Acquisition of Exploration Rights

Basic Procedures for Obtaining Exploration Rights

Foreign enterprises involved in mineral resources exploration, having obtained approval from administrative authorities for commerce, should register with the administrative authorities for industry and commerce, and apply for exploration rights from the state land and resources authorities.

Those foreign enterprises applying for such rights from the administrative authorities for commerce should fill in the Application Form for Establishing Foreign Enterprise Representative Offices and shall provide the following certificates and materials:

i) Application letter signed by the chairman or general manager of the enterprise, which shall contain information such as the name of the permanent representative office, name of the chief representative, business scope, term of residence and location of representative office;

ii) The Certificate of Incorporation issued by the relevant authorities of the nation or region where the enterprise is located;

iii) The Capital Credit Certificate issued by the bank used by the enterprise for business transactions;

iv)The appointment letters for the permanent representative office staff, as well as the resumes and photos of representative office staff.

The administrative authorities for commerce will then propose their examination and approval opinions based on the application of such foreign enterprises' representative offices. If the establishment application is approved, the said authorities will issue the approval certification to such enterprises.

Upon obtaining the approval certificate, the foreign enterprises should go through the registration formalities with the administrative authorities for industry and commerce by providing their approval certificates and completed application forms, together with the abovementioned four types of documents, in order to obtain a registration certificate. After that, they should apply for an exploration license from the state land and resources authorities.

Documents Required for Obtaining Exploration Rights

i) Registration application letter and map showing the range of areas for application;

ii) Photocopy of the qualification certificate of the exploration company;

iii) The working plans for exploration, the exploration contract or the documents certifying the enterprise is entrusted to conduct exploration;

iv)The implementation plans for exploration as well as the appendices;

v) The certificate to prove the source of funds for the exploration project;

vi)Other documents for submission as required by the geology and mineral resources authorities under the State Council.

Rights and Obligations of the Exploration Rights Holder

a) Rights

1) To explore within the time and space limits as specified;

2)To set up electricity, water and communication pipelines within the working area and adjacent areas;

3)Temporary use of the land;

4) Acquisition of first exploration rights to newly discovered mineral types within the working area;

5)Acquisition of first mining rights to for exploitation of mineral resources within the working area;

6)To sell mineral products that are permitted to be recycled;

7)To shield the working area from interference and intrusion;

8)Transfer of exploration rights;

9)Lease of exploration rights;

10)Mortgage of exploration rights.

b) Obligations

1)To start the construction and complete exploration within the specified term;

2)To report the working status to the authorities where the enterprise is registered;

3)To conduct construction according to submitted plans and not to explore mineral resources without permission;

4) To undertake overall exploration and evaluation;

5)To compile an exploration report;

6)To collect and submit exploration data;

7)Land reclamation and environment protection;

8)To cover and fill the mine shaps/pits after completion of exploration;

9)To pay the exploration license fee and inject the minimum exploration investment;

10)To hire a trustee for evaluation when transferring the exploration rights that have been generated with investment by the Chinese government.

Acquisition of Mining Rights

Foreign investors involved in mineral resources mining business in China must set up mining enterprises.  The application for establishing such enterprises must be approved by the administrative authorities for commerce.

After the approval has been obtained, the enterprises shall be registered with the administration for industry and commerce. The enterprises should then apply for mining rights from the state land and resources administrative authorities.

Basic Procedures for Obtaining Mining Rights

Documents Required for Obtaining Mining Rights

i) Application letter for registration of mining rights;

ii) Map of the mining area with a geological topography map or geology map as the base map, to be marked with the point of inflection and the right angle coordinates in compliance with state standards, as well as details about the size of the mining area;

iii) Mineral resource exploitation and utilization plans compiled by a qualified design institution, which contain content such as the location, topography, geomorphy, reserve, quality and reliability of the mine,, and the technologies, and economic proof for the scope of the mining area, arieties of the minerals to be exploited, reserves designed to be utilized, production scale of the mine, service term, exploitation  means  and  methods  and  the  synthesized exploitation and utilization of minerals,

iv)Legal person entity's business license or individual entity's business license;

v)Certification materials to prove the ownership of appropriate funds, technologies and equipment conditions for the mine construction;

vi)Document  related  to the  mining  rights  evaluation and acknowledgement if applying for mining rights in connection with the exploitation and proving of the mining area by government funds;

vii)Environmental impact report and approval opinions of relevant environmental protection authorities.

Rights and Obligations of the Mining Rights Holder

a)Rights:

1)To mine within the time and space limits as specified;

2)Sale of mineral products

3)Building of production and living facilities within the mining area;

4)Acquisition of land use rights;

5)Transfer of mining rights;

6)Leasing out mining rights;

7)Mortgaging of mining rights;

8)To shield the working area from interference and intrusion

b) Obligations:

1)To mine within the time and space limits as specified;

2)Protect the resources and to exploit them in a reasonable way;

3)Pay the resources tax and mineral resources indemnification fee;

4) Carry out the production safely, protecting the water and land resources. Reclamation of land; protection of the environment;

5)Accept the supervision and management of the relevant mining industry administrative  authorities  and  support them  in generating statistics and reports to record changes in reserves;

6)Pay the mining rights license fee;

7)Independent evaluation of mining rights when transfer of mining rights generated by investment from the Chinese government takes places;

8)Collect and submit the geological information when the mine is closed.

Bidding, Auctions and Listing

The MLR has issued the < Trial Measures on the Administration of Bidding, Auction and Listing of Exploration Rights and Mining Rights> in June 2003, aiming to improve the system for acquisition of exploration and mining rights through payment, fully utilizing the market's fundamental role in the allocation of state land and resources, establishing a new mechanism for prioritized allocation/deployment of mineral resources, combining the functions of government administration and market operation, and protecting the legitimate rights and interests of the exploration rights holders and mining right holders. The bidding, auction and listing of exploration rights and mining rights will be organized and implemented by the land and resources administrations of the people's governments above county level in accordance with the legal authority for issuance of the exploration license and mining license.  Only new exploration and mining rights to be set-up from scratch can be applied for via bidding, auction and listing, while the exploration and mining rights that already exist cannot.

The Newly Defined Scope For Bidding, Auction and Listing of Exploration Rights

i) Mining areas explored and proven with government funds for further exploration;

ii) Mining areas with no exploration rights;

iii) Exploration areas and zones demarcated by special planning for mineral resource exploration as planned by the central and provincial governments;

iv) Other cases as defined by the relevant authorities.

The Newly Defined Scope For Bidding, Auction and Listing of Mining Rights

i)  Mining areas explored and proven with government funds for exploitation;

ii)  Mining areas with nonexistent mining rights;

iii) Mining areas available for exploitation but with nonexistent mining rights;

iv) Mineral resources available for direct exploitation that do not need mining rights as defined by the relevant authorities;

v) Other cases as defined by the MLR and the administrations at provincial level.

Cases Applicable For Granting of Exploration Rights and Mining Rights Via Bidding

Exploration rights and mining rights will be granted through bidding however many factors will be brought into play other than the high price value of an offer, and bidding will look to the bidder with the best proposed solution, if new exploration rights and mining rights are to be granted through bidding, auction and listing. This will encourage commercial investment in mineral exploration, lower market access barriers, protect mineral origins and mineral resources related to the national economy and people's life, utilize to the full the economic, social and environment efficiencies of the resources.

i) Exploration projects invested with government funds;

ii) Energy resources and metal mineral resources with large-scale reserves;

iii) Mineral resources with syngenetic and associated minerals with many varieties of constituents and high technological demand for synthetic utilization;

iv) Mineral resource areas of significant value to the national economy;

v) Environmentally sensitive areas and areas non-compliant with the environment quality standards according to government regulations, where new exploration rights and mining rights may be granted in accordance with the laws and regulations as well as government policies.

Cases not Applicable For Exploration Rights and Mining Rights Via Bidding, Auction and Listing

i) Mining rights applied for by exploration rights holders, according to the law, for areas within the range of the exploration area;

ii) The next successive mineral area and mineral area's granted mining rights whose overlying and underground seams require consolidated exploitation of the mining enterprise, that complies with the mineral resources planning or mineral area's overall planning;

iii)Supply of mineral resources to be utilized for the construction in national key infrastructure development projects and projects for public social benefit;

iv) Exploration rights or mining rights where disputes about rights ownership exist.

v) Other cases as defined according to laws and regulations, and other special cases where rights cannot be transferred via bidding, auction or listing as defined by the relevant authorities.