are as follows: 1.5 to 30 yuan in large cities, 1.2 to 24 yuan in medium-sized cities, 0.9 to 18 yuan in small cities and 0.6 to 12 yuan in county seats, administrative towns, industrial and mining areas.53
A property owner should pay property tax. If the title is state-owned, the property tax should be paid by the entity operating and managing the property. In the event that the owner is not in the place where the property is located or the title has not been fixed or is under dispute, the property agent or the user should pay the tax. The property tax rate is 1.2 per cent if calculated according to the remaining value of the property, and 12 per cent if calculated according to the rent revenue of the property.54
Urban maintenance and construction tax
Organisations, entities and individuals that pay consumption tax, VAT and business tax are also liable for urban maintenance and construction tax. The current rates are as follows: if the location of the taxpayer is urban, 7 per cent; if the location of the taxpayer is in a county or town, 5 per cent; and if the location is neither urban nor in a county or town, 1 per cent.55
Organisations, entities and individuals that pay consumption tax, VAT or business tax should also pay an education surcharge, except those organisations that pay surcharges for education in rural areas pursuant to the Notice of the State Council on Raising Funds for Running Schools in Rural Areas. The education surcharge is calculated according to the amounts paid for VAT, business tax and consumption tax, subject to a collection rate for the education surcharge of 3 per cent, and will be collected at the same time as VAT, business tax or consumption tax payments.56
Chinese Customs will collect import or export duties on all goods permitted by China to be imported into or exported out of the customs territory and all inward articles, unless otherwise provided for by laws or regulations. The tariff items, tariff headings and duty rates are defined by the Import and Export Tariff of China and the Flat Duty Rates on Inward Articles of China.
iv Other fees
An entity involved in the exploration and mining of mineral resources within Chinese territory and other sea areas under Chinese jurisdiction must pay resource compensation fees. Mineral resources compensation fees are calculated based on a certain ratio of the sales income of mineral products and may be treated by the payer as a management expense. According to the Notice of the Ministry of Finance and the National Development and Reform Commission on Clearing Funds Relating to Rare Earth, Tungsten and Molybdenum, as of 1 May 2015, the resource compensation fee for rare earth, tungsten and molybdenum mining has been reduced to zero, and the collection of price adjustment funds for rare earth, tungsten and molybdenum has been suspended. According to the Notice of the Ministry of Finance and the State Administration of Taxation on Advancing Reforms on Resource Tax, when implementing the price-based collection of resources tax, the resource compensation fees for all types of mineral resources should be reduced to zero, collection of price adjustment funds should be suspended, and the various local collection funds established unlawfully for mineral resources should be cancelled.
China implements a system whereby charges are payable for exploration rights. The exploration right fee is calculated and paid annually. According to the Measures for Registration and Administration of Exploration Blocks of Mineral Resources and the Administrative Measures on Royalties and Prices for Exploration Rights and Mining Rights, currently the standard exploration right fees are: from the first exploration year to the third exploration year, 100 yuan per square kilometre per year; from the fourth exploration year, 100 yuan per square kilometre to be added each year, but the maximum should not exceed 500 yuan per square kilometre per year.57 As indicated above, when obtaining an exploration right resulting from a state-funded exploration through which the location of minerals is already verified, in addition to the exploration right fee, a charge determined by a valuation of the exploration right should also be paid.58 In addition, according to the Notice of the Ministry of Finance and the National Development and Reform Commission on Cancelling, Suspending the Levy of, and Waiving a Batch of Administrative and Institutional Fees, the collection of mineral resources exploration registration fees relating to exploration registration is suspended.
Charges are also payable for mining rights. If the application has been approved, the mining right applicant should pay a mining right fee. According to the Measures for Registration and Administration of Mineral Resources Mining and the Administrative Measures on Royalties and Prices for Exploration Rights and Mining Rights, the mining right fee should be paid annually according to the acreage of the scope of the mining zone at a rate of 1,000 yuan per square kilometre per year.59 Again, when obtaining a mining right resulting from a state-funded exploration through which the location of minerals is already verified, in addition to the mining right fee, a charge determined by a valuation of the mining right should also be paid.60 According to the Notice of the Ministry of Finance and the National Development and Reform Commission on Cancelling, Suspending the Levy of, and Waiving a Batch of Administrative and Institutional Fees, as also indicated in the paragraph above, the collection of mineral resources mining registration fees relating to mining registration is suspended.
Outlook and trends
The prospective development of China's mineral resources laws is as follows:
- to continue the streamlining of the administrative approval processes;
- to promulgate new laws to improve the regulation of mineral resources;
- to continue the opening-up policy to encourage foreign investment and technology in exploration, mining and related mineral resources valuation; and
- to place a stronger emphasis on human safety and environmental protection within the mining industry.
1 Xiong Yin and Jie Chai are senior partners and Yanli Zhang is an associate at Tian Yuan Law Firm.
2 Ministry of Land and Resources, China Mineral Resources (2017) (Geological Publishing House 2017).
3 Ministry of Land and Resources, China Mineral Resources (2018) (Geological Publishing House 2018).
4 The Belt and Road Initiative is a global development initiative of the Chinese government to jointly build a 'Silk Road' economic belt and a twenty-first century 'Maritime Silk Road', involving investment in infrastructure projects in Asia, Europe, Africa, the Middle East and the Americas. The term originally came from, or is in reference to, the trade activities and friendship of ancient China with peoples and countries in Europe, Asia and Africa along the Silk Road and maritime journeys.
5 Ministry of Land and Resources, China Mineral Resources (2019) (Geological Publishing House 2019).
6 See Notice on Further Enhancing the Supervision and Management of Exploration and Construction Activities in Natural Protection Areas, Article 4.
7 See generally, Outline of the 13th Five-Year Plan for Economic and Social Development of the People's Republic of China (2016–2020).
8 Ministry of Land and Resources, China Mineral Resources (2019) (Geological Publishing House 2019).
9 Recently reorganised according to Decision of the 1st Session of the 13th National People's Congress on the State Council Institutional Reform Proposal.
10 Constitution of the People's Republic of China (2018 Amendment), Article 9.
11 Mineral Resources Law of the People's Republic of China (2009 Amendment), Article 3.
12 Measures for Registration Administration of Exploration Blocks of Mineral Resources (2014 Amendment), Article 16; Measures for Registration Administration of Mineral Resources Exploitation (2014 Amendment), Article 13.
13 Notice of the Ministry of Land and Resources on Issues Regarding the Administration of Strict Control and Regulation of Transfer of Mineral Rights by Agreement, Article 1.
14 Measures for Registration Administration of Exploration Blocks of Mineral Resources (2014 Amendment), Articles 8 and 13; Measures for Registration Administration of Mineral Resources Exploitation (2014 Amendment), Articles 6 and 10.
15 Rules for the Implementation of the Mineral Resources Law of the People's Republic of China, Article 16.
17 id., Article 30.
18 Implementing Opinions of Ministry of Land and Resources, Ministry of Finance, Ministry of Environmental Protection on Accelerating the Construction of Green Mines, Article 3.
19 Rules for the Implementation of the Mineral Resources Law of the People's Republic of China, Article 17.
20 Measures for Registration Administration of Exploration Blocks of Mineral Resources (2014 Amendment), Article 16.
21 Rules for the Implementation of the Mineral Resources Law of the People's Republic of China, Article 31.
22 Measures for Registration Administration of Exploration Blocks of Mineral Resources (2014 Amendment), Article 10.
23 id., Article 7.
24 id., Article 15.
25 id., Article 12.
26 id., Article 8.
27 See footnote 2.
28 Notice of Ministry of Finance and Ministry of Land and Resources on Further Closing of Mining Enterprises and Returning Paid License Fee, Section 1.
29 Special Management Measures for the Market Entry of Foreign Investment (Negative List) (2019 Version).
30 Law on Safety in Mines of the People's Republic of China, Article 8.
31 Measures for Registration Administration of Mineral Resources Exploitation (2014 Amendment), Article 5.
32 Rules for the Implementation of the Mineral Resources Law of the People's Republic of China, Article 33.
33 id., Article 34.
34 Notice of the State Council on Issuing the Plan for the Reform of the Mineral Resource Royalty System.
35 Mineral Resources Law of the People's Republic of China (2009 Amendment), Article 31.
36 Work Safety Law of the People's Republic of China, Article 21.
37 id., Article 29.
38 id., Article 31.
39 Opinions of the General Office of State Council on Further Strengthen Production Safety in Coal Mines, Articles 1(1) and 2(4).
40 Labour Law of the People's Republic of China, Articles 58, 59 and 64.
41 Opinions of the General Office of State Council on Further Strengthen Production Safety in Coal Mines, Article 6(15).
42 Regulations on Environmental Protection Management for Construction on Projects (2017 Amendment), Article 9.
43 id., Article 12.
44 id., Article 17(1).
45 id., Article 17(3).
46 Mineral Resources Law of the People's Republic of China (2009 Amendment), Article 10.
47 id., Article 34.
48 Measures for Registration Administration of Mineral Resources Exploitation (2014 Amendment), Article 29; Measures for Registration Administration of Exploration Blocks of Mineral Resources (2014 Amendment), Article 38.
49 Interim Regulations of the People's Republic of China on Resource Tax, Article 4.
50 Law of the People's Republic of China on Enterprise Income Tax, Article 4.
51 Interim Regulations of the People's Republic of China on Value-Added Tax, Article 2.
52 Interim Regulations of the People's Republic of China on Stamp Duty, Article 3.
53 Interim Regulations of the People's Republic of China on Urban and Town Land-use Tax, Article 4.
54 Interim Regulations of the People's Republic of China on Property Tax, Article 4.
55 Interim Regulations of the People's Republic of China on Urban Maintenance and Construction Tax, Article 4.
56 Interim Provisions on Collection of the Education Surcharge, Article 3.
57 Measures for Registration Administration of Exploration Blocks of Mineral Resources (2014 Amendment), Article 12.
58 ibid., Article 13.
59 Measures for Registration Administration of Mineral Resources Exploitation (2014 Amendment), Article 9.
60 ibid., Article 10.