The "Go West" Campaign's Main Policies

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. It points out that those who conduct exploration and mining of mineral resources in the western regions may apply for a deduction or exemption from the mineral prospecting rights license fee or mineral exploitation 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 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 mineral prospecting 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 mineral exploitation 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.

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

Foreign  enterprises  involved  in  the  exploration  and exploitation of non-petroleum or gas mineral resources are exempt from paying mineral prospecting and exploitation 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 mineral prospecting or exploitation 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 <Categories for Foreign Investors to Invest in the Predominant Industries in the Central and Western Regions of China>, which came into force from September 1, 2004. It 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. The projects that the foreign investors invested is attributed to this categories enjoys the relevant policies relating to the encouraged items in <Regulations to Guide Foreign
Investment Direction>and the relevant preferential policies in <Circular of the Opinions on Further Encouraging the Investment of Foreign Investors Transmitted a Document of Ministry of Foreign Trade and Economic Cooperation And the Other Sectors by the Genera/Office of State Council>.

Table 2-2  shows the Categories for Foreign Investors to invest in the Predominant Industries in the Middle and Western Regions.

Plan for Mineral Resources

"Mineral Resources Plan" is not only a guiding document to mineral resources prospecting and development but also an important basis for examination and approval of prospecting and exploitation activities according to the law. Chinese government put "National Plan for Mineral Resources" in practice on April 30, 2001. It takes the introduction of foreign capital as one of the six major tasks for development and conservation of mineral resources.

Foreign  companies,  enterprises  and  other  economic organizations are encouraged to explore and exploit mineral resources and given legal protection in China according to China's laws and regulations, and policies concerned.

Foreign investors who must have advanced and applicable technology, technique equipments and management methods can invest  in exploration and  exploitation of mineral resources. Only like this, it will improve the level of technology, management and economic returns of mineral resources exploration and exploitation, and increase the competitiveness of enterprises in the international market and preserve the ecological environment.

Proactive policies on foreign mining investment will be constituted by such means as expending the scopes of mining industry wide to the outside world, improving investment environment of mining industry so as to create a good conditions for foreign investment and domestic mining enterprises cooperation with the outside world.

a. Foreign investors will be allowed to engage in mineral resources  exploration  with  china's  cooperators on unincorporated cooperation organization.

b. Once foreign investment enterprises and unincorporated cooperation organization discover the mineral resources with commercial value, the state will guarantee to them for the acquisition of mineral prospecting rights by law under the conditions of acquisition of mineral prospecting rights set by law and regulations

c. Foreign investors are encouraged to cooperate with domestic mining enterprises or use joint capital, which aims at promoting technology and management of exploiting, dressing and smelting; improving intensification and scale; raising  the  utilization  ratio  of resources  and  market competitiveness.

d. Foreign investors are encouraged to explore and exploit mineral resources in the middle or west areas of China.

e. Local people's government at all levels and the departments concerned are neither allowed to participate in handling mining enterprises by joint venture or cooperation nor ask illegal demand for various stock or profit share to foreign investors. Furthermore, arbitrary examination and requisition of donations and unlawful increase of the item of charges are prohibited. The conditions for foreign investment in their regions will be improved; and monitoring law enforcement will be increased to safeguard the order of mining industry and protect the legitimate rights and interests of foreign investors.

f. The improvement of legal system and the guidance of policy relating to exploration and exploitation of mineral resources by using foreign funds will be strengthened. Approval procedure for foreign investment will be standardized and made simple and clear, and information services in geology, law, policy and management provided timely.