State Development Planning Commission, Foreign Investment in the Rare Earth Industry Tentative Provisions

Issued: August 1 2002
Effective: as of date of issue
Interpreting authority: State Development Planning Commission
Applicability: The Regulations apply to the investment and establishment of Sino-foreign equity and cooperative joint ventures, wholly foreign-owned enterprises, foreign-invested companies limited by shares and other foreign investment in the rare earth industry in China (Article 2). The Provisions shall be made reference with regard to investment from overseas Chinese, the Hong Kong and Macao Special Administrative Regions and Taiwan (Article 13).

Main contents: Foreign investment in the domestic rare earth industry is categorized according to three classifications of activities: mining; smelting and separation; and intensive processing and application (Article 3). Foreign investors are prohibited from establishing enterprises that engage in rare earth mining. Foreign investment in smelting and separation is limited to equity and cooperative joint ventures. Foreign investment is encouraged in intensive processing, new materials and application of rare earth.
Where Chinese enterprises that are directly engaged in the production or sale of rare earth mining intend to establish with foreign investors an equity or cooperative joint venture that engages in rare earth smelting and separation, the assets and business related to the original mining operation may not be included in the joint venture (Article 4).
Foreign investment in rare earth smelting and separation projects, no matter the scale, must be approved by the State Development Planning Commission. Foreign investment in intensive processing and application of rare earth shall be approved by the development planning commission of the province, autonomous region, municipality directly under the central government or city with independent plan if the total investment amount is less than US$30 million; when the total investment reaches or exceeds that amount, the project must be approved by the State Development Planning Commission (Article 5). Foreign-invested companies limited by shares engaged in the smelting and separation of rare earths may apply for listing and issuing of shares inside or outside China (Article 7).
Repealed legislation: Administration of Foreign Cooperation in and Technology Export of Rare Earths Circular, 1990 and The Rare Earth Office of the State Development Planning Commission, Relevant Provisions on Reiterating the Administration of Sino-foreign Equity and Cooperative Joint Ventures Engaged in the Rare Earth Industry Circular, 1994