Brazil’s proposed new mining code is now before the country’s congress. The proposed legislation was formally announced last month by Brazilian President Dilma Rousseff and Mines and Energy Minister Edison Lobão. “With this new mining framework, we are creating the conditions under which the research, exploration and commercialisation of mineral resources will be transformed into a more efficient, more profitable and more competitive activity,” said the President. Lobão observed that the current legislation “does not meet the requirements of the present, [given] the clear economic and technological changes in recent years in Brazil and the world.”

The proposed legislation contains a num- ber of changes, compared with the current mining code. A National Mineral Policy Council will be created, which will assist and advise the Presidency in the creation of policies for the minerals sector. A National Mining Agency will also be set up. This will have responsibility for the regulation and inspec- tion of, and management of information about, the minerals sector. It will be administratively autonomous but financially linked to the Ministry of Mines and Energy.

The purpose of the agency is to ensure market equilibrium by curbing activities which could undermine the functioning of the minerals sector. The current National Mineral Production Department will be abolished.

Under the new legislation, mineral rights will be granted to Brazilians or companies (whether commercial or cooperative in structure) which have their headquarters and administration in the country. For most minerals, concessions will be put to public tender. There will be a single licence for both exploration and mining.

The assumption is that there will be a fixed-term exploration phase before mining starts. There will be technical qualifications and economic-financial criteria that will have to be met. There will also be a local content requirement (presumably regarding mining equipment and services).

The licence will be valid for 40 years, renewable for 20 years, successively. The concessions will be in areas defined by the new National Mineral Policy Council. Conditions for bidding will include a signing fee, a discovery fee, notification (presumably to the authorities) of the results of prospecting and a minimum exploration programme.

A public tendering process will not be required for minerals used to produce building materials, such as clays used to manufacture bricks, tiles and ornamental stone, nor for mineral water extraction, or minerals used to enrich soil for agricultural purposes.

Royalties will be calculated on the basis of gross revenues, net of taxes actually paid as a consequence of the commercialisation of the minerals. These royalties will be distributed as follows: 65% will go to municipalities, 23% to the states and 12% to the Federal government.

The new legislation will also involve the amendment or revocation of six existing laws. “This advance will be marked by more competitiveness for business and a greater return for the whole of society,” affirmed Rousseff.