PRC Laws on Mineral Resources – Part 3

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 a Mining Permit

A company wishing to obtain a Mining Permit must make an application in accordance with the requirement of the ‘‘Administrative Measures on Registration of Mineral Resources Exploitation”. In accordance with those requirements an applicant must submit the following documents to the Ministry of Land and Resources of the PRC or its local branch:

  • an application form and a drawing or map indicating the scope of the mining area
  • a certificate validating the qualification of the applicant
  • a plan for development and utilisation of the mineral resources
  • approval documents for establishment of the mining enterprise
  • an environment influence evaluation report for the exploitation of the mineral resources, 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 the mining right usage fee before obtaining the Mining Permit, which is calculated according to the size of the mining area.

As set out in a previous article, Mining right usage fees are also payable on an annual basis. The rate of mining right usage fee is RMB1,000 per of mining area per annum. In accordance with the ‘‘Administration Regulation for Collection of Mineral Resource Compensation Fee”, holders of Mining Permits must also pay mineral resource compensation fees, based on a percentage of their sales revenue.

The maximum period of the initial term of the Mining Permit is determined according to

the construction scale of the mine. For a large-scale mine, the initial term may be as long as 30 years, for a middle-scale mine, 20 years, and for a small-scale mine, 10 years. Holders of Mining Permits must submit applications for renewal to the relevant authority at least 30 days prior to the expiration date for the Mining Permit. A Mining Permit that is not renewed will be automatically annulled on its expiration date.

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