Introduction

On 1 July 2025, the newly revised Mineral Resources Law of the People’s Republic of China (hereinafter referred to as the “New Mineral Resources Law”) officially took effect. This revision is not only a system update, but also a strategic transformation of China’s mining sector from a traditional management model to a modern governance system.

With the rapid development of the economy and society, the inadequacies of the former Mineral Resources Law (2009 Amendment) have become increasingly prominent in aspects such as market resource allocation, real right protection, ecological civilisation construction, and energy and resource security guarantees. Based on summarising the successful experience of mineral resource management reform over the years, the New Mineral Resources Law has achieved major innovations in management concepts and system design, providing holders of mineral rights with the following:

• more stable rights expectations;
• a more transparent transaction environment; and
• a sounder mechanism for protecting rights and interests.

For foreign investors, this not only means the optimisation of market access thresholds and the reduction of investment risks, but also marks the arrival of an important opportunity to achieve long-term and sustainable returns in China’s mining market.

Transformation of the Mineral Rights Management System: From “Approval System” to “Real Right-Based System”

Separation of mineral rights and permits system

The separation of mineral rights and permits is one of the core systems established by the New Mineral Resources Law. Its core essence lies in separating the real right registration of mineral rights from the permission for exploration and mining of mineral resources, with each confirmed and regulated by different systems.

• According to the provisions of the New Mineral Resources Law, the mineral rights certificate, as the carrier of real right registration, is used to confirm the right holder’s rights to possess, use and benefit from specific mineral resources. The creation, modification, assignment, mortgage and extinguishment of such rights shall be valid after legal registration.
• The exploration permit and mining permit, on the other hand, are permits issued by administrative authorities for specific exploration and mining activities. They focus on examining the scientificity and safety of exploration plans and mining plans, as well as the feasibility of ecological protection measures, reflecting the state’s risk control over the mineral resources development process and the protection of public interests.

In terms of legal effect, the mineral rights certificate is independent of the exploration and mining permits. Even if a permit becomes invalid due to failure to renew upon expiration or revocation, as long as the mineral rights certificate remains valid, the relevant real right will continue to exist. The right holder may reapply for the permit and resume production and operation after rectifying to meet the standards. Only when the real right is extinguished due to legal cancellation of the mineral rights certificate or other reasons will the permit lose its effect accordingly. This system arrangement has fundamentally changed the previous risk pattern of “permit cancellation leading to right extinction”, providing mineral rights holders with more stable right expectations.

For mineral rights transactions, the “Separation of Mineral Rights and Permits” system realises the openness and transparency of the rights status through the national unified mineral rights register. This enables both parties to the transaction to conveniently inquire about information such as the ownership, term, mortgage and seizure of the right, effectively reducing transaction risks. At the same time, the law clearly stipulates that the assignment of mineral rights shall be valid after legal registration, and the previous assignment approval procedure has been cancelled, significantly improving the efficiency of market circulation.

The reform of the “Separation of Mineral Rights and Permits” system not only complies with the requirement of the principle of statutory real rights under the Civil Code, but also conforms to the basic needs of the market economy for clear rights and transaction security. For various market entities, including foreign investors, the reform of the system injects new vitality into the high-quality development of the mining economy and has the following results:

• the optimisation of the investment environment;
• clearer right boundaries;
• less and more standardised administrative intervention; and
• broader financing channels.

Direct application system for conversion from exploration right to mining right

Under the framework of the former Mineral Resources Law, although it was stipulated that the exploration right holder had the priority to obtain the mining right for mineral resources within the exploration area, this priority was full of uncertainties in practice. It was not clear whether it was a priority under the same conditions or an absolute priority. This caused exploration right holders many concerns: after investing a large amount of human, material and financial resources in exploration, they could not be ensured to obtain the mining right, which affected the enthusiasm of many potential investors in mineral resources exploration and development.

The New Mineral Resources Law implements the direct application system for the conversion from exploration right to mining right. After the holders of exploration rights have verified the mineral resources for mining, they may, within the duration of the exploration rights, apply to change their exploration rights to mining rights. This means that obtaining a mining right is one of the inherent rights legally enjoyed by the exploration right holder; once the exploration right holders prove the existence of exploitable mineral resources, they can naturally apply for and obtain mining rights. This reform has enhanced the investment confidence and exploration enthusiasm of exploration right holders.

The New Mineral Resources Law establishes a new type of exploration right reservation system, further providing comprehensive protection for the rights and interests of exploration right holders. Where, for the sake of public interests, or due to force majeure or other special circumstances, exploration rights cannot be changed to mining rights for the time being, the holders of exploration rights may apply for the reservation of exploration rights. The original mineral rights assignment authority shall process the application for them. Calculation of the duration of the exploration rights shall cease while the exploration rights are being reserved.

The implementation of the direct application system for the conversion from exploration right to mining right has reduced investment risks for investors, significantly enhancing the attractiveness of China’s mining market to global capital.

Breakthroughs and Diversified Paths in the Mining Land Use System

The New Mineral Resources Law makes systematic provisions on mining land use, constructing a land use system that is commensurate with the characteristics of the mining industry. It effectively solves the long-standing industry problem of “legal mineral rights but illegal land use”, reflecting the transformation of the governance concept from “separation of mineral and land management” to “coordinated management of mineral and land”, and creating a more stable, transparent and predictable land use environment for the development of the mining industry.

Innovations at the planning level

The New Mineral Resources Law clearly requires that in drawing up the territorial spatial plan, the actual needs of the land used for the exploration and mining of mineral resources shall be considered. This means that the mining activity is no longer a passive adapter to land use planning, but is incorporated into overall arrangements at the territorial spatial plan layout stage.

Drawing up the territorial spatial plan shall take into account factors such as resource distribution, geological conditions and ecological environment, and properly handle the relationship between mineral development and control lines such as ecological protection red lines and permanent basic farmland, so as to avoid and minimise the overburdening of mineral resources. This concept of “planning first” provides stable spatial guarantees for the implementation of mining projects and a more predictable development environment for investors.

Transformation in land supply methods

The New Mineral Resources Law breaks the previous single model dominated by assignment, and allows administrative departments of natural resources to supply the lawful use of the land for mining through multiple methods such as assignment, lease or capital contribution at the appraised value. Mining enterprises can choose flexibly according to the characteristics of the project, and even adopt a combination of multiple methods. More importantly, enterprises can not only obtain the right to use state-owned construction land, but also obtain land use rights through rural collectively owned commercial construction land marketisation, expanding the channels for land use sources.

This reform fully takes into account the special attribute of mining land use – that is, the construction land use right for the land used by mining shall be disposed of concurrently with mineral rights – and solves the dilemma of being unable to carry out mineral development due to failure to obtain land use rights. For strategic mineral resources, the New Mineral Resources Law makes special institutional arrangements, clarifying that where land collectively owned by farmers is genuinely needed for the mining of strategic mineral resources, it may be expropriated according to law.

Breakthroughs in temporary land use

On the basis of continuing the temporary land use system for exploration, the New Mineral Resources Law innovatively allows the temporary land use for opencast mining of strategic mineral resources. Where the land use is suitable for simultaneous mining and reclamation, upon scientific demonstration, the land may be used temporarily upon approval from the administrative departments of natural resources under the people’s governments at or above the provincial level. Where agricultural land is used temporarily, the planting conditions shall be restored.

This not only meets the needs of opencast mining for a short construction period and relatively flexible land use, but also ensures ecological security through strict approval and reclamation requirements.

Innovations in Protecting the Rights and Interests of Mineral Rights Holders

State expropriation and requisition: balancing public interests and private rights

Before the duration of the mineral rights expires, the original mineral rights assignment authority may recover the mineral rights according to law for the sake of public interests, but it must provide “fair and reasonable” compensation.

This provision establishes a mechanism for balancing public interests and individual rights and interests. It ensures the realisation of major national construction projects and public interests, while maintaining the normal order of the mineral rights market, reducing the 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 economy, 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 competition.

Strengthening international co-operation in the mining sector

Article 15 of the New Mineral Resources Law stipulates: “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 provision 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 provisions. This is the first time that international co-operation 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 Special Administrative Measures (Negative List) for Foreign 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 investors 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 covered in the negative lists shall be subject to administration 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 Encouraged Industries for Foreign Investment (2022 Edition). Specifically in the mining sector, industries encouraged for foreign investment include:

• exploration and exploitation of oil and natural gas (including shale gas and coal bed gas) carried out nationwide;
• exploration, mining and ore dressing of minerals that are in acute shortage in China (such as potassic salt ores and chromite);
• exploration and mining of seabed minerals in Hainan Province; and
• exploration, exploitation and dressing of marine shale and lacustrine shale in the mining rights blank area of the upstream oil and gas (especially in the Sichuan Basin), and development and application of shale oil and gas technologies in Chongqing Municipality and Sichuan Province.

It can be seen that, in the mineral resources industry, there are very few mineral species or fields where foreign investment is prohibited or restricted; on the contrary, the state encourages foreign investment in this sector.

From Law to Practice: Recommendations for Potential Mining Investors

Laws and national policies are the cornerstone for ensuring capital security and realising long-term value in the process of mining investment. The revision of the Mineral Resources Law and the adjustment of the foreign investment access negative lists have a direct impact on mining investment strategies. For mining investors, a deep understanding and proficient application of these laws and policies is an indispensable path to successful investment. For potential mining investors, especially foreign investors, attention should be paid to the following three aspects.

In-depth due diligence

Macro due diligence on the policy environment

China’s mining policies are both strategic and dynamic. Investors must thoroughly understand the top-level designs of the state, such as the classified management of minerals, the catalogue of strategic minerals, environmental protection red lines and regional industrial plans.

Micro due diligence on the project

It is necessary to verify one by one the legality and validity of mineral rights certificates and whether there are encumbrances such as mortgages and seizures; evaluate the authenticity and credibility of the reserve report for mineral resources; and predict whether there are potential obstacles to the approval of land use, forestry, safety assessment, environmental impact assessment, etc, which may be involved in future mining.

Rigorous contracts and prudent negotiations

After comprehensive due diligence, the next step is to solidify the future uncertainties into protected rights through rigorous contracts and prudent negotiations. The structure design and drafting of transaction documents shall pay special attention to several core links.

• The structure design of equity acquisition or asset acquisition is directly related to tax costs and future operational risks.
• The payment schedule must be closely linked to key nodes such as property right assignment, certificate modification and payment of earnings from the assignment of mineral rights, so as to achieve a balance between risks and payments.
• The representations and warranties clauses shall fully cover the seller’s statements on the absence of defects in mineral rights, no hidden debts in assets, compliance with safety and environmental protection requirements, etc, and be matched with high amount of liability for breach of contract.
• In addition to commercial interests, it is also necessary to gain an in-depth understanding of China’s mining practice. For example, understand the importance of community relations and incorporate social responsibility clauses into contracts.

Full-process compliance system

The operation cycle of mining projects is mostly as long as several decades, and the real challenge lies in the long road after operation. Enterprises need to establish a full-process compliance management and control mechanism covering project approval, exploration, construction, mining, closure of mines and ecological restoration, so as to ensure the acquisition of government support, community trust and continuous operation permits. Enterprises should focus on the following matters.

• Establish special compliance positions to continuously track and interpret the continuously improved laws and regulations on mining, environmental protection, safety, taxation and labour.
• Establish clear internal approval procedures and accountability systems to ensure that each link has rules to follow and evidence to check.
• Conduct regular compliance audits and risk investigations to proactively identify and fix loopholes, rather than remediate after administrative penalties are imposed.

Conclusion: Embracing China’s Mining Industry in the New Era

Against the background of the implementation of the New Mineral Resources Law, China’s mining industry is ushering in a new transformation featuring the rule of law, marketisation and internationalisation. This marks a comprehensive upgrade of the rule of law governing China’s mining sector. China’s mining industry will build a more stable, transparent and diversified market environment through institutional innovations. These include:

• stronger protection of mineral rights;
• development of green mines;
• digital transformation;
• greater transparency in transactions; and
• introduction of foreign capital.

The New Mineral Resources Law clarifies the legitimate rights and interests of mineral rights holders. It also strengthens the market’s leading role and encourages exploration and development of mineral resources. In doing so, it creates favourable conditions and broad market prospects for introduction of foreign capital and technology. With their advanced technology and management experience, foreign-invested enterprises are expected to play an important role in the fields of mineral resources exploration and development, and green mine construction, promoting the high-quality development of China’s mining industry.

The present is the best time for foreign investors to re-examine the potential of China’s mining market and seek co-operation opportunities. With the implementation of the supporting laws, regulations and policies of the New Mineral Resources Law, the business environment for the mining industry will be further optimised, and China’s mining industry will embrace global investors with a more open attitude.