Brazilian congress to discuss mining code in November

Matéria publicada pela Metal Bulletin  – 01/11/2013: (

A special commission of the Brazilian congress will discuss the country’s proposed mining code on November 6, and a vote is expected the following week, according to official news agency Agência Câmara.

Several local miners and market players have raised concerns about the lack of clarity of the new code.

“The new code is not clear. We understand that [as a company] we could be the one to [do the] geological research [but] not be the one to have the concession granted. What would be the point of investing,” a local miner said.

“The lack of clarity in the current text brings legal uncertainty to the mining sector,” Valdir Farias, executive director at Fioito, a consultancy firm specialising in mining royalties, said.

“No one should fear the new mining code,” Brazilian mines and energy minister Edison Lobão was quoted as saying in local newspaper Estado de Minas earlier in September.

Current concessions will be subject to the coming Agência Nacional de Mineração (ANM), instead of the Departamento Nacional de Produção Mineral (DNPM), which will be closed.

The bill had some minor amendments from the original proposal, such as a reduction in the fine for companies that do not fulfil the rules of the new code.

The minimum fee to be charged will drop from 10,000 Reais ($4,567) to 1,000 Reais ($456).

Main changes brought by the new regulation includes an increase in mining royalties, called CFEM (Financial Compensation for the Exploration of Mineral Resources), and substitutes state concessions with tender processes for granting mining permits.

Proposed royalty amounts are set to vary from 0.5% to 4%, up from the current 0.2% to 3%.

“If royalties increase, this will be bad for the sector,” Vale’s director of corporate affairs Rafael Banke was quoted as saying by Brazilian news agency Agência Estado.

The executive also added that Brazil has one of the heaviest tax burdens in the world, and all the taxes added together, not only the royalties, will negatively affect Brazil’s competitiveness.

From January to September 2013, mining royalties generated 1.9 billion Reais ($867 million) for the country.

In addition, the Brazilian government does not intend to define the mineral reserves in areas which will be subject to tenders. State-owned CPRM will be responsible for mineral information and definitions of areas to be auctioned.

Another proposed change is to set a limit of 40 years for mining permits (renewable every 20 years), instead of an unlimited period as is currently the case.

The government has been working on the new code since 2010, and as a consequence has significantly reduced the number of mining permits issued since the end of 2011.

“The new law has to be discussed before being approved, as it is part of a democracy,” Samarco’s ceo Ricardo Vescovi de Aragão told Metal Bulletin sister title Steel First in September.

Members of the Brazilian congress’s special commission have visited some mining states, such as Pará, to listen to miners’ expectations for the new regulations.

In addition, green campaigners are questioning the sustainability of the new bill.

“The new code must make direct reference to the advances Brazil [has made] over the last years in the socio-environmental field,” Aldem Bourscheit, public policy expert at WWF Brazil, told Metal Bulletin.

“Areas which were formally affected by mining, as well as illegal mining were left outside discussions,” Bourscheit added.

It is estimated that some 15,000 to 20,000 irregular miners, especially for gold, operate on the Brazilian border with French Guyana.

Carolina Guerra
Twitter: #!/cguerra_mb