The beginning and end of the case of disputes over the exploration rights in Daying: four issues of value and ownership disputes

A prospective property valued at RMB 170 million has undergone several changes and was later recovered and frozen. Its transfer has been questioned the loss of state-owned assets, and its value and ownership disputes have continued for many years.

This once-convicted mineral exploration right was the exploration and exploration right of the Daying area in Liangshan County, Shandong Province (hereinafter referred to as “Daiying Mineral Exploration Right”). A verdict in 2012 also disrupted the original investment plan for a number of companies surrounding the exploration rights.

The exploration rights of Daying was first approved by the Shandong Provincial Department of Land and Resources in 2004 and registered under the name of the state-owned Jining Mining Group Lutai Coal Company (hereinafter referred to as “Lutai Coal”) for several months before the exploration permit. Afterwards, Luthai Company conducted equity restructuring, Luthai Company employees raised funds to establish Jining Yifeng Investment Co., Ltd., and the prospecting rights were transferred to Yifeng Company.

At this point, the exploration right has changed from state-owned enterprises to private enterprises. Since then, Yifeng has invested more than 18 million yuan in risk exploration. In 2007, Yifeng was asked to withdraw its equity. In the end, Shandong Honglida Investment & Development Co., Ltd. (hereinafter referred to as “Honglida Company”) gave 41.78 million yuan to buy shares and exploration rights. In 2011, Honglida introduced many investors such as Jiangsu Xinguang Group and invested over 200 million yuan. .

However, with the verdict in 2012, Honglida’s investment was forced to suspend. Honglida’s controlling shareholder is Jiangsu Shinko Group, a state-owned company in Yancheng City, Jiangsu Province, and the Shin Kong Group’s investment in Shandong is facing an unfinished business.

In early 2011, Jining City Prosecutor’s Office took three employees from the Municipal Bureau of State Land and Resources and Wang Keli, chairman of Yifeng Company, and other four persons in charge to change the prospecting rights of the case from Luthai Company to Yifeng Company in 2004. For the sake of mentioning.

The 21st Century Business Herald reporter obtained a judgment of the court showing that the above-mentioned four officials ruled that the state-owned assets were lost, and the prospecting right was Yifeng Company’s illegal income, and it had no right to dispose of the prospecting right. As a result of the loss of exploration rights caused by the above-mentioned abuse of authority by the above four officers, it was determined that Honglida did not make a good case for exploration rights and was recovered and returned to Shandong Lutai Coal Company.

“Disputes over prospecting rights have brought us nearly 200 million yuan in losses. The project at Daying Coalfield has been stagnant.” Zhou Fangjin, deputy general manager of Jiangsu Xinguang Group, told the 21st Century Economic Road reporter. Zhou Fangjin’s other identity is the general manager of Hong Lida. On July 26th in Jining, Shandong, he recalled to the 21st Century Business Herald reporter the situation of investing in Shandong and described the current embarrassing situation.

In July 2014, Hong Lida applied to the Ministry of Land and Resources to suspend the change of license for the exploration rights of the Grand Canyon. At the same time, a number of relevant unit personnel and companies have filed a complaint with the Supreme People's Procuratorate. At present, this case is under review.

Second-degree transfer

Lutai Coal Industry Co., Ltd. was established in 2002 by Cinda Asset Management Corporation and Jining Mining Group through the conversion of Taiping Coal Mine and Luyi Coal Mine Debt. The two state-owned enterprises jointly contributed capital, registered capital of 272.2 million yuan, Cinda Asset Holdings invested 145.73 million yuan, accounting for 53.54% of the shares; Jining Mining invested 1207.67 million yuan, accounting for 46.46% of shares.

The legal representative of Lutai Coal is Wang Keli, who previously served as the deputy general manager of Jiyuan Mining Group. He was one of the specific operators in the subsequent series of restructurings and changes in equity and prospecting rights.

On September 14th, 2004, two years after the establishment of Luthai Coal Industry, Shandong Provincial Department of Land and Resources granted Lutai Coal Mining with free exploration rights. During this period, Lutai Coal did not invest funds in exploration.

However, prospecting rights have not been hot in the hands of the state-owned company Lutai Coal. Just three months later, this state-owned exploration right was changed to the private company Yifeng.

Yifeng Company was established on August 29, 2004 by representatives from 28 employees of Luthai Coal. The company’s legal representative is Wang Keli. Cinda Assets holds 16.54% of shares, Jining Mining holds 16.46% and Wang Keli holds 25%. At that time, Luthai’s coal mining system was reformed and used the words of Wang Keli and Jining government officials as saying: “To prevent the prospecting right from falling, Yifeng Co., Ltd. came into being to undertake the withdrawal of shares of Xinda Company and Ji'er Mining Group.”

On December 31, 2004, the exploration right of Daying was transferred to Yifeng Company. Subsequently, Yifeng invested more than 18 million in risk exploration, and in June 2006, it discovered that there were more than 80 million tons of coal reserves in the Daying area.

According to the planning of Yifeng Company, the next step is to prepare for mining. However, at this time, the policy changed. In July 2007, Yifeng Company was asked to withdraw its equity.

It has become a thorny issue for the exploration rights of the Battalion. A number of government documents showed that due to various reasons, Jining City SASAC did not acquire the shares and exploration rights of Yifeng Company. As of April 2008, the six departments of the Commission for Discipline Inspection of Jining City will withdraw the equity of Yifeng Company within a limited time. After negotiating with a number of companies, the final price of the company reached 41.78 million and won the prospecting right. Yifeng company also dissolved.

On June 29, 2008, Honglida and Yifeng Company signed a contract for the transfer of prospecting rights. On September 1, 2009, the Ministry of Land and Resources approved the transfer of the contract and awarded Honglida with exploration rights. At this point, the Great Explorer Prospector found its third owner.

It is worth noting that the new owner of the Daying prospecting right was established two days before signing the transfer contract. Industrial and commercial data at that time showed that Honglida Corporation was established on June 27, 2008. Legal representative Hu Quanshan had a registered capital of 10 million and a paid-up amount of only 2 million.

Since then, Honglida Co., Ltd. has made several equity changes and increased its capital. As of March 22, 2011, the registered capital was RMB 130 million and legal representative Song Haitao (formerly General Manager of Shin Kong Group). Currently, Hongda's controlling shareholder Jiangsu Xinguang Group also invested 66.30 million yuan at this time, and thus held 51% of Honglida.

Shin Kong Group is a wholly state-owned company funded by the Yancheng City Government of Jiangsu Province with a registered capital of 218 million yuan, which is mainly engaged in investment in the mining industry. After becoming the controlling shareholder of Hong Lida, Xinguang Group invested a large amount of funds in Daying Coalfield and invested 30 million yuan in the preliminary mining work.

However, when the mineral exploration rights were being invested by Honglida in the coal field, in 2012 it was reported that the prospecting rights had been recovered. Since then, Hong Lida has been caught in the embarrassing situation of stagnant operations.

Complaint to the highest inspection

The news that the Dachang exploration rights were pursued was reported in a 2012 verdict.

In early 2011, Jining City Prosecutor’s Office took three employees from the Municipal Bureau of State Land and Resources and Wang Keli, chairman of Yifeng Company, and other four persons in charge to change the prospecting rights of the case from Luthai Company to Yifeng Company in 2004. For the sake of mentioning.

The 21st Century Business Herald reporter obtained the "Criminal Judgment of the People's Court of Zhangzhou City in 2012" showing that the referee mentioned above caused the loss of state-owned assets and changed the prospecting right of the state-owned company to Yifeng Company. Yifeng Company is in violation of law. It has no right to dispose of this prospecting right. Due to the loss of prospecting rights caused by the abuse of authority by the above four officers, it was determined that Honglida was not good at obtaining the case and involved in exploration rights, and was recovered and returned to Shandong Luthai Coal Company.

The testimony of many people from the Jining city government disclosed the background. At that time, Lutai Coal was reformed. Luthai's controlling shareholder, Cinda, proposed to sell its shares to UK-based Anglo-American companies in order to prevent resources from flowing into foreign capital. Established Yifeng Company. If the exploration rights of Daying are transferred from Yitai Mining Group of Shandong Iron and Steel Group to Yifeng, it can avoid the flow of resources into foreign capital.

“The change of prospecting rights is not my personal behavior. The change of prospecting rights from the name of Lutai Coal to Yifeng is agreed by the government of Jining City and approved by the Ministry of Land and Resources of the People's Republic of China.” Wang Keli, 60 years old, for the 21st Century Brokerage reporter said.

“Yifeng Company was established by cadres and staff members and invested in shares. At that time, it was a private enterprise in form. It was essentially responsible for the reform of the municipal government and reserved reserve coal resources for Jining City. After the acquisition of exploration rights by Yifeng, Luthai and SASAC There are several opportunities to recover, but in the end it is not accepted.” Another person familiar with the restructuring explained.

In addition to disputes over the legality of the procedure, another controversy in this link from state-owned exploration rights to private exploration rights is whether the change in prospecting rights causes losses to the national interest.

“Because Yifeng Company is an actual investor in the preliminary exploration right of Daying Group, Luthai Company has not invested and exploration rights have not yet formed assets at the time of transfer. The mineral resource reserves of Daying Coalfield have not yet been verified, and the prospecting right at this time As for the prospecting rights in the census work phase, the future earnings cannot be predicted. There must be no equal between the assets assessment and the actual losses.” Wang Keli further explained: “Even since the Yifeng Company invested 18 million in exploration, neither national investment nor utilization State-owned funds."

However, things are not so simple. 21st Century Brokerage Reporter was informed that as early as before the exploration of Yifeng Company, Jiangsu Coal Geological Exploration Team 2 had begun geological exploration in July 2004. In mid-September, Liangshan County reported information about seeing coal from “Jining Daily”. .

From the transcripts in the Judgment, Yifeng executives stated at the shareholders’ meeting: “The big camp has already seen coal. If we want to further confirm that we have about 3 to 5 million in venture capital, we are willing to risk our shareholders. The meeting will be passed, but if you don’t want to do it, the shareholders’ meeting will be passed.” After this, the executives of Yifeng Company started to go through the formalities for changing the prospecting rights.

This was also seen by the court as Yifeng Company’s “premeditated” prospecting right was in the pocket. Between Luthai and Yifeng, state-owned prospecting rights have been transformed into proprietary exploration rights and have been questioned as to the loss of state-owned assets. The exploration right from Yifeng to Honglida was also considered by the court as a non-intellectual acquisition.

Dispute over the value of prospecting rights

Another controversial verdict of the court judgment is that Yifeng Company transferred its exploration rights to Hong Lida Company for illegal transfer. The registered capital of Hong Lida was 10 million yuan and the paid-up capital was only 2 million yuan. Within three days after the company was established, it signed a contract for the exploration of mineral prospecting in the Daying area of ​​the Liangying county, Liangshan county, Shandong province, within three days of the establishment of the company, and the prospecting right was transferred at a price significantly lower than the value of the prospecting rights. It is also a loan, and its transfer behavior is not obtained in good faith.

On March 27, 2012, Beijing Jingwei Assets Appraisal Co., Ltd. issued the "Evaluation Report of Coalfield General Exploration Rights in the Daying District, Liangshan County, Shandong Province", which showed that the assessment result was that the evaluation of the prospecting power was carried out for 30 years, and the evaluation and utilization was carried out. 56.816 million tons of resource reserves, 27.2103 million tons of recoverable reserves, and appraised value of 16.9 million tons of recoverable reserves of 16.969.69 million yuan.

This report shows that the exploration value of Daying prospecting rights on September 29, 2008 was nearly 170 million yuan, which was far more than the price of 41.78 million yuan when Hong Lida purchased it from Yifeng.

However, Zhou Fangjin, general manager of Honglida, expressed that: “The evaluation report was evaluated on June 30, 2009, and the prospecting right was changed on December 31, 2004. It should be a prospecting right held by Lutai Company. The value of the project is assessed instead of the prospecting right held by Yifeng Company after the transfer. Luthai does not invest in the exploration right, and no investment can not form an asset and cannot be evaluated because it is only a worthless exploration certificate. ."

The lawyer of Beijing Renren Desai Law Firm believes that the essence of the exploration right is the investment right that belongs to the jurisdiction of the administrative license. The value of prospecting rights refers to the amount of investment income that may be generated by the exploration right holder through investment in the living labor and materialized labor of the licensed mineral resources. The value of the prospecting right should be calculated from the actual exploration investment and exploration results.

Was Honglida, who took over the burden at that time, a good-faith purchase? The person familiar with the prospecting right for bids at the time informed the 21st century brokerage reporter: “At the time, several companies and Liangshan County government participated in the quotation, but the quotation was lower than Honglida.”

Specifically, Shandong Rich Materials Trading Co., Ltd. offered 26 million yuan; Liangshan County government made a bid of 20 million yuan; Beijing Womei Trading Co., Ltd. offered 38.8 million yuan.

“At that time, Beijing Womei Economic and Trade Co., Ltd. once signed a contract. Later, they invited a local expert from Inner Mongolia to visit Liangshan. The experts believe that this is located at the lower reaches of the Yellow River and there is controversy at the junction of Liangshan and Henan. Poor geological conditions are not safe. The risk is also high, the price is high, and the contract is finally terminated,” said the person familiar with the matter.

Wang Keli also stated that he was eager to withdraw his employee's equity and return the employee's investment funds. In the absence of the SASAC, he had to find other buyers. “When we got it off, Hong Lida’s 38.8 million plus 298 yuan extra drilling cost was just about the same as the investment cost of Yifeng and the total interest of employees. So it was transferred to Hong Lida. In order to complete it as soon as possible, I In the middle, we also help with borrowing coordination."

In addition, insiders of Honglida Company stated that the original investor of Hong Lida is the legal representative of the real estate company and its business scope does not include coal operations. In the case of negotiation with Yifeng Company, a new investment company was newly established to carry out the project. Therefore, within three days after the establishment of Honglida, it signed a contract for the exploration of mineral rights.

v. Supreme Procuratorate

At the end of 2012, the exploration rights of Daying had been frozen by inspection agencies. With the freezing of prospecting rights, Honglida’s operations have also begun to stagnate and 600 employees have “locked out of business” so far.

A number of managers of Honglida Company told the reporter: “As an outsider of this case, Hong Lida has been petitioning through various channels after he learned that his prospecting rights were illegally recovered.”

Zhou Fangjin told reporters: “The Shin Kong Group's stake in Hong Lida mainly depends on the exploration rights of Daying, and Liangshan County also gave some preferential policies. We invested nearly 200 million before and after, which accounted for 40% of the investment of Shin Kong Group at that time. But at that time, When the coal market is the highest price, we still recognize its value."

After Jiangsu Shinko Group became the controlling shareholder of Honglida, it invested more than 20 million in the second half of 2010 and the second half of 2011. In the blueprint of Honglida's planning in Liangshan, trial operation began at the end of 2013, and the mine under construction will become a production mine.

The reality today is that after the expiry of the prospecting rights, a mining permit cannot be issued within a specified period of time. The reality of coal mining in 2014 will be lost. The annual output of 450,000 tons of coal will bring 100 million yuan of fiscal revenue to the local area. It can only be set in the blueprint outlined.

The further progress of the dispute was that the 2013 “Review of Criminal Prosecution by the People’s Procuratorate of Shandong Province” mentioned that after review, the court found that the original ruling of the verdict determined that the claimant Honglida’s acquisition of prospecting rights was not good enough to obtain evidence. The recovery of the prospecting right through criminal judgment seriously violated the lawful rights and interests of outsiders, and it is recommended that the case be retried.

On July 9, 2014, Honglida Company applied to the Ministry of Land and Resources to suspend the change of exploration rights. The dispute over exploration rights caused by a joint case has now become increasingly fierce. Recently, relevant companies and personnel have filed a complaint with the Supreme People's Procuratorate and are currently in the process of review.