Laws of the People's Republic of China

No.85

For purposes of further strengthening administration on export of rare earth and regulating the order of export operation, the Requirements and Procedures for Applying the Export Quota of Rare Earth in 2007 is hereby announced in accordance with related regulations of Foreign Trade Law of the People's Republic of China and Regulation of the People's Republic of China on the Administration of the Import and Export of Goods, and foreign-invested enterprises are excluded. The Ministry of Commerce

November 10, 2006

Requirements and Procedures for Applying for the Export Quota of Rare Earth in 2007

1.

Requirements for Applying for the Export Quota of Rare Earth in 2007

Enterprises which meet requirements as follows may apply for the export quota of rare earth in 2007:

(1)

As for manufacturing enterprises:

(a)

to have registered at the competent administrative departments of industry and commerce in accordance with relevant state rules and regulations, to have obtained the operation qualification of import and export or have gone through the formalities of record keeping and registration of foreign trade operators, and to have independent legal personality; enterprises which registered after 2005 shall be approved by the state competent authorities and present relevant certificates;

(b)

to comply with the access standards and relevant policies on the rare earth industry; the export volume in 2005 to have exceeded 2000 tons or the export value to have exceeded 30 millions RMB Yuan;

(c)

the annual average export volume of rare earth for the past three years (2003-2005) to have exceeded 700 tons or the annual average export value to have exceeded 4 million US dollars (on the basis of the statistics of the customs) if requirements in Item (b) are not fulfilled;

(d)

the quality of the products to meet the existing national standards and the enterprises to gain registration to ISO9000 Quality Management System;

(e)

to have environmental protection facilities suited to their production scale, to meet relevant local or national standards for the discharge of pollutants, to be evaluated and approved by the competent departments of environmental protection above the provincial level and to issue the environment monitoring report on the discharge up to the standard of the current year;

(f)

to comply with relevant state policies and regulations on land management;

(g)

in accordance with relevant laws and regulations of the country, to purchase various social insurances, such as endowment insurance, employment insurance, medical insurance, industrial injury insurance and maternity insurance, to pay social insurance premiums on time and in full, and to present relevant certificates on that issued by local departments of labor and social security; and

(h)

not to break relevant laws or regulations of the country.

(2)

As for circulation enterprises:

(a)

to have registered at the competent administrative departments of industry and commerce according to relevant state rules and regulations and have obtained the operation qualification of import and export or gone through the formalities of record and registration of foreign trade operators and to be with independent legal personality;

(b)

the registered capital to exceed 5 million RMB Yuan, and the annual average export volume of rare earth for the past three years (2003-2005) to have exceeded 700 tons or the annual average export value to have exceeded 4 million US dollars (on the basis of the statistics of the customs);

(c)

as of the implementation of the aforementioned standards for manufacturing enterprises, the export products to be manufactured by enterprises which comply with Paragraphs 1, 4, 5, 6, 7, and 8, and the enterprises to present relevant documents on the qualification of the source enterprises for manufacturing the products, relevant VAT invoices and the certificate of the source of products;

(d)

in accordance with relevant laws and regulations of the country and related provisions of the local government, to purchase various social insurances in accordance with law, such as endowment insurance, employment insurance, medical insurance, industrial injury insurance and maternity insurance, to pay social insurance premium on time and in full, and to present relevant certificates on that issued by local departments of labor and social security; and

(e)

not to break relevant laws or regulations of the country.

(3)

Where the main producing areas of rare earth in western areas of the country without any enterprise qualified for application, the governments of provinces, autonomous regions or municipalities may recommend no more than 3 manufacturing enterprises which have considerable export volume in the past 3 years (2003-2005) and shall then be evaluated and confirmed by the competent state departments and an authorized panel of experts.

(4)

The main producing areas of rare earth in western areas of the country with 3 or more than 3 enterprises which meet the requirements mentioned in Paragraphs (1) and (2) shall not enjoy the preferential policy as prescribed in Paragraph 3; those with less than 3 such enterprises may recommend more according to Paragraph 3, but the total number (the number of enterprises which meet the aforementioned requirements plus the number of the recommendations) shall not exceed 3.

(5)

The export of rare earth by foreign-invested enterprises shall be conducted according to the existing regulations.

2.

Procedures for Application and Confirmation

Local rare earth exporting enterprises shall file an application to the competent commerce departments in provinces, autonomous regions, municipalities directly under the Central Government and Xinjiang Production and Construction Corps (hereinafter referred to as provincial competent department of commerce). The provincial competent department of commerce shall have a preliminary qualification examination for them according to the aforementioned requirements, submit the name list of the local qualified exporting enterprises and the written opinions of the preliminary examination (with the related materials of the enterprise attached) to the Ministry of Commerce before November 15, 2006, and send a copy to China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters.

Enterprises administrated by the central government submit their applications and relevant materials directly to the Ministry of Commerce, and send a copy to China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters.

The Ministry of Commerce entrusts China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters with reconfirmation. China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters shall offer overall suggestions to the reconfirmed local rare earth exporting enterprises and those administrated by the central government, and submit the suggestions to the Ministry of Commerce before November 25, 2006.

The Ministry of Commerce shall examine and approve the enterprises applying for export quota of rare earth according to the reconfirmation opinions of China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters, and make an announcement of the enterprises which meet the standards.

3.

Documents Needed for Application

Local rare earth exporting enterprises and those administrated by the central government shall, when filing applications to the provincial competent department of commerce or the Ministry of Commerce, submit documents as follows with the signature of the legal representative for confirmation:

(1)

A copy of the duplicate of business license for legal entities, Registration Form for Foreign Trade Operators with the seal of registration or Qualification Certificate of Importing and Exporting Enterprise of People's Republic of China, and their Customs code and enterprise code;

(2)

Certificate for Discharge up to the Standard or the examination opinions on the environmental impact report issued by the competent department of environmental protection above the provincial level, and the evaluation report of the current year on environment monitoring issued by the provincial competent department of environmental protection;

(3)

Registration to ISO9000 Quality Management System;

(4)

Manufacturing enterprises shall present certificates or documents for 2005 as follows: the certificate of tax exemption & credit or the original Application Form for Exemption Credit & Refund with a seal of the tax authority, the Export Customs Declaration (the duplicate) and the Verifying and Writing-off Instrument (the duplicate) for those who export their own goods; the original VAT invoice issued under the supervision of the state tax bureau, the Export Customs Declaration (the duplicate) and the Verifying and Writing-off Instrument (the duplicate) for those whose products are purchased and exported by exporting enterprises; the original exporting invoice, the Export Customs Declaration (the duplicate), the Verifying and Writing-off Instrument (the duplicate) and the Agent Certificate for Export of Commodities (the duplicate) for those who have exporting enterprises as their export agents.

Circulation enterprises shall present: the original VAT invoice or the original export invoice, the Export Customs Declaration (the duplicate), the Verifying and Writing-off Instrument (the duplicate) and the Agent Certificate for Export of Commodities (the duplicate) issued by the tax bureau.

Enterprises which newly apply for export quota of rare earth shall present relevant materials for the past three years (2003-2005), and those which have obtained the export quota of rare earth for 2006 are only to present relevant materials for 2005.

(5)

Manufacturing enterprises shall present legal certificate issued by the competent department of land management approving the use of land.

(6)

Certificate of payment for social insurances issued by the local competent department of labor and social security.