On 20 May 2026, the State Council of China issued the Implementation Regulations of the Mineral Resources Law of the People’s Republic of China (“Regulations”), which will take effect on 15 June 2026. The Regulations represent a comprehensive elaboration of the Mineral Resources Law revised on 8 November 2024, and systematically integrate and supersede seven existing administrative regulations, including the Detailed Rules for the Implementation of the Mineral Resources Law of the People’s Republic of China, the Measures for the Registration and Administration of Mineral Exploration Blocks, the Measures for the Registration and Administration of Mineral Exploitation, and the Measures for the Administration of Transfer of Exploration and Mining Rights. For mining investors, the Regulations not only bring a fundamental change to the method of obtaining mining rights, but also introduce for the first time at the administrative regulation level a dedicated national security review mechanism for foreign investment in the mining sector – a milestone that deserves close attention.
Summary of the Regulations
The Regulations consist of 8 chapters and 79 articles and take “safeguarding national mineral resource security” as their core principle. They establish a legal framework covering competitive grant of mining rights, category‑based control of strategic mineral resources, mine site ecological restoration, and national security review of foreign investment.
The core innovation of the Regulations is a comprehensive shift from the “application‑and‑approval” system to a market‑oriented model under which competitive grant is the rule and negotiated grant the exception. Article 8 provides that mining rights shall be granted through competitive means such as tender, auction or listing. For strategic mineral resources that are in high shortage and have a medium‑to‑large scale of reserves, or for exploration blocks with special requirements for exploration/extraction technology or environmental protection, exploration rights shall be granted preferentially by tender. Negotiated grant is limited to four specified situations, and where “urgent exploitation of strategic mineral resources” is required for national security, a mining right may be directly awarded only with the consent of the State Council – a balancing mechanism between national security and market order.
On the administration side, the Regulations establish a system characterized by “legally prescribed catalogue, systematic control, and specific measures”. The catalogue of strategic mineral resources is determined and adjusted by the natural resources department under the State Council in conjunction with other relevant State Council departments and must be approved by the State Council. The assessment factors include: (i) importance to national economic and social development and to national security; (ii) domestic resource endowment, degree of shortage and external dependency; and (iii) resilience and security of the relevant industrial and supply chains. For specific strategic mineral resources designated by the State Council, protective exploitation measures such as planning control, aggregate output control and restrictions on exploitation entities apply. In addition, the Regulations establish a three‑in‑one strategic mineral reserve system (product reserve, capacity reserve, and deposit reserve), and make the mining right holder liable for mine site ecological restoration with lifelong accountability.
For foreign investors, the Regulations introduce for the first time at the administrative regulation level a national security review system for foreign investment, creating a second layer of review on top of the existing negative list access control. Article 7 sets out the basic policy of “equality, mutual benefit, cooperation and win‑win” for international mining cooperation, but Article 74 simultaneously provides: where foreign investment in the exploration and exploitation of mineral resources affects or may affect national security, a national security review shall be conducted in accordance with the relevant regulations. This “dual‑track” review framework significantly increases the compliance complexity and uncertainty for foreign capital entering China’s mining market and is a risk factor that all prospective investors must assess as a priority.
Special Provisions for Foreign Investment: Negative List + National Security Review
I. Basic Legal Framework for Foreign Investment
Under the Foreign Investment Law of the People’s Republic of China, foreign natural persons, enterprises or other organizations may invest in China by establishing wholly foreign‑owned enterprises (WFOEs) or Sino‑foreign equity joint ventures (JVs). However, in the mineral resources sector, the types of entities a foreign company may choose are strictly restricted, depending on the category of the target mineral in the Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition) (“Negative List”), and whether such mineral is included in the catalogue of strategic mineral resources.
II. Three Categories of the Current Negative List for the Mining Sector
The current Negative List divides the mining sector into the following three categories:
1. Absolutely prohibited areas (the entire chain of exploration, exploitation, mineral processing and smelting of rare earths, radioactive minerals, tungsten, molybdenum, tin, antimony and fluorite, as well as smelting and processing of radioactive minerals): For these minerals, foreign companies may not enter in any form (including WFOEs or JVs). These minerals are all core categories in the strategic mineral catalogue.
2. Conditionally restricted areas: For the exploration and development of petroleum and natural gas, foreign companies may only invest through Sino‑foreign equity joint ventures or contractual joint ventures, and the Chinese party must hold a controlling interest. For the exploration and exploitation of graphite, foreign investment is limited to joint ventures or cooperative arrangements, but the law does not mandate Chinese party control.
3. Principally open areas (other minerals not listed in the Negative List, such as iron, copper, aluminum, lithium, etc.). As a matter of law, foreign companies may establish WFOEs to apply for mining rights. However, this is only a theoretical possibility.
III. The Legal Prescription of the Strategic Mineral Catalogue and the Introduction of National Security Review Increase Difficulty for Foreign Investment
If the minerals in the above‑mentioned “principally open areas” are also included in the strategic mineral catalogue (e.g., copper, lithium, aluminum), then because the Regulations give the catalogue the force of administrative regulation, these minerals are subject to special administrative measures, including: centralization of mining rights grant authority, aggregate output control, planning control, and restrictions on exploitation entities.
More importantly, Article 74 of the Regulations introduces a national security review system for foreign investment, providing that “where foreign investment in the exploration and exploitation of mineral resources affects or may affect national security, a national security review shall be conducted in accordance with the relevant regulations of the State”. This national security review mechanism constitutes a second layer of review in the mining sector, forming a “dual‑track” system together with the Negative List access review. The national security review is conducted jointly by multiple departments, the standards are not publicly disclosed, and the regulatory authorities have significant discretion in the process. The national security review applies not only to transactions where control is acquired, but the working mechanism office also has the authority to require a party to file a declaration on its own initiative. Review decisions are not subject to judicial review.
IV. The Joint Venture Structure Remains the Best Option for Foreign Investment
For minerals that fall into the “principally open areas” and are also within the strategic mineral catalogue (e.g., copper, lithium), although foreign companies may legally establish a WFOE, once a national security review is triggered – and in practice, transactions where a foreign company obtains mining rights for such minerals will almost certainly trigger such review – the probability of a wholly‑owned structure passing the review is extremely low. In contrast, the likelihood of passing the national security review is significantly higher if the foreign company chooses to establish a joint venture (JV) with a reputable and capable Chinese partner, particularly a non‑controlling, equity‑participation JV.
Therefore, for foreign companies such as Rio Tinto and BHP Billiton, the investment strategy in China’s mining sector is no longer “if the law permits a WFOE, I will use a WFOE”. Instead, they must conduct a “three‑level assessment”: first, confirm whether the target mineral is in the strategic mineral catalogue; second, confirm its category in the Negative List (prohibited, restricted, or open); and third, assess the risk of national security review. For the vast majority of commercially valuable minerals (especially new energy critical minerals such as copper, lithium, nickel, and cobalt), the ultimately feasible entity form is almost always a Sino‑foreign joint venture (JV), not a wholly foreign‑owned enterprise (WFOE).
Conclusion
By establishing a full‑chain control system for strategic mineral resources and introducing for the first time a national security review mechanism for foreign investment, the Regulations significantly increase the difficulty for foreign capital to enter China’s mining market. For foreign companies such as Rio Tinto and BHP Billiton, when engaging in mineral exploration and exploitation in China, except for absolutely prohibited areas, the most feasible and practically the only operable entity form is a Sino‑foreign joint venture (JV). Although a WFOE may be legally permitted for certain minerals, the institutional operation of the national security review makes it very unlikely to pass such review in practice. Therefore, foreign investors are advised to select reputable and capable Chinese partners and establish a mutually beneficial joint venture as the foundational structure for long‑term operations in China’s mining market.
Summary of the Regulations
The Regulations consist of 8 chapters and 79 articles and take “safeguarding national mineral resource security” as their core principle. They establish a legal framework covering competitive grant of mining rights, category‑based control of strategic mineral resources, mine site ecological restoration, and national security review of foreign investment.
The core innovation of the Regulations is a comprehensive shift from the “application‑and‑approval” system to a market‑oriented model under which competitive grant is the rule and negotiated grant the exception. Article 8 provides that mining rights shall be granted through competitive means such as tender, auction or listing. For strategic mineral resources that are in high shortage and have a medium‑to‑large scale of reserves, or for exploration blocks with special requirements for exploration/extraction technology or environmental protection, exploration rights shall be granted preferentially by tender. Negotiated grant is limited to four specified situations, and where “urgent exploitation of strategic mineral resources” is required for national security, a mining right may be directly awarded only with the consent of the State Council – a balancing mechanism between national security and market order.
On the administration side, the Regulations establish a system characterized by “legally prescribed catalogue, systematic control, and specific measures”. The catalogue of strategic mineral resources is determined and adjusted by the natural resources department under the State Council in conjunction with other relevant State Council departments and must be approved by the State Council. The assessment factors include: (i) importance to national economic and social development and to national security; (ii) domestic resource endowment, degree of shortage and external dependency; and (iii) resilience and security of the relevant industrial and supply chains. For specific strategic mineral resources designated by the State Council, protective exploitation measures such as planning control, aggregate output control and restrictions on exploitation entities apply. In addition, the Regulations establish a three‑in‑one strategic mineral reserve system (product reserve, capacity reserve, and deposit reserve), and make the mining right holder liable for mine site ecological restoration with lifelong accountability.
For foreign investors, the Regulations introduce for the first time at the administrative regulation level a national security review system for foreign investment, creating a second layer of review on top of the existing negative list access control. Article 7 sets out the basic policy of “equality, mutual benefit, cooperation and win‑win” for international mining cooperation, but Article 74 simultaneously provides: where foreign investment in the exploration and exploitation of mineral resources affects or may affect national security, a national security review shall be conducted in accordance with the relevant regulations. This “dual‑track” review framework significantly increases the compliance complexity and uncertainty for foreign capital entering China’s mining market and is a risk factor that all prospective investors must assess as a priority.
Special Provisions for Foreign Investment: Negative List + National Security Review
I. Basic Legal Framework for Foreign Investment
Under the Foreign Investment Law of the People’s Republic of China, foreign natural persons, enterprises or other organizations may invest in China by establishing wholly foreign‑owned enterprises (WFOEs) or Sino‑foreign equity joint ventures (JVs). However, in the mineral resources sector, the types of entities a foreign company may choose are strictly restricted, depending on the category of the target mineral in the Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition) (“Negative List”), and whether such mineral is included in the catalogue of strategic mineral resources.
II. Three Categories of the Current Negative List for the Mining Sector
The current Negative List divides the mining sector into the following three categories:
1. Absolutely prohibited areas (the entire chain of exploration, exploitation, mineral processing and smelting of rare earths, radioactive minerals, tungsten, molybdenum, tin, antimony and fluorite, as well as smelting and processing of radioactive minerals): For these minerals, foreign companies may not enter in any form (including WFOEs or JVs). These minerals are all core categories in the strategic mineral catalogue.
2. Conditionally restricted areas: For the exploration and development of petroleum and natural gas, foreign companies may only invest through Sino‑foreign equity joint ventures or contractual joint ventures, and the Chinese party must hold a controlling interest. For the exploration and exploitation of graphite, foreign investment is limited to joint ventures or cooperative arrangements, but the law does not mandate Chinese party control.
3. Principally open areas (other minerals not listed in the Negative List, such as iron, copper, aluminum, lithium, etc.). As a matter of law, foreign companies may establish WFOEs to apply for mining rights. However, this is only a theoretical possibility.
III. The Legal Prescription of the Strategic Mineral Catalogue and the Introduction of National Security Review Increase Difficulty for Foreign Investment
If the minerals in the above‑mentioned “principally open areas” are also included in the strategic mineral catalogue (e.g., copper, lithium, aluminum), then because the Regulations give the catalogue the force of administrative regulation, these minerals are subject to special administrative measures, including: centralization of mining rights grant authority, aggregate output control, planning control, and restrictions on exploitation entities.
More importantly, Article 74 of the Regulations introduces a national security review system for foreign investment, providing that “where foreign investment in the exploration and exploitation of mineral resources affects or may affect national security, a national security review shall be conducted in accordance with the relevant regulations of the State”. This national security review mechanism constitutes a second layer of review in the mining sector, forming a “dual‑track” system together with the Negative List access review. The national security review is conducted jointly by multiple departments, the standards are not publicly disclosed, and the regulatory authorities have significant discretion in the process. The national security review applies not only to transactions where control is acquired, but the working mechanism office also has the authority to require a party to file a declaration on its own initiative. Review decisions are not subject to judicial review.
IV. The Joint Venture Structure Remains the Best Option for Foreign Investment
For minerals that fall into the “principally open areas” and are also within the strategic mineral catalogue (e.g., copper, lithium), although foreign companies may legally establish a WFOE, once a national security review is triggered – and in practice, transactions where a foreign company obtains mining rights for such minerals will almost certainly trigger such review – the probability of a wholly‑owned structure passing the review is extremely low. In contrast, the likelihood of passing the national security review is significantly higher if the foreign company chooses to establish a joint venture (JV) with a reputable and capable Chinese partner, particularly a non‑controlling, equity‑participation JV.
Therefore, for foreign companies such as Rio Tinto and BHP Billiton, the investment strategy in China’s mining sector is no longer “if the law permits a WFOE, I will use a WFOE”. Instead, they must conduct a “three‑level assessment”: first, confirm whether the target mineral is in the strategic mineral catalogue; second, confirm its category in the Negative List (prohibited, restricted, or open); and third, assess the risk of national security review. For the vast majority of commercially valuable minerals (especially new energy critical minerals such as copper, lithium, nickel, and cobalt), the ultimately feasible entity form is almost always a Sino‑foreign joint venture (JV), not a wholly foreign‑owned enterprise (WFOE).
Conclusion
By establishing a full‑chain control system for strategic mineral resources and introducing for the first time a national security review mechanism for foreign investment, the Regulations significantly increase the difficulty for foreign capital to enter China’s mining market. For foreign companies such as Rio Tinto and BHP Billiton, when engaging in mineral exploration and exploitation in China, except for absolutely prohibited areas, the most feasible and practically the only operable entity form is a Sino‑foreign joint venture (JV). Although a WFOE may be legally permitted for certain minerals, the institutional operation of the national security review makes it very unlikely to pass such review in practice. Therefore, foreign investors are advised to select reputable and capable Chinese partners and establish a mutually beneficial joint venture as the foundational structure for long‑term operations in China’s mining market.