Temer updates Brazil's mining code
Brazilian President Michel Temer (pictured on the left with mining and energy minister Moreira Franco) signed on Tuesday two decrees updating the country's mining code and fixing the mining royalties revenue distribution criteria, according to a note from the presidency.
Under the old system, royalties, known as the CFEM tax, were split between municipalities (65%), states (23%) and the federal government (12%).
But one of the new decrees states that non-producing municipalities that are impacted by transportation, shipping and the presence of industrial facilities on their territory will now receive 15% of CFEM revenue, the note said.
The remaining revenue will be split between municipalities (60%), states (15%) and the federal government (10%). CFEM collection for 2017 was up 2.17% to 1.84bn reais (US$500mn).
Another decree updates the mining code itself, in force since 1967, including stricter environmental requirements such as explicitly stating miner's responsibility to recover degraded areas. Likewise, the proper implementation of a mine closure plan will be mandatory, and must become part of the concept of mining activity in the country.
In addition, to enable the development of new technologies and the consequent reduction of environmental liabilities, the decree foresees that the recently created national mining agency (ANM) will discipline the use of tailings and wastes from mining activity.
INVESTMENTS AND PROPERTY RIGHTS
Another incentive is the permission to use the mining title as a guarantee for financing, generating credit lines and stimulating investments in the sector. Mining areas returned or retaken by the federal government will be offered to the market through a process of selection and judgment with objective criteria, replacing the current procedure, characterized as sluggish.
The decree maintains the right of ownership for research and allows the holder to continue this type of work after submitting a final report, with the purpose of converting resources into reserves, the note said.
The move meets a demand from the industry, which was earlier required to discontinue activities until obtaining the regulators' analysis and opinions on the miners' final research report.
According to the government, the mining code update brings the local mining sector's reality closer to internationally recognized practices. The norms will contribute to the attractiveness of the sector, imparting greater transparency, agility and legal security to the Brazilian mineral sector, according to the note.
In a speech after the signing ceremony, Temer stated that "it is a reformist act that gave meaning and importance to a paramount sector of our country."
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