In recent years, the enthusiasm of foreign investors for acquisitions in the mining sector in the PRC has cooled, due to the international financial crisis and the fact that the relevant laws are outdated.
Due to restrictions on the transfer of exploration rights and mining rights, most foreign investments in Chinese enterprises engaged in mineral exploration and exploitation take the form of equity acquisitions.
When a foreign investor wishes to acquire a mining company, the approvals and registrations required include approval from the National Development and Reform Commission and the Ministry of Commerce; confirmation from the military authorities that the area in question is not a restricted military area; approval from the land and resources authority; approval from the Ministry of Industry and Information Technology (required for gold mining); approval of the environmental protection authorities; approval of the work safety authorities; registration with the State Administration for Industry and Commerce; and foreign exchange registration with the State Administration of Foreign Exchange. There is also a complex division of authority between different approval levels. All these plus the security review of foreign acquisitions, introduced by the Ministry of Commerce this year, make the approval process one long reel of red tape.
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Xu Bin is a partner at Concord & Partners in Beijing
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