China still welcomes foreign investment in mining sector - MLR official

China's increasingly restrictive policies on foreign investment will not preclude qualified foreign investors from investing in China's mining sector, a Ministry of Land and Resources (MLR) official said at the MLR-organized China Mining 2007 conference, held in Beijing yesterday.

We strongly welcome foreign companies that possess advanced technology to prospect and develop low-grade mineral resources, as well as carry out deep prospecting and complex ore body prospecting and development in China, in order to support domestic companies. Moreover, foreign companies will easily be able to get the upper hand over Chinese counterparts when bidding for exploration and mining rights, due to their technical advantages," the head of MLR's mineral resource department, Jia Qihai, said.

Jia added that domestic and foreign companies will be treated equally when bidding for exploration and mining rights, as long as foreign companies are in line with the latest Catalogue for the Guidance of Foreign Investment Industries, released last week. Foreign investors are only permitted to take part in Chinese mineral resource development projects by incorporating subsidiaries in mainland China, forming joint ventures with domestic companies, or cooperating with domestic companies by contract.

In addition, exploration and mining activities are not permitted to be outsourced to third parties.

Jia stressed that when evaluating foreign investment projects, Chinese authorities will not take the achievements of foreign investors through their overseas entities into account.

Jia revealed that China is considering releasing a new Mineral Resources Law in the near future, to replace the previous law released in 1996. The new law will emphasize the sustainable development of mineral resources, combine the currently separate guidelines on prospecting rights and mining rights into one unified policy, highlight the nature of property rights as part of mineral resources rights, improve macro planning on mineral resource development, set technical standards for mineral resource development and improve the management of surveys and reserve data.

China's National Development and Reform Commission released new foreign investment guidelines on Nov. 7, which will take effect on Dec. 1. The guidelines state that foreign investors are prohibited from exploring and mining molybdenum, tungsten, tin, antimony, rare earth metal, fluorite and radioactive ore resources in China, and are prohibited from either developing precious metals mines or from holding controlling stakes in particularly rare coal resources.

According to previous guidelines released in 2004, foreign investment was both allowed and encouraged in copper, lead, zinc and bauxite mines in western China, which boast abundant undeveloped metal resources, as was whole ownership. This favorable policy has been canceled with the release of the Catalogue.