The last eighteen months have seen significant regulatory developments in relation to the acquisition of mineral exploration and mining rights (collectively below “Mineral Rights”) in China.

In August, 2005, China’s State Council issued a directive to local governments and central

government ministries to actively review the lawfulness of current Mineral Rights holdings.[fn1]

In September, 2005, the Ministry of Land and Resources (“MOLAR”) issued a circular clarifying which level of government is authorized to grant different categories of Mineral Rights and when the acquisition of Mineral Rights is subject to auction or other formalities.[fn2]

On January 20, 2006, MOLAR issued a notice to standardize procedures for the grant of Mineral Rights. This notice sets out a few limited circumstances where Mineral Rights can be obtained by agreement or on a “first come, first served” basis, as well as the circumstances when it may be

necessary to obtain Mineral Rights through invitation to bid, auction, or listing procedures.[fn3]

On September 30, 2006, the State Council approved a pilot program for obtaining Mineral Rights for value in regard to coal, jointly proposed by the Ministry of Finance (“MOF”), MOLAR, and the National Development and Reform Commission.[fn4] The Pilot Program required “cash” payments for the acquisition of new Mineral Rights in regard to coal that had been invested in by the State or obtained from the State free of charge.