Brazil mining trade group slams Senate royalty proposals

An association of Brazilian mining companies on Wednesday criticized some proposals made a day earlier by a Senate committee that spent months investigating the collapse of one of Vale SA’s tailings dams.

In a 400-page report, the Senate panel looking into the January disaster proposed a ban on new tailings dams, sought the phase-out of all existing tailings dams within 10 years and recommended harsher legislation for environmental crimes.

The dam in the town of Brumadinho, which contained tailings, the mud-like byproducts of mining, burst on Jan. 25, unleashing a torrent of toxic mud that killed at least 246 people, most of them buried alive.

The panel also asked for implementation of a 40% royalty charge on high-yield mines and recommended the indictment of several Vale executives, including the former CEO and the current CFO.

Wilson Brumer, president of the association known as Ibram – which includes Vale – said the proposals regarding dams and taxation need to be better evaluated, with specific studies before any implementation.

Senators were punishing the whole mining sector for one company’s mistakes, Brumer said. He also said the report would create legal confusion in the sector, and could impact investment decisions.

“We don’t want to ignore what happened, it needs to be investigated. But let’s not mix up punishment with taxation,” he said.

Currently, mining activities in Brazil are subject to a royalty charge of 3.5% over gross revenue.

Regarding an overall decommissioning of all dams, Ibram says it could be very hard to carry out due to the diversity of the sector. Some smaller mining companies could not bear the high costs expected if the proposal were passed, it said.

(By Marta Nogueira and Marcelo Teixeira; Editing by G Crosse)