[Field: Mining]

Mineral rights mortgage financing: three conditions are indispensable, don’t let hundreds of millions of mines turn into dead assets

Bosses who have been working hard in the mining industry know that holding mineral rights in their hands is like holding "real money". But the problem is that mining rights have a long realization cycle and a large amount of capital. Many private mining company owners have tens or even hundreds of millions of exploration and mining rights, but because of poor financing channels, the capital chain is so tight that they can’t sleep.

Turning mineral rights into a financing tool is an urgent need for many bosses. But you know what? There are three legal conditions for mineral rights mortgage financing, and one of them is indispensable. Otherwise, your mineral rights may become a "dead asset" in an instant, and the mortgage right cannot be established at all!

1. The new regulations clarify that mining rights can be mortgaged in accordance with the law.

Many bosses are still worried: Can mineral rights be mortgaged?

The clear answer: Yes!

Article 37 of the Mineral Resources Law revised in 2024 (effective on July 1, 2025) stipulates:Exploration rights and mining rights can be guaranteed according to law. The "Regulations on the Implementation of the Mineral Resources Law" that will be implemented on June 15, 2026 is further detailed and clarifies the filing and registration procedures and effective requirements for mining rights mortgages.

This means that mineral rights mortgage financing finally has a clear legal basis. Private mining companies can use mining rights and exploration rights as collateral to apply for loans from banks or financial institutions.

But here comes the problem: not all mineral rights can be mortgaged, and three legal conditions must be met at the same time.

2. Three legal conditions, one of which is indispensable

According to the "Regulations on the Implementation of the Mineral Resources Law" and relevant judicial interpretations, the mortgage of mining rights must meet the following conditions at the same time:

Condition 1: The mining rights certificate is legal and valid

This is the most basic threshold. The mining license and exploration rights certificate must be within the validity period, and the content of the certificate must be consistent with the actual mining rights status.

Common pitfalls: Many bosses finally get their mining rights approved, but forget to renew them after expiration, or the name and coordinates of the mining rights are inconsistent with the registration information. In this case, the mortgage right cannot be established at all.

Condition 2: The mining rights price (transfer proceeds) has been paid in full or paid in installments as agreed

This is a key point that many bosses tend to overlook!

Article 42 of the Mineral Resources Law stipulates:Mining rights holders shall pay the proceeds from the transfer of mining rights in accordance with relevant national regulations.. The implementation regulations further clarify thatIf the proceeds from the transfer of mining rights have not been fully paid, the mining rights shall not be mortgaged.

Practical cases: A private coal mining enterprise in a certain province applied for a mortgage loan from a bank with the mining rights valued at 350 million yuan. During the bank's review, it was discovered that the company still had 120 million yuan in unpaid proceeds from the transfer of mining rights. In the end, the loan was rejected and the company's financing plan was completely ruined.

Condition 3: There is no dispute, no seizure, and no encumbrance on the mining rights.

If there is a dispute over the ownership of the mineral rights, the court has seized the mineral rights, or the mineral rights have been established with other security interests, no further mortgage may be established.

Special reminder: The new regulations on income from the transfer of mining rights that will be implemented on August 1, 2026 may have an impact on the price calculation of some historical mineral rights. If your mineral rights involve a dispute over transfer proceeds, it is recommended to resolve the dispute first before considering mortgage financing.

3. Filing and registration: prerequisite procedures for mortgage rights to take effect

The three conditions have been met, but there is still one final step to go -Registration.

The "Regulations on the Implementation of the Mineral Resources Law" clearly stipulates:Mining rights mortgage adopts a filing system, the filing agency is the original issuing authority (natural resources department).Registration is a requirement for the validity of mortgage rights against third parties, unregistered mortgage rights shall not be used against bona fide third parties.

In layman’s terms:Banks will not recognize unregistered mineral rights mortgages!

Materials required for filing include: mortgage contract, mining rights certificate, price payment certificate, evaluation report, etc. It is recommended that enterprises register as soon as possible after signing a mortgage contract to avoid long nights and dreams.

4. Selection of assessment agencies: Don’t step on these pitfalls

Mineral rights mortgage financing is inseparable from evaluation, and the choice of the evaluation agency directly affects the loan amount.

FAQ:

- The evaluation report is only valid for one year and must be re-evaluated upon expiration;
- In order to cater to customer needs, some appraisal agencies overestimate the value of mineral rights, resulting in banks not recognizing it;
- The assessment method was improperly selected and factors such as the scarcity of minerals and policy risks were not fully considered.

Suggestions: Choose a professional institution with mining rights evaluation qualifications and familiar with local policies, and fully communicate with the bank before the evaluation to ensure that the evaluation results can be accepted by financial institutions.

Lawyer advice

As a lawyer who has handled a large number of mineral rights financing cases, I would like to give you some suggestions:

1.Check yourself before financing: Confirm that the mining rights certificate is valid, the price is paid in full, and there are no rights encumbrances;
2.Contract terms should be strict: Clarify the scope of mortgage, liability for breach of contract, and method of realizing creditor's rights;
3.Complete filing in a timely manner: Filing is a prerequisite for the mortgage to take effect, so don’t delay;
4.Choose a reliable assessment agency: The evaluation report must withstand the inspection of banks and judicial authorities;
5.Pay attention to policy changes: New regulations on income from the transfer of mining rights (implemented on August 1, 2026) may affect the valuation and mortgage conditions of some mineral rights. It is recommended to consult a professional lawyer in advance.