Measures for the Administration of Foreign-invested Mineral Exploration Enterprises

(Promulgated by the Ministry of Commerce and Ministry of Land and Resources on July 18 2008 and effective as of August 20 2008.)

Order of MOFCOM and MLR [2008] No.4

Article 1: These Measures have been formulated pursuant to the PRC Sino-foreign Equity Joint Venture Law, thePRC Sino-foreign Cooperative Joint Venture Law, the PRC Wholly Foreign-owned Enterprise Law, the PRC Mineral Resources Law and other laws and administrative regulations in order to further open the mineral resource exploration sector to foreign investment and regulate the examination, approval and administration of foreign-invested mineral exploration enterprises.

Article 2: For the purposes of these Measures, the term “foreign-invested mineral exploration enterprise” means a foreign-invested enterprise registered in China in accordance with relevant laws and engaging in investment in mineral (here and hereinafter excluding petroleum, natural gas and coal bed gas) exploration and related activities.

Article 3: Foreign-invested mineral exploration enterprises established in China by foreign enterprises, individuals or other economic organisations (Foreign Investors) in the form of wholly-owned enterprises or with Chinese enterprises or other economic organisations (Chinese Investors) in the form of equity joint ventures or cooperative joint ventures shall comply herewith.

Geological surveying work units registered in China and engaging in business activities in accordance with the law may serve as Chinese Investors.

Article 4: Foreign-invested mineral exploration enterprises shall abide by the laws, administrative regulations and relevant rules of the People's Republic of China, and their legitimate mineral exploration activities and lawful rights and interests shall be protected by the law of China.

The state encourages investment in mineral exploration activities by Foreign Investors with mineral exploration experience or mining financing capabilities, encourages foreign-invested mineral exploration enterprises to use hi-tech means to engage in mineral exploration activities and encourages foreign-invested mineral exploration enterprises to play an active role in the sustainable development of the mining industry.

Article 5: Departments in charge of commerce and land and resources administration departments, at every level, shall oversee the business activities of foreign-invested mineral exploration enterprises in accordance with the law.

Article 6: Chinese Investors may use their lawfully-owned exploration rights and the geological survey information relating to such exploration rights as part of their capital contributions or conditions of cooperation.

If a Chinese Investor uses exploration rights arising from a capital contribution by the state as part of its capital contribution or conditions of cooperation, it shall comply with relevant provisions.

Article 7: The Ministry of Commerce shall be in charge of the examination and approval of the establishment and the administration of foreign-invested mineral exploration enterprises engaging in activities falling within the restricted category of the Industrial Guidance Catalogue for Foreign Investment. Departments in charge of commerce of provinces, autonomous regions, municipalities directly under the central government and cities with independent development plans (the Provincial-level Departments in Charge of Commerce) shall be in charge of the examination and approval of the establishment and the administration of other foreign-invested mineral exploration enterprises.

Article 8: To establish a foreign-invested mineral exploration enterprise, the following documents shall be submitted to the department in charge of commerce:

(1) an application letter;

(2) a project feasibility study report signed by the investors;

(3) the contract and articles of association (a wholly foreign-owned enterprise shall only be required to submit the articles of association);

(4) the list of the members of the board of directors and the instruments of appointment of the directors by the parties;

(5) the notice of preliminary approval of the enterprise name issued by the administration for industry and commerce;

(6) the registration documents and documentation evidencing the credit-worthiness of the Chinese and Foreign Investors;

(7) information on the establishment of the exploration rights, investments in surveying and other relevant matters, an exploration right appraisal report and a photocopy of the exploration permit, if a Chinese Investor is to use exploration rights as part of its capital contribution or conditions of cooperation;

(8) a description of the business conditions of the Foreign Investor(s); and

(9) other documents as required by the examination and approval authority.

The project feasibility study report shall, in addition to the basic particulars of the project, fully address the exploration technology and methods, economic returns, resource use, environmental protection, safety and security, use of human resources, etc.

Article 9: An application for the establishment of a foreign-invested mineral exploration enterprise shall comply with laws and administrative regulations on foreign investment and shall be carried out in accordance with the following procedure:

(1) the documents specified in Article 8 hereof shall be submitted to the Provincial-level Department in Charge of Commerce;

(2) the Provincial-level Department in Charge of Commerce shall seek the opinion of the land and resources administration department at the same level within five working days of receipt of all of the submitted documents and, within 45 working days after the consent of the land and resources administration department, render a decision granting or withholding its approval; if, after examination, it grants its approval, it shall issue an Approval Certificate for a Foreign-invested Enterprise and if it withholds its approval, it shall explain the reason therefor in writing; if, pursuant to Article 7 hereof or other laws or regulations on foreign investment, the application shall be forwarded to the Ministry of Commerce for approval, the Provincial-level Department in Charge of Commerce shall conduct a preliminary examination of the submitted documents and directly forward the same to the Ministry of Commerce within one month of receipt of all of the submitted documents;

(3) the Ministry of Commerce shall seek the opinion of the Ministry of Land and Resources within five working days of receipt of all of the submitted documents and, within 45 working days after the consent of the Ministry of Land and Resources, render a decision granting or withholding its approval; if, after examination, it grants its approval, it shall issue an Approval Certificate for a Foreign-invested Enterprise and if it withholds its approval, it shall explain the reason therefor in writing; and

(4) if a Chinese Investor is to use exploration rights as part of its capital contribution or conditions of cooperation, the Ministry of Commerce shall seek the opinion of the military administration authority.

Article 10: The applicant shall carry out registration procedures with the administration for industry and commerce on the strength of the Approval Certificate for a Foreign-invested Enterprise within one month from the date of receipt of such certificate.

Article 11: A foreign-invested mineral exploration enterprise shall apply to the land and resources administration department for an exploration permit on the strength of its Approval Certificate for a Foreign-invested Enterprise and business licence in accordance with relevant state provisions. A foreign-invested mineral exploration enterprise established in accordance with the law may, depending on the circumstances of an exploration project, apply for an exploration permit and such application shall not be restricted to the geographic area of the place where the enterprise is registered.

If a foreign-invested mineral exploration enterprise obtains an exploration permit in a place other than its place of residence, it shall, based on the circumstances of the exploration project, register a branch with the administration for industry and commerce in accordance with the law.

Article 12: If, in consideration of the development of an exploration project, a foreign-invested mineral exploration enterprise applies to increase its total investment and registered capital, it shall, in addition to submitting the relevant legal documents to the examination and approval authority in accordance with the law, give a description of the purpose of the increased capital, the source of the funds, details of the operations, use of its exploration permit and its payment of relevant charges, etc. in the capital increase application letter. The examination and approval authority shall render a decision granting or withholding its approval within 45 days of receipt of all of the capital increase application documents. If it withholds its approval, it shall explain the reason therefor in writing.

If a foreign-invested exploration enterprise modifies its exploration design after a capital increase, it shall submit the modified design to the original exploration permit registration authority for approval.

Article 13: A Sino-foreign cooperative joint venture mineral exploration enterprise shall specify the distribution ratios for rights and interests in accordance with the law, and if it engages in two or more exploration projects, it may specify separate distribution ratios for rights and interests for each project.

Article 14: If a Chinese Investor is a state-owned geological surveying work unit and intends to use the exploration rights of a subordinate geological surveying work unit as part of its capital contribution or conditions of cooperation, it shall provide a letter of consent signed and stamped by the person in charge of the subordinate geological surveying work unit. If a state-owned geological surveying work unit intends to use its own exploration rights as part of its capital contribution or conditions of cooperation, it shall submit the document from its higher-level department in charge consenting to the transfer.

Article 15: A foreign-invested exploration enterprise may engage in geological surveying activities consistent with its qualifications only after applying for and obtaining a geological surveying qualification certificate.

Article 16: A foreign-invested mineral exploration enterprise shall submit the following information in writing to the examination and approval authority by March of each year:

(1) information on its exploration operations (and shall additionally submit the same to the exploration permit examination and approval authority for the record);

(2) information on its payment of taxes and levies;

(3) information on its protection of the environment;

(4) information on its use of land; and

(5) information on its participation in the joint annual inspection of foreign-invested enterprises.

Article 17: A foreign-invested mineral exploration enterprise shall, in accordance with relevant state provisions, engage in exploration business activities only in regions where access by foreign nationals is permitted.

Article 18: If a Foreign Investor lists offshore on the strength of its mineral exploration achievements in China, it shall report the details of its listing in writing to the Ministry of Commerce and the Ministry of Land and Resources for the record.

Article 19: If a foreign-invested mineral exploration enterprise intends to transfer its exploration rights, it shall carry out the relevant examination and approval procedures with the land and resources administration department in accordance with the law and report the same to the commerce department for the record.

Article 20: If a foreign-invested mineral exploration enterprise discovers exploitable mineral resources and the principal mineral complies with the Industrial Guidance Catalogue for Foreign Investment and it intends to exploit the same itself, it shall handle matters in accordance with relevant state provisions, apply for a mining permit in accordance with the law and apply to the original examination and approval authority for amendment of its scope of business. Following approval, it shall apply to the administration for industry and commerce for amendment of its registration.

Article 21: The investors in the foreign-invested mineral exploration enterprise may separately establish in accordance with the law a foreign-invested enterprise to engage in exploitation of the minerals and carry out the procedures for the transfer of the exploration rights in accordance with the law, or may have the aforementioned foreign-invested enterprise that engages in the exploitation of minerals directly apply for the mining permit in accordance with the law.

Article 22: If the principal mineral discovered by a foreign-invested mineral exploration enterprise is one that foreign business entities are prohibited from exploring for and exploiting as specified in the Industrial Guidance Catalogue for Foreign Investment, the enterprise may transfer its exploration rights. If a discovered paragenetic or associated mineral is one that foreign business entities are prohibited from exploring for and exploiting and the Foreign Investor needs to explore for and exploit it together with the principal mineral, relevant procedures for the amendment of registration shall be carried out in accordance with provisions following approval by the Ministry of Land and Resources and the Ministry of Commerce.

Article 23: Matters shall be handled with reference to these Measures for the investment in and establishment of mineral exploration enterprises on the mainland by investors from Taiwan, the Hong Kong Special Administrative Region and the Macao Special Administrative Region.

Article 24: The Ministry of Commerce and the Ministry of Land and Resources shall be in charge of interpreting these Measures within their respective purviews.

Article 25: These Measures shall be effective as of August 20 2008.