Brazil's mining royalty collection spikes

Brazil's mining royalties, known as the CFEM tax, reached 296mn reais (US$80.8mn) in January, up 49.2% year-on-year.

Royalties dropped 0.96% compared to 299mn reais in December, according to local mining watchdog ANM.

CFEM collection over the past 12 months totaled 3.13bn reais. Revenue for 2018 was 3.04bn reais, equivalent to around 2% of the net sales of mining companies. The revenue was split between municipalities (65%), states (23%) and the federal government (12%).

MINING CODE REFORM

Following congressional approval of a measure changing mining royalties, former Brazilian president Michel Temer signed a bill into law in December 2017.

The new rates, which are still not in force, will be applied to gross revenue.

Royalties applied to iron ore, Brazil's most important mineral, will rise to 3.5% from 2%. Other minerals set to face higher royalties are gold (1.5% from 1.0%), niobium (3% from 2%) and diamonds (2% from 0.2%).

Under the current system, miners pay royalties on net sales in the range of 0.2-3.0%, depending on the mineral.