Land Utilized for Mineral Resources Exploration

Given the uncertainties in mineral resources exploration, applications for land used for mineral resource exploration are for temporary land use, and such approvals must be obtained from the land administrative authorities of the people's governments above provincial level.  In addition, contracts for temporary land use for this purpose must be signed with the relevant local land administrative authorities or rural collective organizations or village committee. According to the contract terms, a land indemnification fee must be paid for the temporary use of the land and the term for temporary use must not exceed two years.  After certain deposits have been proven, official procedures, according to relevant regulations, for taking over the land to be used for mining must be gone through accordingly.

Use of Land for Mining Enterprises

Foreign-owned mining enterprises must apply for land use to the local land administrative authorities where the land they wish to explore is located, with their mining business license, project approval document and other relevant documents. The land administrative authorities under the people's government at the municipal or county level will examine the application and grant approval, as well as drawing up plans for supplying the land and taking over the land.  After approval by the people's government at the municipal or county level, the application will be submitted upwards to a government body with the relevant approval authority.

The taking over of basic farmland or other plough land (that covers an area of more than 35 hectares) or other land covering more than 70 hectares must be approved by the State Council. The taking over of land other than the above-mentioned must be approved by the people's government at provincial, autonomous region or municipal level and must be filed with the State Council.

Taking over state-owned farmland needs approval from the State Council. Taking over of other land must be approved by the people's government at provincial, autonomous region or municipal level.

Taking over unused state-owned land needs approval by the people's government at provincial, autonomous region or municipal level.  However, if the project is a national key project, contains military facilities or is trans-province, trans-autonomous region or is trans-municipal, or if the land usage is one needing special approval by the State Council, then approval from the State Council must be obtained.

Upon approval of land use, the people's government at the municipal or county level is responsible for implementation of the plans.  The land administrative authorities of the said people's government will provide the land and issue a land use approval certificate to the foreign-owned mining enterprise, according to the land use application and the plans submitted. For enterprises using land through transfer or lease, they will need to sign the 'State-Owned Land Using Right Transfer Contract' or 'State-Owned Land Lease Contract' with the said people's government.  Those who apply for land use via appropriation or evaluation and investment by the state will need to obtain the 'State-Owned Land Granting Decision' or 'State-Owned Land Use Rights Evaluation and Investment Decision' to be issued by the land administrative authorities of the above-mentioned people's government.

Foreign-owned mining enterprises that apply for land use must apply for the land registration according to the relevant approval documents and obtain land use rights granted by the 'State-Owned Land Use Rights Certificate'.

The State Council Office has recently reissued the <Opinions on A Number of Policies and Measures for Developing the Western Region> ('the Opinions'). The reissuing is in order to implement the State's 'Go West' strategy by encouraging the utilization of foreign investment, and introducing advanced technologies and equipment, to facilitate development of the relatively predominant industries, and enterprises with advanced technologies in the middle and western regions of China, and to speed up the upgrade of the industrial structure in the regions, so as to improve the overall economy of the regions.  The following (from the Opinions) outlines preferential policies for investment in mineral resources exploration and exploitation in the western region.

i) Within the state-owned land resources plan, geological surveys for the western region should be a priority, and funds will be available to support this work. The areas with concentrated supplies of key mineral resources and areas where mineral resources and underground water resources are in short supply will be listed as first priority for investigation and evaluation. Areas with low geological development and severe geological disasters will be listed as first priority for fundamental geological work.

ii) Exploration rights or mining rights price value generated from government-invested exploration in the western region may be partially or completely transferred to become state-owned capital for state-owned mining enterprises or geological exploration institutions by obtaining approval, if complying with any of the following terms and conditions.

a) Exploration or mining of petroleum, natural gas, coal seam gas, rich ferrous minerals, high-quality manganese, chromite, copper, nickel, gold, silver, leopoldite, platinum group  metals,    underground water or other mineral resources;

b)  Exploration or mining of mineral resources within state-designated poor areas or key developments areas;

c) Exploration of succession and substitution resources due to resource depletion by large and medium-sized mining enterprises;

d) Companies with state-owned capital to invest as shareholders with exploration rights and mining rights value in state-owned mining enterprises being reformed into shareholding companies or joint ventures by approval;

e) State-owned mining enterprises facing true difficulties in paying for exploration rights and mining rights due to natural disasters or other force majeure.

iii) Those who conduct exploration and mining of mineral resources in the western regions may apply for a deduction or exemption from the exploration rights license fee or mining rights license fee if the following conditions apply:

a) Exploration and exploitation of petroleum, natural gas, coal seam gas, uranium, rich ferrous mineral, high-quality manganese, chromite, copper, leopoldite, platinum group metals,    underground water or other mineral resources;

b) Exploration and exploitation of succession and substitution resources by large and medium-sized mining enterprises;

c) Using new technologies and methods to improve the overall utilization level of of the exploitation of mineral resources (including  low quality and  hard-to-dress- and-smelt    mineral resources, as well as exploitation of leftovers from old mines);

d) Other situations determined and acknowledged by the relevant government authorities.

The exploration rights license fee for the first year of exploration year can be waived, and for years two and three there is 50% reduction, while years four to seven feature a reduction of 25%. The mining rights license fee for the first year of the initial construction phase and production startup of the mines is waived, and for years two and three there is 50% reduction, while years four to seven feature a reduction of 25%, and during the year of mine closure, the fee for that year is waived.

iv)Once the exploration rights holder has established the value of mineral resources, via investment and exploration that person may legitimately obtain mining rights. The exploration costs are allowed to be counted into the deferred assets and to be amortized in the mining phase.

v)  Actively foster the exploration rights and mining right market, and push forward prospecting rights, and the sale and legitimate transfer of these rights.

vi) Foreign enterprises involved in the exploration and mining of non-petroleum or gas mineral resources are exempt from paying exploration and mining rights license fees for one year and a further two years only need to pay 50% of such fees, in addition to enjoying the relevant preferential policies at the time. Foreign enterprises engaged in the mining of non-petroleum or gas mineral resources listed under the Encouraged Items in the <Foreign Investment Industry Guidance Categories> are exempted from mineral resources indemnification fees for five years.   In a Sino-foreign joint venture, if the Chinese party invested with exploration or mining rights, then such rights shall be legitimately evaluated, filed or confirmed, and shall be given a reasonable price, according to relevant laws and regulations. The Chinese party shall provide the relevant materials on the geological results.

The State Council has also revised and promulgated the new <Categories for Foreign Investors to Invest in the Predominant Industries in the Middle and Western Regions>, which provides clear guidance for foreign investors regarding investment in predominant industries  in  different  provinces,  autonomous  regions  and municipalities in China's middle and western regions.

Foreign enterprises are allowed to legitimately apply for approvals for geological exploration qualification certificates, exploration licenses and mining licenses within what is permitted by China's laws and regulations, before they become involved in the exploration and mining of mineral resources by way of equity joint ventures, cooperative joint ventures or wholly-foreign-owned enterprises within China's territory and sea areas governed by the China.

The applicant for exploration rights and mining rights for mineral resource exploration and mining by foreign enterprises must be either the investor or the legal person entity setup by the investor. The enterprise will be the applicant for exploration rights and mining rights, if the mineral resources exploration and mining are conducted by an equity joint venture or cooperative joint venture established by two or more investors.  For mineral resources exploration and mining conducted without setting up a cooperative enterprise, the investors shall designate an applicant for exploration rights and mining rights with jointly provided written documents.

The applicant for mining rights must be the legal person entity. If the applicant is applying for exploration rights and is a Sino-foreign equity joint venture, cooperative joint venture, branch office or representative office, which has officially registered with China's administrative authorities for industry and commerce, and has obtained a non-legal person enterprise business license, it can be treated as an applicant with legal person qualifications in this case.

The foreign enterprises involving in exploration and mining of mineral resources shall be approved and registered by the geological mineral resources authorities under the State Council. The said authorities will issue the exploration license and mining license to such enterprises.