Main Aspects Of The Brazilian Mining Sector Reform

Author:Mr Christian Galvão Davies, Isaac Cattan and Rodrigo Dias
Profession:Levy & Salomao Advogados

On December 18 and 26, 2017, President Michel Temer enacted the two laws previously approved by Brazilian Congress for the reform of the Brazilian mining sector1. Law No. 13,540/17 changed the regulation of the Financial Compensation for the Exploitation of Mineral Resources (Compensação Financeira pela Exploração de Recursos Minerais - CFEM) and Law No. 13,575/17 replaced the National Department of Mineral Production (Departamento Nacional de Produção Mineral - DNPM) with the National Mining Agency (Agência Nacional de Mineração - ANM). A third bill of law originally encompassed in the reform, which intended to change provisions of Decree-Law No. 227, dated February 28, 1967 (Brazilian Mining Code), did not become effective.

The reform aims to modernize the Brazilian mining legal framework by increasing the level of independence and the surveillance prerogatives of the regulatory agency, including those relating to compliance with environmental legislation by mining activities. The new laws in general increase the costs applicable to mining activities. On the other hand, the so-called Surveillance Charge for Mining Activities (Taxa de Fiscalização de Atividades Minerais - TFAM) was not approved, as it was suppressed in the approval process of Law No. 13,575/17.

The main aspects of the Brazilian mining sector reform are set forth below.

Mineral exploitation regimes

The new legislation does not modify the regimes set forth in the Brazilian Mining Code for research and exploitation of mineral resources. The mining concession is the regime applied to the exploitation of most mineral resources in Brazil2, preceded by a research authorization.

The party interested in exploiting mineral resources in Brazil shall request to ANM a research authorization for a given area and period. The ANM will deny it or require adaptations to, or the fulfillment of demands for, the authorization in case the area is already covered in whole or in part by one or more existing mining rights. The party that obtains the authorization, develops its research and timely obtains ANM approval for its final mining research report3 will be entitled to request a mining concession to the minister of Mines and Energy. The minimum period of duration of the research authorization is one year. The legislation leaves the number of renewals of the authorization up to the regulator4. Mining concessions and authorizations can be transferred to third parties with the consent of the Minister of Mines and Energy or of ANM, respectively...

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