Brazil gov’t updates mining rules

In a ceremony held Tuesday (Jun. 12), President Michel Temer signed decrees bringing Brazil’s Mining Code up to date and introducing new rules on the funds of the Financial Compensation for the Exploration of Mineral Resources.

The decrees modernize the current Mining Code, dated 1967. As for the Financial Compensation for the Exploration of Mineral Resources, non-producing municipalities that are affected by transport, boarding, or presence of industrial facilities in their territories must receive 15% of the compensation.

President Michel Temer signed decrees bringing Brazil’s Mining Code up to date - Antonio Cruz/Agência Brasil

The compensation is formed by royalties paid by mining firms to compensate for the effects of their activity. The 15% to be paid to non-producing municipalities is to come from the reduction of values to be paid to other administrative units.

The new code will make it possible for mining licenses to be used as guarantee for loans, generating credit lines and drawing investment to the sector. Mining areas that have been returned to or were reclaimed by the government will be offered to the market after a screening process.

According to the government, the update was based on international standards and aims to bring the country’s practices in the industry closer to what is done worldwide.

In the view of mining company Mineração Serra Verde CEO Luciano Borges, the new rules lend more legal security to the sector. “Updating the provisions in the mining code strengthens the legal security necessary to attract investment, while bringing about significant improvements in the public management of these funds. This combination of clear rules represents a major progress,” he argued.

Brazil’s Mines and Energy Minister Moreira Franco unveiled data on the nation’s mining industry. He noted that the sector accounts for 4% of the country’s gross domestic product—which saw a $6.3 billion surplus in 2017, up 30% from the previous year.