PRC Laws on Mineral Resources – Part 2

by David Richardson - Dorsey & Whitney

This series focuses on the basic legal and bureaucratic framework around the mining of mineral resources in the PRC.

Obtaining an Exploration Licence

Anyone wishing to engage in exploration activities relating to mineral resources in the PRC must obtain an Exploration Licence before commencing those activities.

The ‘‘Administrative Measures on Registration of Tenement of Mineral Resources Exploration and Survey” contains the administrative requirements to apply for an Exploration Licence. In accordance with those requirements an applicant for an Exploration Licence must submit the following documents to the Ministry of Land and Resources or its local branch:

  • an application form for registration and a drawing or map indicating the scope of the blocks for which the applicant is applying
  • a copy of the certificate validating the qualification of the exploration unit
  • an exploration working plan and an exploration contract or documents evidencing that the exploration unit and project are entrusted by the State
  • an implementation proposal for the exploration
  • documents of proof showing the source of the funds for the exploration project, and
  • materials otherwise required by the relevant authority.

After reviewing these documents, the relevant authority must make a decision within 40 days and notify the applicant of the result. If the application is approved, the applicant must pay an exploration right usage fee before obtaining the Exploration Licence.

As explained in our previous article, exploration right usage fees are calculated according to the size of the exploration area and are payable on an annual basis. The rate of exploration right usage fees for the first year to the third year of exploration is RMB100 per of exploration area per annum. From the fourth year of exploration onwards, the rate increases by RMB100 per of exploration area per annum, up to an annual maximum rate of RMB500 per of exploration area.

The maximum period for the initial term of the Exploration Licence is three years. The holder of an Exploration Licence must submit an application to the registration authority for renewal of an Exploration Licence at least 30 days prior to the expiration date of the Exploration Licence. If it is not renewed, an Exploration Licence is automatically annulled on its expiration date. Each period of renewal cannot exceed two years.

David Richardson of the Hong Kong office of Dorsey & Whitney has over 20 years of experience in corporate finance in Hong Kong. He sits on a number of securities regulatory committees in Hong Kong.

David advised in a secondary listing on the Hong Kong Stock Exchange (“HKSE”) of Sino Gold Mining Limited (“Sino Gold”). The listing raised approximately US$120 million. Sino Gold is primarily listed on the Australian Stock Exchange. Sino Gold was, at the time of listing, the largest foreign producer of gold in the People’s Republic of China (”PRC”). David had previously acted in the listing of Zijin Mining, one of the largest domestic producer of gold in the PRC, on the HKSE. David is presently acting on the listing of other mineral resources companies on the HKSE.

Dorsey & Whitney have a strong mineral resources practice. For a list of representative transactions of this practice, please click here.

For further information, please contact:

David Richardson
Dorsey & Whitney
Hong Kong
Telephone: +852 2105 0234