A State Council Decision 1, made public on July 26,
2013, repealed the administrative measures regarding coal
production licenses. The decision came following changes to
China's Coal Industry Law 2 which abolished the need
for the license. As a result of the changes to the Coal Industry
Law, companies (both domestic and foreign-invested enterprises)
will no longer need to obtain a coal production license to produce
coal or a coal trading license to sell coal.
Abolishment of the Coal Production License and Coal Trading
On June 29, 2013, the Standing Committee of the National
People's Congress amended the Coal Industry Law by abolishing
the need for: (i) a mining company to obtain a coal production
to produce coal, and (ii) a company to obtain a coal trading
to sell coal. 3 In order to finalize these amendments to
the law, the State Council Decision was issued to repeal the Coal
Production Measures 4 on July 18, 2013. The Coal
Production Measures set out the requirements and procedures for
mining companies to obtain the coal production license previously
required by the Coal Industry Law. The State Council Decision,
which was published on the State Council website on July 26, 2013,
also made corresponding changes to four other regulations related
to the coal industry, namely, amending references to coal
production licenses. We anticipate that the Coal Business Measures
5will be revised to repeal the requirements to obtain a
coal trading license.
Reasons for the Changes?
The changes to the Coal Industry Law and the abolishment of the
Coal Production Measures (referred to above) are aimed at improving
the efficiency of the approval process for companies wanting to
produce or trade in coal. The changes are part of a larger reform
movement, started in 2001, aimed at increasing the efficiency of
the government's administrative processes.
What Does This Mean for the Coal Industry in China?
Previously, in order to produce coal, a mining company had to
obtain both a coal production license and a production safety
The coal production license was intended to strengthen the
administration of the coal industry and improve the safety of coal
production. 6 To obtain the license, mining companies
had to meet a number of requirements such as having an approved
mining design, having a production system in compliance with mine
safety standards, and having qualified personnel. 7 The
purpose of the coal production license, however, was similar to the
purpose of the production safety license, which aimed to strengthen
production safety supervision and administration. 8 Some
of the requirements for obtaining each license were also similar,
such as the safety requirements and personnel qualifications. In
order to eliminate this "overlap" of requirements and
increase the efficiency of the approval process, the need for a
coal production license was abolished (however, a production safety
license, amongst others, is still required).
Similarly, in order to trade in coal, a company previously had
to obtain a coal trading license. This license was intended to
regulate and control coal trade activities such as the wholesale
and retail of raw coal, coal washing, the selection and processing
of coal products, and the processing and sale of coal for
residential use. 9 Apart from other corporate licenses
and certificates, the coal trading license often took the longest
time to obtain (up to 40 business days from the acceptance (rather
than the receipt) of an application by the relevant authorities).
Now, a company wishing to trade in coal will be able to do so
without applying for a coal trading license. Other than the
generally required corporate licenses and certificates, the company
does not need to obtain any licenses specifically related to coal
1"Decision to Cancel and Amend Certain
Administrative Regulations (State Council Decree No. 638)"
2"Law of the People's Republic of
China on the Coal Industry"
3"Decision to Revise 12 Laws including
the Cultural Relics Protection Law of the People's Republic of
China (Presidential Decree No. 5)"
4"Administrative Measures for Coal
5"Measures for the Supervision and
Administration of Coal Businesses"
6Supra note 4, Art. 1.
7Id., Art. 4-5.
8"Regulation on Production Safety
9Supra note 5, Art. 1, 3.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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