CHINA Trends and Developments Contributed by: Guisheng Yang, Qi Zhu, Yonghui Wang and Ranran Shi, Beijing Dacheng Law Offices
policy uncertainty of investment, providing stable right expectations for mineral rights holders, and enhancing the confidence of investors in long-term investment. Management of overburdened mineral resources: from compensation for direct losses to fair and reasonable compensation Before the New Mineral Resources Law, in practice, the scope of compensation for overburdened mineral resources was usually limited to direct investment losses, which could not fully reflect the true value of mineral rights. However, the New Mineral Resources Law raises the compensation standard to a “fair and reasonable” level, and compensation may be made based on the market price of the mineral rights. This reform fully takes into account the property attribute of mineral rights, follows the laws of the market econ- omy, and reflects the comprehensive protection of the rights and interests of mineral rights holders. Competitive assignment: allowing the market to allocate resources Mineral rights shall be assigned through competitive methods such as bidding, auction and listing, except where laws, administrative regulations or the State Council provide that mineral rights may be assigned through agreement or established by other methods. This system is of great significance for improving the development and utilisation of mineral resources. It not only improves the transparency and fairness of mineral rights allocation and stimulates market vitality, but also attracts more external funds into the mining industry, thereby promoting capital flow and competi- tion. Strengthening international co-operation in the mining sector Article 15 of the New Mineral Resources Law stipu- lates: “The State upholds the principles of equality, mutual benefit and win-win cooperation and actively promotes the international cooperation in the field of mineral resources.” This article is a newly added pro- vision and is located in the general provisions of the New Mineral Resources Law. The Energy Law, which was adopted on the same day as the New Mineral Resources Law, also emphasises the promotion of international energy co-operation in its general provi- sions. This is the first time that international co-oper-
ation in the fields of mineral resources and energy has been encouraged and strengthened at the legislative level. Preferential Policies for Foreign Investment in the Mining Industry The New Mineral Resources Law does not directly stipulate provisions on foreign investment in the mineral resources industry; such investment mainly applies to national industrial policies such as the Spe- cial Administrative Measures (Negative List) for For- eign Investment Access (2024 Edition). In accordance with the provisions of the Foreign Investment Law, China implements a management system of pre-establishment national treatment and negative list for foreign investment. Up until now, the foreign investment access negative lists issued by China mainly include: • Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Edition); • Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2021 Edition); and • Special Administrative Measures (Negative List) for Admission of Foreign Investments in Hainan Free Trade Port (2020 Edition). According to the above negative lists, foreign inves- tors investing in China’s mining sector shall first avoid the prohibited areas specified in the negative lists, such as the exploration, mining and beneficiation of rare earths, radioactive minerals and tungsten. For restricted fields, foreign investors shall meet special requirements such as shareholding ratio and senior management personnel qualification. Fields not cov- ered in the negative lists shall be subject to adminis- tration pursuant to the principle of equal treatment for domestic and foreign investments. For fields not covered in the negative lists, foreign investors may also focus on the Catalogue of Encour- aged Industries for Foreign Investment (2022 Edition). Specifically in the mining sector, industries encour- aged for foreign investment include:
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