CHINA Trends and Developments Contributed by: Guisheng Yang, Qi Zhu, Yonghui Wang and Ranran Shi, Beijing Dacheng Law Offices
to renew upon expiration or revocation, as long as the mineral rights certificate remains valid, the rel- evant real right will continue to exist. The right holder may reapply for the permit and resume production and operation after rectifying to meet the standards. Only when the real right is extinguished due to legal cancellation of the mineral rights certificate or other reasons will the permit lose its effect accordingly. This system arrangement has fundamentally changed the previous risk pattern of “permit cancellation leading to right extinction”, providing mineral rights holders with more stable right expectations. For mineral rights transactions, the “Separation of Mineral Rights and Permits” system realises the open- ness and transparency of the rights status through the national unified mineral rights register. This ena- bles both parties to the transaction to conveniently inquire about information such as the ownership, term, mortgage and seizure of the right, effectively reducing transaction risks. At the same time, the law clearly stipulates that the assignment of mineral rights shall be valid after legal registration, and the previous assignment approval procedure has been cancelled, significantly improving the efficiency of market circu- lation. The reform of the “Separation of Mineral Rights and Permits” system not only complies with the require- ment of the principle of statutory real rights under the Civil Code, but also conforms to the basic needs of the market economy for clear rights and transaction security. For various market entities, including foreign investors, the reform of the system injects new vital- ity into the high-quality development of the mining economy and has the following results: • the optimisation of the investment environment; • clearer right boundaries; • less and more standardised administrative inter - vention; and • broader financing channels. Direct application system for conversion from exploration right to mining right Under the framework of the former Mineral Resources Law, although it was stipulated that the exploration right holder had the priority to obtain the mining right
for mineral resources within the exploration area, this priority was full of uncertainties in practice. It was not clear whether it was a priority under the same condi- tions or an absolute priority. This caused exploration right holders many concerns: after investing a large amount of human, material and financial resources in exploration, they could not be ensured to obtain the mining right, which affected the enthusiasm of many potential investors in mineral resources exploration and development. The New Mineral Resources Law implements the direct application system for the conversion from exploration right to mining right. After the holders of exploration rights have verified the mineral resources for mining, they may, within the duration of the explo- ration rights, apply to change their exploration rights to mining rights. This means that obtaining a mining right is one of the inherent rights legally enjoyed by the exploration right holder; once the exploration right holders prove the existence of exploitable mineral resources, they can naturally apply for and obtain min- ing rights. This reform has enhanced the investment confidence and exploration enthusiasm of exploration right holders. The New Mineral Resources Law establishes a new type of exploration right reservation system, further providing comprehensive protection for the rights and interests of exploration right holders. Where, for the sake of public interests, or due to force majeure or other special circumstances, exploration rights can- not be changed to mining rights for the time being, the holders of exploration rights may apply for the reservation of exploration rights. The original mineral rights assignment authority shall process the applica- tion for them. Calculation of the duration of the explo- ration rights shall cease while the exploration rights are being reserved. The implementation of the direct application system for the conversion from exploration right to mining right has reduced investment risks for investors, sig- nificantly enhancing the attractiveness of China’s min- ing market to global capital.
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