Brazil’s President to change mining regulations as early as next week

Brazil’s President Michel Temer is set to issue a decree next week introducing key changes to current mining regulations, aimed at making the country’s industry more competitive and sustainable.

The executive order will technically be a reinterpretation of 50-year-old regulations, rather than a new law, Adriano Trindade, attorney specializing in mining rules from Pinheiro Neto Advogados told MINING.com.

Mining is regulated in Brazil by the Mining Code enacted in 1967 and by its Regulations of 1968. While the code has been amended several rimes, the regulations have remained the same. Last year, Temer attempted to enact a new Mining Law by issuing a Provisional Measure that had to be voted by Congress in 120 days, but this period lapsed and lawmakers neither approved, nor rejected it.

Instead, other two other provisional measures were approved and later signed into law. One of them created the National Mining Agency, an autonomous regulatory agency for the mining sector, in a move aimed at accelerating slow licensing approvals in Brazil.

The other change introduced higher mining royalties. Iron ore producers now pay a 3.5% royalty instead of the previous 2% as a result. That amount is calculated of gross revenue instead of net revenue as is previously done, which would notably increase collections. Gold royalties, in turn, were set at 1.5%, up from the previous 1%.

The expected decree, says Trindade, will include provisions about exploration and extraction and the new mining agency’s attributions, continuity of exploration works during the transition to development and mining, infractions and penalties and mine closure rules, among other issues.

According to anonymous sources quoted by Reuters, it may also open up about 20,000 exploration blocks where permit applications have been postponed or abandoned, one source said. Those areas, which account for about a tenth of Brazil’s pending permits, would be subject to new auctions.

“In short, the update of the regulations will help filling in some gaps that cause uncertainties to the industry and to the mining agency,” Trindade told MINING.com, adding that a draft was submitted to public consultation and discussed in a public hearing in March.

Latin America’s largest country ground to a halt last month as truck drivers created hundreds of roadblocks during 11 days, protesting rising fuel costs. Some miners halted operations while others, including Companhia Siderurgica Nacional, declared force majeure.