A state-owned enterprise in Yibin, Sichuan auctions off a sand quarry and subcontracts it multiple times, leading to “over-extraction” by contractors; 8 arrested

Contracted to Mine Sand Legally but Facing Criminal Charges for “Illegal Mining” Due to Over-Extraction and Exceeding Time Limits: As the actual person in charge of Yibin Huahui Commerce and Trade Co., Ltd. (hereinafter referred to as Huahui Company), Han Bo’s company contracted a labor mining business in a sand mining project led by the government and state-owned enterprises. Having invested hundreds of millions without recovering the costs, eight investors have been accused of “illegal mining” and successively investigated.
Procuratorial authorities accused them of “over-extracting and exceeding the time limit” to mine more than 5 million tons of sand and gravel from the Yangtze River after the “River Sand Mining License” expired. Their destructive mining behavior caused the riverbank to be eroded and destroyed by river water, resulting in irreversible damage to the ecosystem. They should be held criminally responsible for illegal mining.
Han Bo recently told The Paper (www.thepaper.cn) that as a labor contracting company, they operated according to the contract requirements and were previously unaware of the “over-extraction”. They contracted the mining business from a state-owned enterprise with a license and authorization and mined sand under the supervision of relevant law enforcement departments. Now, they are being investigated by the public security department and approved for arrest, while the relevant state-owned enterprises that contracted the work to them are “unharmed”.
An informed source from the Nanxi District Water Conservancy Bureau confirmed part of Han Bo’s statement. On August 14, 2024, the Nanxi District People’s Procuratorate initiated a public prosecution against the Nanxi District People’s Court for “illegal mining”.
On December 3, Han Bo told The Paper that the Nanxi District People’s Court decided to postpone the trial of the case on November 25. According to the “Decision on Postponement of Trial” issued by the Nanxi District People’s Court, “During the trial, the Nanxi District People’s Procuratorate of Yibin City, Sichuan Province, suggested a postponement of the trial due to the need for supplementary investigation in this case.” The court made the above decision in accordance with relevant laws and regulations.
Sand and gravel projects were subcontracted layer by layer, and mining restrictions were gradually lifted.
In 2014, the sand and gravel mining rights for the Yangtze River in Nanxi District were transferred by the Yibin Water Conservancy Bureau, with the project’s general contracting going to a state-owned enterprise in Nanxi District, Yibin Nanxi Xingnan Resource Development Co., Ltd. (abbreviated as “Xingnan Company”). The company won the bidding for the sand and gravel mining rights of 5 mining areas and 9 mining points in the Yangtze River channel of Nanxi District. The period was from May 25, 2014, to May 31, 2015. The approved total mining volume was 930,000 tons, with a total transfer fee of 4.5 million yuan.
The Yangtze River sand mining sites in Nanxi District that year. (Provided by the interviewee)
After obtaining the sand and gravel mining rights, Xingnan Company did not directly carry out mining but signed a “Cooperative Operating Agreement” with its holding company, Yibin Nanxi Jiangfeng Resource Development Co., Ltd. (abbreviated as “Jiangfeng Company”), transferring the entire sand mining project to Jiangfeng Company. The term was from September 2, 2014, to May 31, 2015.
The agreement stipulated that Jiangfeng Company would organize the mining (production, processing) and sales of sand and gravel within the project area and bear the expenses incurred during mining and sales. Xingnan Company would receive a profit share of 3.5 yuan per ton, with the remaining profits going to Jiangfeng Company.
Jiangfeng Company then conducted an external tender for labor contracting, and Yibin Nanxi Zhongxin Equipment Leasing Co., Ltd. (abbreviated as “Zhongxin Company”) won the bidding for the sand and gravel mining business at the Tuonihao mining point in Sanshe and Sishe of Jiangnan Town. This was one of the mining points within the entire project’s mining area.
On December 12, 2014, both parties signed the “Maliuwan Machinery Leasing and Labor Contracting Contract”. The project mainly involved machinery leasing and labor contracting for the incoming material processing point in Sanshe and Sishe of Peishi Township. The contract required a monthly output of no less than 5,000 tons for the dry mining point and no less than 150,000 tons per month for the Tuonihao water mining point. The contract was renewed annually, meaning it had been signed until December 2015, far exceeding the approved mining period.
The supplementary contract between the two parties stipulated that Zhongxin Company was responsible for coordinating and resolving issues related to the construction site and surrounding areas (including land leasing, compensation for damaged crops, etc.) and would bear all expenses incurred.
Subsequently, on January 9, 2015, Huahui Company signed the “Tuonihao Sand and Gravel Mining Labor Contract” with Zhongxin Company, contracting all labor for the sand and gravel mining and transportation project in Sanshe of Tiantang Village. The contract term was “from the date of signing to May 31, 2015”.
The contract also required a monthly water mining output of no less than 300,000 tons, without specifying a maximum mining limit. The compensation for damaged crops at the stockyard, originally the responsibility of Zhongxin Company, was transferred to Huahui Company.
On June 6, 2015, Zhongxin Company, Huahui Company, and a third party (Party C), Mr. He, signed the “Tuonihao Sand and Gravel Mining Contract”. The contract stipulated that if the mining volume was less than 1 million tons, the resource fee would be 4.8 yuan per ton; if it exceeded 5 million tons, the fee would be 1 yuan per ton.
The contract did not specify the mining period or volume limits but explicitly stated that the larger the mining volume, the lower the resource fee per ton.
Upper Contractors Unable to Pay, Continuing Cooperation Becomes Unsustainable
According to the contract, Huahui Company fully invested in sand mining, extracting millions of tons in just a few months.
During this period, on May 4, 2015, the Yibin Water Conservancy Bureau issued the “Notice on Strengthening River Sand Mining Management”, stipulating that from July 1 of that year, sand mining would be completely prohibited in the Yangtze River channel within the Yibin jurisdiction. However, on June 6, 2015, Zhongxin Company still signed the aforementioned “Tuonihao Sand and Gravel Mining Contract” with Huahui Company and the third party, Mr. He.
Han Bo stated that at that time, Jiangfeng Company and Zhongxin Company were unable to pay the labor fees. Huahui Company had previously invested a lot in manpower and equipment and had also advanced funds for land leasing and compensation for damaged crops. Without receiving the labor fees, the company faced the risk of losing all its investment.
An informed source from the Nanxi District Water Conservancy Bureau also confirmed that due to severe fund shortages at Jiangfeng Company, they could not pay the mining labor fees. “Instead, they paid a management fee of 7 yuan per ton to Jiangfeng Company, and Huahui Company was responsible for selling the mined sand and gravel.”
By June 30, 2015, Huahui Company had mined 5.3 million tons of sand and gravel. After the Yangtze River was fully closed to mining on July 1, 2015, with the consent of Jiangfeng Company, Huahui Company sold 550,000 tons of sand and gravel to cover management fees, resource fees, and compensation for villagers. Han Bo said that the third-party partner, Mr. He, found it unprofitable and chose to withdraw midway.
On September 13, 2018, the Nanxi District Water Conservancy Bureau verified that Xingnan Company and Jiangfeng Company had illegally over-mined by not following the regulations on the sand mining license. They were penalized for this serious over-mining behavior.
The “Administrative Punishment Decision” issued by the bureau stated that during the approved mining period from November 2014 to May 31, 2015, the approved mining volume for the 5 mining areas and 9 mining points was 842,000 tons, but the existing over-mined inventory was 4.823 million tons. The bureau imposed administrative penalties, confiscating 3.981 million tons of over-mined inventory and fining 50,000 yuan.
Han Bo said that although the administrative punishment acknowledged the illegality of Xingnan Company and Jiangfeng Company, the confiscated and fined sand and gravel were those mined by them for which Xingnan and Jiangfeng had not yet paid the relevant fees, causing them significant losses. In response, Huahui Company filed an administrative reconsideration, which was not accepted due to “not meeting the qualifications of an applicant for administrative reconsideration”.
Over-Mining of Sand and Gravel Leads to Corporate Executives Being Prosecuted
The upper contractors had not settled the payments, but the mined river sand was auctioned off, with the proceeds going to the district finance. Huahui Company continuously negotiated with relevant departments in Nanxi District to settle the labor fees and advance payments