Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Mining reforms in Brazil are raising the cost of operating without generating increased interest in investing in the sector, an executive for world’s largest iron ore producer Vale said on Monday.
Brazil President Michel Temer issued decrees in July to boost mining royalties, create a new industry regulator and streamline regulations, arguing that efficient and transparent rules would bring in more investment.
That has not been the case, said Clovis Torres, an executive director for Vale who oversees legal issues and human resources.
“If it was already difficult to attract external investment for mining, the outlook became even more cloudy (after the reforms),” Torres told an industry conference.
The decrees must be confirmed by Congress by a November deadline to become permanent and could be subject to amendments.
Torres said miners were in part frustrated that the reforms were announced by decree, a move that limited public discussion.
Brazil has lost ground to Australia in iron ore production because it can take more than 10 years to get a license for a new mine, he said.
The country must cut red tape in order to attract junior mining companies that are key to developing the sector, Torres said.
“Vale has gone years without opening a new mine because we can’t get a license … how is a junior company going to wait for years?” he said.
Mining and Energy Minister Fernando Coelho Filho specifically mentioned the 10-year wait time when the reforms were launched and vowed that the new regulations would speed up the process.
(Reporting by Luciano Costa; Writing by Jake Spring; Editing by Jonathan Oatis)
