Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
After four years of discussing a new regulatory framework for Brazil’s mining sector, the country’s government has decided to allow only 90 days for public debate on the contents of a revised draft of its 46-year old mining code.
The bill, being enacted on a “legal urgency” basis, includes a polemic proposal to potentially double royalties to 4%.
However, the massive protests sweeping the country lately have impacted the Congress’s priorities, said lawyer Luiz Arthur Bihari from Osler, Hoskin & Harcourt LLP. He highlights that no timeframe for approval is certain at the moment.
“Uncertainty regarding the content of this much-anticipated regulatory proposal has been blamed for the slowdown in investments in the Brazilian mining sector. Once approved, the new mining code should bring a measure of stability to the sector and re-ignite domestic and foreign interest in Brazilian mineral resources,” he wrote.
For Carlos Bittencourt of the Brazilian Institute of Social and Economic Analysis, the fact most companies consider the proposed law positive is not surprising. In a recent interview (in Portuguese) he declared that mining companies “were able to negotiate details of the proposal prior to its submission to Congress, for example, on the issue of taxation and royalty rates.”
On the other hand, Bittencourt said the sense of sudden rush with this legislation exposes the Brazilian government’s positioning “against debate and citizen participation, especially as unions, NGOs, and other civil society actors were practically absent from discussions.”
The South American nation is one of the world’s largest producers of iron ore, bauxite, gold, nickel, manganese and other minerals.
Image of Brazil’s president Dilma Rousseff announcing the reforms in June. Screenshot from GloboTV News.
Comments
JFA VdS
Folks, there is sadly much more and gloomy to this subject than what the article seems to indicate. The new “regulatory framework for the mining industry” is disastrous in its intent to substitute for a mature and working mining code. The moratorium on regulations that has forced mining and exploration investment to a stand-still for 2 years now, is the result of an authoritarian presidential style and has in fact cost Brazil hundreds of billions in real investment in the sector. The intent to model mining regulations on the existing ANP – National Agency for Oil & Gas, is proof of incompetence by the President’s inner circle. The proposed bills were written by people far distant from the mining industry and in reality, the great majority of voices of the Brazilian Mining Sector have never been listened to. If approved as is, the regulation will cast the Brazilian exploration and mining industry into at least two decades of stagnation for lack of venture capital investment.
Why the urgency, after having left our industry in the dark for the four years in the absence of industry consultation on the legal, economic and industrial consequences of an utopian and rushed legal framework?
If you’re interested in investing in the Brazilian exploration and mining industry, make sure you take your time and study the proposals in detail. Make sure you understand the surrepticious political mechanism by which this is being imposed on society. That’s were the sad truth is hidden. For us, brazilian mining and exploration professionals, an ice-age in the coming.