Beware of the Legal Risks of Generation-Grid-Load-Storage Integration in Mining Sector

At the CLNB 2025 (10th) New Energy Industry Chain Expo - New Energy PV ESS Forum hosted by SMM Information & Technology Co., Ltd. (SMM), Yuqi Ma, Senior Partner and Head of the Mining Energy M&A and Restructuring Department at Beijing Yuren Law Firm, shared insights on the theme "Legal Risks and Risk Prevention of Generation-Grid-Load-Storage Integration in Mining Enterprises." She stated that generation-grid-load-storage integration is an essential path for the green transformation of mines, enabling optimized energy utilization, reduced energy consumption, minimized environmental impact, and driving mining enterprises toward sustainable development. During the implementation of generation-grid-load-storage integration projects, the principle of compliance-first must always be upheld. It is crucial to fully recognize the existence of legal risks, take effective preventive measures, and ensure the legal and compliant operation of the project. Risk prevention and compliance operation will help achieve a win-win situation for both new energy and mining enterprises.

Significance of Generation-Grid-Load-Storage Integration in Mining Enterprises

Significance for New Energy Enterprises

Business Expansion: With increasing competition in the new energy industry, enterprises need to continuously expand their business areas to seek new development opportunities. The application of generation-grid-load-storage integration in mining enterprises provides new business directions for new energy enterprises, helping them expand market share and enhance competitiveness.

Cost Reduction: Some new energy enterprises need to procure raw materials from mining enterprises. Through the application of generation-grid-load-storage integration, new energy enterprises can establish closer cooperation with mining enterprises, achieve optimized resource allocation, and thereby reduce raw material procurement costs.

Significance for Mining Enterprises

Green Transformation: Mining enterprises are often located in remote areas, characterized by high energy consumption and environmental sensitivity, facing significant environmental protection pressures. The application of generation-grid-load-storage integration can help mining enterprises achieve optimized energy utilization, reduce energy consumption, minimize environmental impact, and drive green transformation.

Compliant Development: The mining industry is subject to strict regulations, and compliance, environmental protection, and safety are essential prerequisites for enterprise development. Generation-grid-load-storage integration projects align with industry regulatory directions, helping mining enterprises meet relevant legal requirements and achieve compliant development.

Legal Risk Prevention

Core Value: The core value of applying generation-grid-load-storage integration in mining enterprises lies in achieving energy optimization, cost reduction, efficiency improvement, and low-carbon development. By rationally allocating energy resources, improving energy utilization efficiency, reducing enterprise operating costs, and minimizing carbon emissions, it meets the requirements of sustainable development.

Compliance Support: Analyzing the legal risks of applying generation-grid-load-storage integration projects in mining enterprises and proposing corresponding prevention strategies can provide compliance support for project implementation, ensuring smooth cooperation between new energy and mining enterprises.

Case Studies of Generation-Grid-Load-Storage Integration in Mining Enterprises

Overview of Tibet Mining Project

Project Composition: The generation-grid-load-storage integrated comprehensive energy station project at the Zabuye Salt Lake lithium mine, developed by Tibet Mining, is a comprehensive thermal and power energy system consisting of power supply (solar thermal + PV), load (electricity, steam), energy storage (thermal storage + electrochemical storage), power distribution, and control systems.

System Capacity: The project includes a 40MW solar thermal system, a 35MW (AC side) PV system, and a 20MW / 40MWh electrochemical energy storage system, providing strong energy supply and storage capabilities.

Progress of Tibet Mining Project

The project commenced construction in March 2023;

The project started generating power in March 2025;

Energy Supply: Upon completion, the project will supply 258 million kWh of electricity and 264,000 mt of steam annually to Tibet Mining's second-phase lithium carbonate processing plant, providing stable energy support for the enterprise's production.

Analysis of Legal Risks for Mining Enterprise

Project Compliance Implementation Risks

1. Project Approval/Filing

The implementation of generation-grid-load-storage integration projects in mining enterprises requires strict project approval or filing procedures. If the project fails to obtain approval or filing from relevant departments during the initiation phase, it cannot proceed.

2. Environmental Impact Assessment (EIA)

Obtaining EIA approval for mining enterprises is inherently challenging. Generation-grid-load-storage integration projects may have certain impacts on the surrounding environment of the mine, and ensuring smooth EIA approval is a critical step for project implementation.

3. Land Pre-Approval

Project site selection and land pre-approval are prerequisites for project implementation. Mining enterprises often face tight land quotas, and generation-grid-load-storage projects require significant land. Ensuring that the project land complies with relevant planning and requirements, passes land pre-approval, and obtains legal land use rights remains uncertain.

Contract Performance Risks

Mismatch in Mining and Beneficiation Projects: The progress of mining and beneficiation projects in mining enterprises may not align with generation-grid-load-storage integration projects. If mining and beneficiation projects lag, it may reduce energy demand, affecting the project's economic benefits; conversely, if mining and processing projects progress too quickly, it may lead to insufficient energy supply, impacting normal production.

Delayed Electricity Payment: Delayed electricity payment is a common risk during contract performance. Mining enterprises may fail to pay electricity bills on time due to financial difficulties, affecting the energy supplier's cash flow and potentially leading to the breakdown of the cooperative relationship.

Production Cuts or Shutdowns: Production cuts or shutdowns in mining enterprises may significantly reduce energy demand, posing operational challenges for generation-grid-load-storage integration projects. Additionally, production cuts or shutdowns may trigger a series of contract disputes, such as liability for breach of contract.

Policy and Its Change Risks

Inconsistent Policies: Different regions have varying standards for energy storage configuration ratios and consumption requirements, creating significant uncertainty for the implementation of generation-grid-load-storage integration projects.

Unclear Responsibilities: Many regions require that power supply, grid, load, and energy storage be controlled by the same investment entity, but some projects involve multiple parties, leading to unclear responsibilities and failure to pass acceptance. This will prevent normal project operation and increase legal risks.

Security Review: Projects involving sensitive industries (e.g., energy service stations) with foreign investment require additional security reviews, which may delay project implementation, increasing time costs and uncertainty.

Policy Changes: Policy changes are a significant risk for generation-grid-load-storage integration projects. The government may adjust relevant policies based on macroeconomic conditions and energy policies, potentially adversely affecting project operations and returns.

Balancing Stakeholder Risks

1. Local Government Departments: Local government departments play a crucial regulatory and guiding role in generation-grid-load-storage integration projects. Projects must meet local government policies and requirements; otherwise, they may face approval difficulties or penalties. Poor communication and coordination with local government departments may also hinder project progress.

2. Local Collective Economic Organizations: Local collective economic organizations may have certain interests in project construction and operation, such as employment opportunities and local donations. If the project fails to meet the reasonable demands of local economic organizations, it may trigger opposition and resistance, affecting smooth project implementation.

3. Villager Demands: Villagers in the project area may be concerned about the project's impact on their living environment and land rights. If villagers' demands are not reasonably addressed, it may lead to mass incidents, posing serious legal risks and social impacts.

Legal Risk Prevention Strategies

Comprehensive Due Diligence in the Early Stage

Mining Enterprise Verification: Conduct comprehensive verification of mining enterprises, focusing on the compliance of mining rights and mining and processing projects, as well as the financial status of the enterprise. Understanding the legal and financial status of mining enterprises helps assess project risks and provides a basis for subsequent cooperation.

Project Implementation Condition Verification: Verify the implementation conditions of generation-grid-load-storage projects, focusing on local policies, project land, EIA, and safety supervision, ensuring the project complies with local policies and laws, and avoiding legal risks due to insufficient preparation.

Risk Sharing in Transaction Contract Design

Clear Terms: Clearly define technical standards and responsibility sharing in transaction contracts to ensure the rights and obligations of both parties are clear. This avoids disputes during contract performance and reduces legal risks.

Revenue Compensation: Considering special circumstances such as production shutdowns, include revenue compensation mechanisms in the contract. When special circumstances affect project revenue, it protects the investor's legal rights and reduces investment risks.

Investment Exit Arrangement: Clearly define investment exit arrangements during the operation period in the contract, providing investors with flexible exit mechanisms. When unforeseen risks arise or investors have other needs, they can exit the project smoothly, minimizing losses.

Dynamic Compliance Monitoring in Later Operations

Compliance Monitoring System: Establish a compliance monitoring system, conduct regular compliance reviews, and develop contingency plans. Timely identify and resolve compliance issues during project operation to ensure legal and compliant project operation.

Policy Dynamic Tracking: Closely monitor policy dynamics, promptly understand the impact of policy changes on the project, and take flexible response measures. Adjust project operation strategies based on policy changes to reduce policy risks.

Balancing Stakeholder Interests: During project operation, balance the interests of stakeholders, actively communicate and coordinate with local government departments, local economic organizations, and villagers. Strive for support and cooperation from all parties to create a favorable external environment for smooth project operation.

Conclusion

Summary and Outlook

Essential Path: Generation-grid-load-storage integration is an essential path for the green transformation of mines, enabling optimized energy utilization, reduced energy consumption, minimized environmental impact, and driving mining enterprises toward sustainable development.

Compliance First: During the implementation of generation-grid-load-storage integration projects, the principle of compliance-first must always be upheld. Fully recognize the existence of legal risks, take effective preventive measures, and ensure the legal and compliant operation of the project.

Win-Win Goal: Risk prevention and compliance operation will help achieve a win-win situation for both new energy and mining enterprises.

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