The Provisional Regulations on Administration of Foreign Investment in the Rare Earth Industry were issued by the State Development Planning Commission and came into force on August 1, 2002.
Foreign-invested projects in the rare earth industry may be divided into the three main categories of (i) mines, (ii) smelting and separation and (iii) intensive processing and applications.
The establishment of rare earth mine enterprises in China by foreign investors is prohibited. Sole ownership of rare earth smelting and separation projects by foreign investors is not permitted (such projects are limited to equity joint ventures and cooperative joint ventures).
If a Chinese enterprise that plans to establish a rare earth smelting and separation project with a foreign investor using the joint equity or joint cooperation form has already been engaged directly in rare earth mine production and business operations, then the assets and business related to the mines may not be included as part of the joint equity.
This translation, together with any explanatory material, is provided courtesy of Lehman Tax & Accounting.