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Operating in China

Advantages of Operating in China

  • Low Capital & Operating Costs – Low-cost mining equipment and experienced labour
  • Rapid Construction Times – Mills and roads built in fraction of the time it takes in North America – all supplies sourced locally
  • Close to End Market – Chinese smelters starved for concentrate feeds of silver, copper, lead, zinc and gold
  • Third Largest Silver Producing Country – Home to world class silver deposits
  • Many Regions Underexplored – Historical government ownership; no access to equity market to fund exploration and development
  • Fragmented Primary Silver Market – Largest existing producer accounts for less than 5% of market share, providing opportunities for consolidation

Basic Legal & Bureaucratic Framework for Mining in China

Laws and Regulations:

All mineral resources within China are owned by the state under the Mineral Resources Law. The Ministry of Land and Resources is responsible for the supervision and administration of the mining and exploration of mineral resources nationwide.

An exploration license or a mining permit must be obtained before a company may commence its respective exploration or mining projects. Once a license or permit is obtained, all holders are subject to a usage fee of 100 RMB per square kilometre for the each of the first three years. The fee increases to 200 RBM per square kilometre in the fourth year, 300 RMB in the fifth year, 400 RMB in the sixth year up to a maximum of 500 RBM for each year thereafter.

Mining right usage fees are payable on an annual basis. The rate of mining right usage fee is RMB1,000 per sq.km. of mining area per year. Holders of Mining Permits must also pay mineral resource compensation fees, based on a percentage of their sales revenue.

The transfer of permits for consideration is only permitted in circumstances prescribed under China’s laws, and subject to approval by government authorities.

Obtaining an Exploration Licence:

The following documents are to be submitted to the Ministry of Land and Resources in order to obtain an exploration license:

  • an application form for registration
  • a map indicating the scope of the exploration area
  • a certificate validating the qualification of the applicant
  • an exploration working plan
  • an implementation proposal for the exploration project
  • documents showing the source of the funds for the exploration project
  • all other materials otherwise required by the relevant authority

A decision within 40 days will be made. If the application is approved, the applicant must pay an exploration right usage fee before obtaining the exploration licence.

Obtaining a Mining Permit:

The following documents are to be submitted to the Ministry of Land and Resources in order to obtain a mining permit:

  • an application form for registration
  • a 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
  • an environmental impact report for the exploitation of the mineral resources
  • all other materials otherwise required by the relevant authority

A decision within 40 days will be made. 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.

Rights and Obligations of Holders of Exploration Permits:

The rights of a holder of an exploration permit include:

  • to engage and carry out exploration activities within the boundaries prescribed under the exploration license to install the necessary exploration facilities and amenities within the designated area
  • the temporary use of the land in accordance with the needs of the exploration project
  • priority in obtaining the mining right of the mineral resources as specified on the exploration permit
  • the exploration right of other newly discovered minerals within the designated exploration area
  • upon fulfillment of the prescribed minimum expenditure requirements, the right to transfer the exploration right to any third party upon government approval
  • rights to sell the mineral products extracted from the surface of the land in the exploration area, except for those mineral products which are required by the State Council to be sold to designated entities

The obligations of a holder of an exploration permit include:

  • to commence and complete the exploration work within the term of the exploration permit
  • to carry out the exploration work in accordance with the exploration plan and to ensure that there are no occurrences of unauthorised mining activities in the designated area
  • to carry out integrated exploration and assessment activities of the targeted mineral resources
  • to submit an exploration report of the mineral resources to the relevant government authority for approval.

Rights and Obligations of Holders of Mining Permits:

The rights of a holder of a mining permit include:

  • to engage and carry out mining activities within the boundaries prescribed under the mining permit
  • to install the necessary production facilities and amenities within the designated area
  • to sell the mineral products, except for those minerals which are required by the State Council to be sold to designated entities
  • to acquire the land use rights legally based on the requirement of its production and construction
  • the right to transfer the mining right to any third party upon government approval

The obligations of a holder of a mining permit include:

  • to carry out mining activities in the designated area and within the terms of the mining permit
  • to efficiently protect and reasonably extract the mineral resources
  • to pay resource tax and mineral resources compensation fees
  • to comply with laws and regulations relating to labour safety, soil and land conservation, land rehabilitation and environment protection
  • to submit a report on the exploitation of mineral resources to the relevant government authority

Last updated Oct 30, 2008

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