Laws of the People's Republic of China

General Office of the State Council

Notice of the General Office of the State Council on Transmitting Several Opinions of State Development and Reform Commission, the Ministry of Finance, the Ministry of Land and Resources, People's Bank of China and State Environmental Protection Administration concerning Preventing the Haphazard Investment in Copper Smelting Industry

Guo Ban Fa [2005] No. 54

To people's government of all provinces, autonomous regions and municipalities directly in the Central Government, all ministries and commissions of the State Council and its directly affiliated departments:

Several Opinions of State Development and Reform Commission, the Ministry of Finance, the Ministry of Natural Resources, People's Bank of China and State Environmental Protection Administration concerning Preventing the Haphazard Investment in Copper Smelting Industry has been approved by the State Council and hereby is transmitted to you for strict implementation.

General Office of the State Council

November 3, 2005

Several Opinions of SDRC, MOF, MLR, PBC and SEPA concerning Preventing the Haphazard Investment in Copper Smelting Industry

Copper smelting is an important raw material industry. Recent years, driven by periodically rapid growth of copper and influence of surge of copper price and lure of profitable interest, some local authorities and enterprise, regardless of the external conditions such as market, resource and etc, hazardously invested in copper industry, which resulted in a series of troubles. First, copper smelting capability increased quickly, the national raw copper smelting in 2004 reached 1.63 million ton, the import of copper concentrate amounted to 2.88 million ton, the total capability for the copper smelting projects under construction or to be constructed added up to 2.05 million ton. It is estimated that the smelting capability will reach 3.7 million ton at the end of 2007, largely exceeded the estimated guarantee capability of national copper concentrate and the possibly available capability of copper concentrate in international market; second, the disordered market, excessive competition, scramble for raw material would result in plunge of copper smelting interest, wasted investment and financial risk as well as hidden troubles; third, the newly-established copper smelting industry are generally in small-scale and high energy consumption, serious environmental pollution, which are unfavorable to structural adjustment and upgrading. In order to prevent the tendency of haphazard investment in copper smelting industry and to promote the sustained and sound development of copper industry, the following opinions are hereby raised:

1.

To get done with the clearance and rectification of projects earnestly

The earnest clearance and rectification upon the copper smelting projects under construction and to be constructed shall be undertaken promptly around China. The copper smelting projects in contravention of the provisions of industrial policy, investment administration, environmental impact assessment, land administration and etc. shall not be approved for construction. Where the registered copper smelting project has the single system less than 0.1 million annually or fails to employ such advanced, low-energy-consumption, up-to-the-standard-of-environmental-protection, and high comprehensive utilization rate technologies as flash smelting, ISA smelting, Noranda smelting, or fails to fulfill such external conditions as supply of copper concentrate, transportation and etc. or the proportion of self-owned mine materials is less than 1/4, it shall cease to be constructed and the rationality and feasibility of the project shall be studied once again. Should the project has been operated without submitting environmental impact statement to administrative department in charge of environmental protection, the project under construction shall be ceased and the operating project shall be stopped. Should land for project construction has been utilized without the approval in accordance with the relevant provisions, it shall be ceased. Where the project has, after clearance and rectification, met the access qualifications, it shall be listed as a qualified enterprise.

2.

To strengthen the administration of industrial policy orientation and market access.

The relevant department of the State Council shall carry out the scientific development outlook in an around way, target at taking a new road to industrialization, accelerate the formulation and perfection of copper industrial policy, outline the access standard for copper smelting industry, nail down the development orientation and regional layout of copper industry and guide the orderly development of the industry hereof. The relevant department of the State Council shall strengthen the study and analysis upon the performance of copper industry, at home and abroad and promptly issue information including the performance of raw material market, production capability and price fluctuation to guide the investment act of local authorities and enterprises. The relevant department of the State Council shall also, in accordance with laws, rules and the relevant industrial policies to undertake strict market access administration. The copper smelting projects having violated the industrial policy and the relevant provisions after investment mechanism reform shall not be approved for construction. In case that new industrial polices are issued by the central government, they shall prevail.

3.

To adjust the relevant economic policies

In order to effectively control the investment scale and to improve investment efficiency, the proportion of copper smelting project shall be improved from 20% or more to 35% or more. The relevant tax exemption policy applicable to import of copper smelting equipment shall be controlled strictly, for those construction projects lack of conformity with relevant provisions, without effective record and approval from the administrative authority in charge of environmental protection, the relevant authorities shall not issue Confirmation for the Domestic or Foreign-funded Projects Encouraged by the State. In the course of studying out the import tax policy in the 11th Five-Year Plan, the relevant authorities shall plan as a whole the policy concerning value-added tax of crude copper import.

4.

To strengthen credit administration

Financial institutions shall, in accordance with requirements of state macro control and industrial policy, rationally arrange credit fund, incessantly optimize orientation for the credit fund investment, hedge against credit risk. Financial institutions shall render continuous support to the copper smelting projects in conformity with national industrial policy and market access, shall not extend credit to those inconsistent with national industrial policy and qualification of market access as well as those having failed to be put on record in accordance with the prescribed procedures, and shall withdraw appropriately the credit which has been extended.

5.

To strengthen supervision and administration on environmental protection

State Environmental Protection Administration shall, in accordance with the Environmental Protection Law of the People's Republic of China as well as the relevant laws and rules, undertake supervision and inspection upon the fulfillment of environment protection standard by the current copper smelting enterprises, issue regularly the name list of those enterprises having not be up to standard and the local people's government shall be responsible for harnessing those enterprises hereof within the prescribed time limit and suspend or even close down those enterprise having still not reached the prescribed standard after the harness. The backward production capability shall be washed out more quickly, in accordance with the related industrial policy and the standard of environmental protection, the closed blast furnace no more than 15 m2 in size shall be washed out promptly, reverberator, electric furnace and the closed blast furnace ranging from 15-10 ?O (10 ?Oexcluded) shall be washed out prior to the end of 2006 and all the closed blast furnace shall be washed out prior to the end of 2007.

6.

To strengthen the restructuring of copper smelting industry

The mainstay of copper smelting industry shall be encouraged to cooperated with small and medium-sized mines and enterprises to ensure the supply of raw materials and avoid the construction of smelting projects by unqualified mines and enterprises; the mainstay of copper smelting industry shall be supported to cooperated with geology survey enterprises to increase the reserved resources; the up-to-standard enterprises shall be supported to implement reform, restructuring and transformation continuously so as to realize their complimented advantages and to improve the their industrial concentration and improve their international competitiveness. Copper smelting industry shall seriously study variation of domestic and foreign market and cash in on two kinds of resources. The mainstay of copper smelting industry shall be supported to purchase copper concentrate by means of coalition bargaining. The role of agency such as trade society shall be given full play. All the regions and relevant departments shall, in accordance with the spirit of the Opinion, mobilize the earnest clearance upon the construction projects of construction projects as soon as possible and submit the result hereof and the proposal for treatment to the State Council prior to the end of 2005 and make a copy for the State Development and Reform Commission.