China's Mining Industry Will Be Further Opened to the Outside World



China's Mining Industry Will Be Further Opened to the Outside World

Recently, the National Development and Reform Commission and the Ministry of Commerce jointly issued the Catalog of Industries for Guiding Foreign Investment (revised in 2017) (hereinafter referred to as the "Catalog"). Compared with the Catalog of Industries for Guiding Foreign Investment (revised in 2015), the Catalog has made some adjustments in terms of increasing openness in the service, manufacturing and mining industries. Regarding the mining industry, the Catalog primarily removed restrictions on the entry in unconventional oil and gas, precious metal, lithium ores and other fields.

The Catalog further reduced foreign investment restrictions and kept 63 restrictive and prohibitive articles (including 35 restrictive articles and 28 prohibitive articles), 30 articles less than the 93 restrictive and prohibitive articles (including 19 encouraging articles with stock ratio requirements, 38 restrictive articles and 36 prohibitive articles) in the Catalog of 2015. Regarding the mining industry, the Catalog removed restrictions on the entry of foreign investment in the exploration and development of unconventional oil and gas such as oil shale, oil sands and shale gas, the prospecting and mining of precious metals (gold, silver, platinum), lithium mining and dressing and smelting of rare metals such as molybdenum, tin (except tin compounds) and antimony (containing antimony oxide and antimony sulfide).

Another major change in the Catalog is the adjustment of the structure. The Catalog clearly stipulated special management measures for foreign investment access (a negative list of foreign investment access). In accordance with the requirements of the negative list model reform, the Catalog integrated original encouraging articles with stock ratio requirements, restrictive articles and prohibitive articles into a negative list of foreign investment access to be used as a basis for pre-establishment national treatment and negative list management of foreign investment. In principle, no restrictive measures shall be taken against foreign investment access in areas outside the scope of the negative list, and the filing management model shall be adopted for the establishment of foreign investment projects and enterprises.

The Catalog is an important industrial policy to guide foreign investment in china. Encouraged foreign investment projects may enjoy preferential policies such as duty-free import of equipment. Encouraged foreign investment projects relating to intensive land use will be given priority in the supply of land at a minimum land selling price no less than 70% of that of corresponding national industrial land. Encouraged projects in the western region can enjoy preferential income tax policies for enterprises serving the Western Development strategy.

After the release of the Catalog, there will be a transition period of about 30 days, so the Catalog will come into effect as of July 28, 2017. Foreign investment projects approved or recorded after the aforesaid date will be implemented in accordance with the Catalog of 2017. Foreign investment projects approved or recorded before the aforesaid date will be implemented in accordance with the Catalog of 2015.