mineral resources

Article text

Dear mine owners, there is news that you must hear - your mining rights can now be mortgaged!

On May 20, the State Council announced the "Regulations on the Implementation of the Mineral Resources Law", which will be officially implemented on June 15. The most important one:What are mining rights? Usufruct rights. Like real estate and land use rights, it can be mortgaged and financed.

Many bosses have been waiting for so many years, and the opportunity for mineral rights mortgage loans has finally opened. But I have to remind you that there are several pitfalls in the operation, and if you don’t avoid it, the loan will be rejected instantly.

## Three steps to understand how to operate

Step one: The mineral rights must be certified and within the validity period.

This is the most basic. Your mining license must be valid, there must be no disputes over mineral rights, and the mine must not be sealed or frozen. If your mining rights are about to expire, go and renew them first. Banks will be upset when they see the certificate that is about to expire.

Step 2: Do a reserves assessment or mining rights assessment.

The bank doesn't know how much you are worth, so you have to come up with an authoritative appraisal report. Find an agency with the qualifications to evaluate mining rights to do it, don't just look for an evaluation company to fool you. In the evaluation report, mineral reserves, grade, and market price must be clearly stated.

Step 3: Take the appraisal report to the bank to apply for a mortgage loan.

After the bank approves the application, sign a mortgage contract and then go to the real estate registration center to apply for mortgage registration. Remember,Signing the contract is not completed, it must be registered to take effect.. After the registration is completed, you will get a mortgage registration certificate, which is the key.

## Five pitfalls, don’t step on any of them

Pitfall 1: Can mineral rights be mortgaged if there is a dispute? wrong!

The mortgaged assets must be "clean". Have you ever been involved in a lawsuit with anyone regarding your mining rights? Are there any records of administrative penalties for cross-border mining? Are there any unpaid mining rights transfer proceeds? If these are found out, the loan will be gone.

Pitfall 2: Is it okay if the transfer proceeds are paid later? wrong!

During the period when transfer proceeds are in arrears, mineral rights mortgages are restricted. Some bosses think it’s okay to pay a few days late, but after checking, the bank directly rejected it.

Pitfall 3: Can you just find someone to make your evaluation report? wrong!

It must be an institution with mining rights evaluation qualifications. Banks have requirements for appraisal agencies, and they will not accept any report issued by any appraisal company.

Pitfall 4: There is no special account for ecological restoration funds? wrong!

The new regulations clearly require that a special account must be set up for ecological restoration costs to be used exclusively for ecological restoration of mines. If the money is not in place, the bank's pre-loan investigation will definitely fail.

Pitfall 5: Once the mortgage contract is signed, it’s over? wrong!

You must go to the real estate registration center to register the mortgage. If you do not register, you cannot fight a third party. In reality, some bosses signed the contract but did not register it. As a result, the mining rights were seized by others and they lost all their money.

## Ying Ting Lawyer Reminder

The policy dividend of mineral rights mortgage financing is a real benefit to our private mining owners. But in practice, details determine success or failure. My suggestion is:

-Check yourself before taking out a mortgage: Are the mineral rights valid? Have the transfer proceeds been fully paid? Has an ecological restoration account been established?
-The assessment needs to be done by a qualified agency: Don’t be greedy for cheap, otherwise the bank will not recognize it and you will waste your money.
-Registration must be timely: Registration must be completed within 30 days after signing the contract.

## If you have any questions, please contact Yingting

Mineral rights mortgage financing is a systematic project, involving many aspects such as mineral rights compliance, evaluation, registration, etc., and each step has to be paid attention to. Our team has handled many mineral rights mortgage financing cases and has accumulated a lot of practical experience.

If you have any questions about mineral rights mortgage, please come and chat with us. I am lawyer Zhu Zi, specializing in mining legal services. See you in the next issue.