1 What is the nature and importance of the mining industry in your country?
The mining industry plays a very significant role in the Brazilian economy. Apart from positively influencing the country's foreign trade balance (due to the high levels of ore exports), the mining industry accounts for approximately 5 per cent of the Brazilian GDP. Investments of approximately US$53 billion are expected in the mining industry up to 2018.
In 2013, mining investments in Brazil have been affected by uncertainties in the worldwide economic scenario and by the launching of a bill of law by the government to introduce new mining regulations, as further described below. On the other hand, it was clear that various companies are looking for economic efficiencies through joint ventures and consolidation of assets. Brazil plays host to important mining companies, such as Vale, Usiminas and CSN, besides various international conglomerates. The mining sector is well established and well regarded in general.
2 What are the target minerals?
Brazil has a wide variety of metallic and non-metallic minerals, being the largest world producer of niobium (97 per cent of world production) and tantalite (18.4 per cent of world production); second-largest producer of magnesite (7.7 per cent of world production); and third largest producer of iron ore (14.2 per cent of world production) and aluminium (14.3 per cent of world production). Gold, manganese, nickel, copper and phosphate are also common targets of exploration companies.
3 Which regions are most active?
The most important mining initiatives occur in the states of Pará, Amapá and Tocantins, located in the northern part of Brazil and in the states of Minas Gerais and Mato Grosso do Sul, in the south-east and central regions of the country, respectively. Recently, the state of Bahia in the north-eastern region of Brazil has also attracted various mining initiatives.
Legal and regulatory structure
4 Is the legal system civil or common law-based?
The Brazilian legal system is based on a civil law tradition. The heart of the Brazilian legal system is the Federal Constitution, in force since 5 October 1988; it is the supreme rule of the country, characterised by its written form. Under the Federal Constitution the country is organised as a federative republic, formed by a union of the states and municipalities and of the Federal District (Brasilia, the capital). Brazilian states have powers to adopt their own constitutions and laws; their autonomy, however, is limited by the principles established in the Federal Constitution. The judiciary is an independent branch and is reliable, as it does not discriminate against foreigners or capital.
5 How is the mining industry regulated?
The mining industry is primarily regulated at the federal level by the Federal Constitution and mining laws, which are supplemented by state and municipal regulations mainly regarding specific local taxes, environmental matters and soil usage matters. The exploration and exploitation works of mining companies are subject to licences and concessions by the federal government.
6 What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws?
The principal laws are the Federal Constitution, the Mining Code (and its Regulations) and the environmental legislation. Several other rulings issued by the mining authorities also have a significant role in the regulation of the Brazilian mining industry. The National Department of Mineral Production (DNPM), the Ministry of Mines and Energy and the environmental protection authorities (especially the Brazilian Environmental and Renewable Resources Institute (IBAMA) and the federal Environmental Protection Agency (EPA) are the main mining regulatory bodies.
7 What classification system does the mining industry use for reporting mineral resources and mineral reserves?
Brazil does not have its own classification system for reporting mineral resources and mineral reserves. In fact, Brazilian mining regulation does not distinguish between resources and reserves, as certain other jurisdictions do. The Brazilian mining legislation sets forth the following standards for determining the different levels of certainty on the existence of a deposit.
A measured reserve is the tonnage of ore calculated by the dimensions verified in surface geological mapping, underground trenches, galleries, underground work and drillings, and in which the amount is determined by the results of detailed sampling. The inspection, sampling and measurement must be as thorough as possible and the geological characteristics well defined in order to ensure that the geological features (dimension, form and grade of the deposit) can be accurately determined. The tonnage and grade must be rigorously defined within the limits established with a margin of error of no more than 20 per cent.
An indicated reserve is the tonnage and the grade of ore partially measured based on specific samples or production data and partially by estimates based on geological evidence at a reasonable distance from the actual sampling.
An inferred reserve is an estimate made based on the knowledge of the geological characteristics of the mineral deposit, with little or no exploration work carried out.
These standards must be used for reporting to the DNPM. However, Brazilian mining companies seeking investments through the capital markets use other classification systems to assess their local resources and reserves.
Mining rights and title
8 To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?
Under the Federal Constitution, the Union (ie, the Brazilian federal state) has ownership over all mineral resources, including metallic minerals, existing either in the soil or subsoil. Therefore, exploration of mineral resources requires the granting of an authorisation by the federal government through the DNPM. Mineral exploitation, on the other hand, requires a concession by the Ministry of Mines and Energy. Once exploited, mining products belong to the concessionaire.
9 What information and data is publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?
The DNPM provides general information related to the Brazilian mining sector, statistics on mining activities in Brazil and general commercial information for mining investors and new players interested in engaging in mining activities in Brazil.
Preliminary information on existing exploration licences and mining concessions along with maps containing the geographic coor-dinates of mining titles and information on titleholders are publicly available and can be accessed through the DNPM's internet database. Although mineral assessment reports are mandatory for holders of exploration licences, which are collected by the DNPM, such reports are not publicly released.
Basic geological information, databases, georeferenced information, documents, charts, maps and images can also be obtained from the Brazilian Geological Survey Company (CPRM), a publicly held company subordinated to the Ministry of Mines and Energy that performs geological studies and evaluates natural resources in Brazil. Some of the CPRM studies, surveys and mineral evaluations can be obtained from the CPRM's internet database.
10 What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?
There are two main types of mining rights that can be obtained by mining companies: exploration licences, which can be applied for on a first come, first served basis and give licence holders the right to have access to the properties and perform exploration activities (under agreements with surface owners if necessary); and mining concessions, which may be granted to holders of exploration licences that, among other conditions:
successfully conclude the exploration programme of the mineral reserves; prove the economic feasibility of the exploitation of the explored reserves; prove they have the financial capacity to conduct such exploitation; And produce the required environmental licences. Exploration licences can be granted for one to three years, which can be extended upon request of the licence holder. Under Brazilian laws, exploration consists of a preliminary stage where the licensee must conduct exploration work and, if successful, provide evidence to the DNPM on the existence of mineral reserves in the licensed area. Title holders must comply with the following obligations to:
start exploration works within 60 days of the date of publication of the licence or obtaining access to the relevant properties; refrain from interrupting exploration without justification for more than three consecutive months or for more than 120 nonconsecutive days during the term of the licence; notify the DNPM of the discovery of ores not included in the authorisation; not remove substances extracted from the licence area for analysis...