New Brazilian Mining Code Is Proposed By The Brazilian Government

Author:Mr Guilherme Vieira da Silva, Francisco Rohan, Carlos Hartveld and Gustavo Flausino Coelho
Profession:Tauil & Chequer

Keywords: New Mining Code, mining titles, National Mining Agency, mineral rights, National Counsel of Mining Policies,

On June 17th, the Brazilian Government submitted to the National Congress a bill of law that sets forth the new legal framework for the mining sector in the country. If approved, the New Mining Code, as it is called, should introduce substantial change to the provisions of the current Mining Code, which dates from the 1960s.

One of the most significant innovations being proposed is the introduction of a new method for the concession of mining titles. Inspired by the oil & gas legal framework, the new National Mining Agency (NMA) shall be endowed with the authority not only to regulate and supervise the mining sector, but also to organize public bidding for the concession of new mineral rights. However, the selection of the mining rights to be offered at those auctions will fall within the competency of the so called National Counsel of Mining Policies (NCMP), a counsel that will report directly to the President.

The winning criteria for the concessions should be defined by the NMA for each public auction, but should include Signature Bonus, Discovery Bonus, the participation in the revenues offered, and/or the minimum exploration plan. Notwithstanding those competition criteria, the concessionaires should also have to comply with minimum local content standards and prove minimum financial and technical capabilities, as will be set forth in the tender protocol.

Notwithstanding the general rules regarding the bidding process, the bill of law introduces two other alternative methods for the granting of mineral rights. The first is through "public calls" made by the NCMP aiming to grant areas of interest to mining companies that have not been offered in the public auctions, but which one or more mining companies have shown interest to acquire. The second alternative is the mining authorization for the exploitation of civil-construction raw materials, such as clay and ornamental rocks, as well as the production of mineral water. The granting process of both should be simplified.

Also, the bill of law proposes the unification of the exploration and production rights under a single title. The new mining rights would, however, be limited to a term of 40 years, but renewable for 20 more years, successively, so long the requirements set forth under the concession agreement have been complied with. Another significant change proposed...

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