Laws of the People's Republic of China

Circular of the Ministry of Finance, the Ministry of Land and Resources and the People's Bank of China concerning the Related Matters on the Administration of Income from the Purchase Price of Mineral Prospecting Right and Mining Right

Cai Jian [2006] No. 394

The public finance departments (bureaus) of each province, autonomous region, municipality directly under the Central Government, city specially designated in the state plan, the departments (bureaus) of state land and resources, the Shanghai Headquarters of the People's Bank of China, each branch, business department, central sub-branch of provincial capital cities and deputy provincial cities:

In accordance with the Circular of the State Council concerning Rectifying and Regulating the Mineral Recourse Exploration Order in an All-around Way (Guo Fa [2005]No. 28 ) and the Decision of the State Council concerning Strengthening the Work of Geology (Guo Fa [2006] No. 4 ), in order to further deepen the reform of the systems of paid use of mineral resources and paid acquisition of mineral properties, rationalize the income distribution of mineral resources, and rationally determine the ratio for the sharing of income from the purchase price of mineral prospecting right and mining right between the central and local governments, the relevant issues concerning the administration of the income from the purchase price of mineral prospecting right and mining right are hereby notified as follows:

1.

The term "income from the purchase price of mineral prospecting right and mining right" herein refers to the entire income gained by the competent departments in charge of the approval and registration of mineral prospecting right and mining right of the central and local people's governments by means of aliening the mineral prospecting right and mining right, which are prospected and formed with financial contributions from the state (including those from the central finance, local finances and joint contributions by central and local finances, the same as below), in such market ways as bidding, auction, quotation or by agreement, and the payment made up by state-owned enterprises for their gratuitous seizure of mineral prospecting right and mining right prospected and formed with financial contributions from the state.

2.

As from September 1, 2006, the income derived from the purchase price of mineral prospecting right and mining right shall be shared by the central government and local governments in light of a fixed proportion, which is 20% for the central government and 80% for local governments. The ratio for any province, municipality or county shall be determined by the corresponding provincial people's government under the actual situation. Where there is any provision otherwise provided by the state, it shall prevail.

3.

The administration on the collection of income derived from the purchase price of mineral prospecting right and mining right shall be intensified and be timely paid into the state treasury in full amount. If it is really difficult to pay the purchase price of mineral prospecting right and mining right in a lump sum, it is allowed to pay by installments upon the approval by registration administrative organ; the time limit for payment of the purchase price of mineral prospecting right shall not be more than 2 years, and that of mining right shall not be more than 10 years.

The concrete procedures of payment into the state treasury are: the registration administrative organ of mineral prospecting right and mining right fills a circular on payment to the state treasury in light of the evaluated price or negotiated price, or the trading price of bidding, auction and quotation for transferring mineral prospecting right and mining right, so as to inform the applicant for mineral prospecting right and mining right of the payment which shall be made within 7 workdays upon receiving of the circular. The income derived from the purchase price of mineral prospecting right and mining right that fall within the registration and administration ground of the State Land and Resources Department of the State Council shall be collected according to the Circular of the Ministry of Finance concerning Confirming the Related Matters on the Pilot Reform of the Administration System on Income Collection by the Ministry of Land and Resources (Cai Ku [2003]No. 6 ) and the related provisions concerning the reform of collection administration system. The collection of the income derived from the purchase price of mineral prospecting right and mining right that fall within the registration and administration ground of local land and resources departments shall, as for the places that have implemented the reform on the collection management system of non-tax revenues, be implemented in light of related provisions concerning the reform stipulated by the local departments of finance; as for the places that have not implemented such reform for the moment, a way of paying into the local treasury shall be adopted; a "general covering warrant" shall be used in handling the procedure of paying into the treasury, the budgetary account shall be filled in accordance with the related provisions of the Classification of Accounts of Government Budgetary Revenue and Expenditure of that year, and the ratio for sharing of each budgetary class shall be marked at the column of "Notes". The state treasuries at all levels shall, upon receiving of the payments, according to the stipulated ratio for sharing, turn over 20% of the payments to the general treasury of each higher national treasury level by level, and transfer 80% of the payments to provinces, municipalities or counties based on their respective ratios for sharing as prescribed by the relevant people's government of each province, autonomous region, and each municipality directly under the central government.

4.

The departments of public finance and the departments of state land and resources at all levels shall intensify the supervision and administration over the income derived from the purchase price of mineral prospecting right and mining right. The registration administrative organs of mineral prospecting right and mining right at all levels shall examine and verify on the basis of all the pages of the related payment vouchers which are affixed with the transfer/receipt seal of the bank or state treasury, and related materials and vouchers. If the purchase price of mineral prospecting right and mining right is not paid in full amount timely , the registration of mineral prospecting right and mining right shall not be handled, and the license for mineral prospecting right or mining right may not be issued. The departments of public finance shall ensure the necessary expenses to be enough for transacting the business of transferring mineral prospecting right and mining right according to the requirements of the land and resources departments when they are performing their functions and duties, and ensure that the income derived from the purchase price of mineral prospecting right and mining right be collected in full amount and handed over to the treasury in time.

5.

The public finance departments shall closely cooperate with the departments of the state land and resources at all levels take more measures in the investigation and prosecution of all kinds of violations of laws and regulations that exist in the course of transferring of mineral prospecting right and mining right; investigate and prosecute violations of laws and regulations strictly, in accordance with law, such as reducing or exempting fees by violating laws and regulations, failing to collect fees, failing to collect the due fees, failing to pay to the state treasury in full amount timely, retaining fees, financing expenses with revenue, embezzling fees, and commercial bribes and so on; investigate the administrative and economic liabilities of the related leaders and persons who held liable; If any crime is constituted, the case shall be transferred to the judicial organ for investigating the criminal liabilities.

6.

Upon the issuance of this Circular, If there is any provision that isn't consistent with this Circular, this Circular shall prevail.

Ministry of Finance of the People's Republic of China

Ministry of Land and Resources of the People's Republic of China

People's Bank of China

August 14, 2006