mineral resources

A company in a certain province that holds the mining rights of a large coal mine plans to build a high-speed rail project within its mining area. According to geological surveys, the high-speed rail line will cover nearly one-third of the reserves of its main ore body. The company and the construction unit negotiated on the compensation issue: the company advocated compensation based on the full market value of the suppressed mining rights, including the loss of proven reserves, loss of expected profits, and the increased cost of being forced to adjust the mining plan; the construction unit insisted on only compensating for direct resource losses in the suppressed area, and did not recognize indirect losses such as expected benefits. The two sides had huge differences and the negotiations reached a deadlock.

This dispute is not an isolated case. For a long time, compensation disputes caused by construction projects overturning mineral resources have occurred frequently. Mining rights holders are often in a weak position and their legitimate rights and interests are difficult to fully protect. The revision of the new Mineral Resources Law in 2024 and the promulgation of the supporting implementation regulations in 2026 and the relevant judicial interpretations of the Supreme People's Court provide a clear legal basis for resolving such disputes, marking significant progress in the override compensation system.

The "Mineral Resources Law of the People's Republic of China" revised in 2024 established the basic principles of overturning compensation and made it clear that if mineral resources need to be overturned due to public interests, fair and reasonable compensation should be given to the mining right holder. The "Implementation Regulations" to be implemented in 2026 further refine the compensation procedures and scope. According to relevant legal provisions, overburden compensation should follow the principle of comprehensive compensation, which should not only compensate for the direct value loss of the overburdened resource reserves, but also include other reasonable losses suffered by the mining rights holder.

What is particularly important is that the Supreme People's Court issued the "Interpretation on Several Issues Concerning the Application of Law in the Trial of Mineral Resource Dispute Cases" (Fa Shi [2026] No. 2) issued by the Supreme People's Court in January 2026, which specifically makes systematic provisions for override compensation. The "Interpretation" clarifies the criteria for determining the scope of compensation for compressed mineral resources, emphasizing that the scope of compensation should include the value of the mining rights corresponding to the suppressed resource reserves, the loss of some resources that cannot be mined due to compression, and the reasonable expenses incurred by the artificial restoration of production of the mining rights, etc. This provision has completely changed the one-sided practice in the past in which construction units only compensated for direct resource losses.

In addition, the "Interpretation" also clarifies the method for determining the compressed resource reserves, which is based on the proven reserves within the scope of mining rights registration and accounting based on the overpressed scope to ensure the objectivity and operability of the compensation basis. Regarding overturning disputes that occur after the expiration of the mining rights, the Interpretation also responds, clarifying that the amount of compensation should be reasonably determined by comprehensively considering the possibility of renewal of the mining rights and other factors to fully protect the legitimate rights and interests of the mining rights holders.

A case involving a coal mine covered by a high-speed railway that was heard by the Higher People's Court of a certain province is of typical demonstration significance. In this case, the scope of compensation claimed by the mining rights holder included: the estimated value of the suppressed resource reserves of approximately 120 million yuan, the expected revenue loss of approximately 80 million yuan due to the reduction in production capacity due to the retention of the pillars, and the increased cost of adjusting the mining plan of approximately 20 million yuan, for a total compensation of 220 million yuan. The construction unit only recognized direct resource losses of 120 million yuan.

After trial, the court held that compensation for overturning should follow the principle of complete compensation, and the legitimate rights and interests of mining rights holders should be fully protected. The final verdict was that the construction unit should pay a total of more than 180 million yuan in compensation to the mining right holder, including expected loss of income. The court clearly pointed out in the ruling that: as a usufruct right, the value of mining rights is not only reflected in the direct value of proven resources, but also includes the expected income based on resource reserves; the construction unit needs to overwhelm the mining rights due to public interest needs, and should provide fair and reasonable compensation to the mining rights holder for all losses suffered thereby.

This precedent fully embodies the spiritual core of the Supreme People's Court's "Interpretation", has important reference value for similar cases, and provides strong judicial support for mineral rights holders to safeguard their rights according to law.

Based on the above legal analysis and judicial practice, it is clear that under the framework of the new law, the overturning compensation system has achieved a major transformation from single direct loss compensation to comprehensive loss compensation, and the legitimate rights and interests of mining rights holders have gained stronger legal protection.

In practical operations, mining rights holders should pay attention to the following points:

First, promptly entrust a professional institution to conduct reserve verification and value assessment to provide an objective basis for claiming the scope of compensation and avoid damage to rights and interests due to insufficient evidence.

Second, comprehensively sort out the loss items. In addition to the loss of resource reserves, it should also include the loss of expected income, loss of adjustment of mining plans, relocation and resettlement expenses, etc., to ensure the completeness and rationality of the compensation request.

Third, give priority to settlement through negotiation, and decisively initiate legal proceedings if negotiation fails. The new law and judicial interpretations have given support to mineral rights holders, and the courts’ judgment standards for override compensation cases have tended to be unified. Mineral rights holders should actively use legal weapons to protect their legitimate rights and interests.

——Lawyer Liu Jingzhu, Beijing Yingting Law Firm

Please consult a professional lawyer for specific questions. This content does not constitute legal advice.