The Brazilian Federal Government launched, on July 25, 2017, the Revitalization Program of the Brazilian Mining Industry with the purpose of modernizing the mining sector laws and attracting more investments for the area.
The changes brought by the Program, which counted with the issuance of the three Provisional Measures numbers 789, 790, and 791, aim at updating the regulatory framework of the mining sector in Brazil, with the creation of a specific regulatory agency for the sector, the Brazilian National Mining Agency (ANM), as well as altering the tax rates relative to the Financial Compensation for Exploitation of Mineral Resources (CFEM)
As provided for in the Provisional Measure no. 789, the CFEM (which composes the value owed to the Federal Government due to the exploitation of mineral resources) will become due on the occasion (i) of the first exit through sale of a mineral asset; (ii) of a purchase at an auction, in cases of mineral asset acquired in a judicial sale; (iii) of first acquisition of mineral asset extracted under the PLG regime (Small-Scale/Alluvial Mining License), and (iv) of consumption of mineral asset.
The PM no. 789 also alters the tax rates applicable over several mineral substances (as shown below), being worth highlighting that in the iron ore case the tax rate will vary according to the price of this commodity in the international market.
TAX RATE MINERAL SUBSTANCE
0,2% Gold and Diamond when extracted under the PLG regime, other precious stones and cut and polished colored stones
1,5% Rocks, sands, gravel, and other mineral substances when intended for immediate use in construction industry.
2% Gold and other mineral substances, except iron ore, whose tax rate will be defined based on the international price of the product (according to the table contained in Annex of PM no. 789)
3% Bauxite, manganese, diamond, niobium, potassium, and rock salt.
The PM no. 790, in its turn, altered the Mining Code and the Law no. 6,567/1978, which sets forth provisions on special regime for exploration and utilization of mineral substances. Amongst the changes edited in the provisional measure it is worht mentioning the provision of liability of the miner for the recorvery of the impacted areas; and alteration ot the period of effectivenss of the authorization of research, which will henceforth vary between 2 and 4 years, with possiblity of extension.
Lastly, the PM no. 781 created the Brazilian National Mining Agency (ANM), which will be a Ministry of Mines and Energy (MME)’ agency, and will take over functions carried out by the now extinct Brazilian National Department of Mineral Production (DNPM). The agency will also be responsible for the grant and supervision of the exploration of minerals in Brazil, and implantation of the domestic policy for the mining activities, and for the regularization, monitoring, supervision, and collection of the governmental participations.
As set forth in the PM no. 791, the ANM will be managed by a Collective Board of Executive Officers, composed by one Managing Director, and four Directors, who will be nonimated by the Brazilian President and appointed after the Brazilian Federal Senate’s approval.
Additionally, the PM no. 791 instituted the Mineral Activities Inspection Fee (TFAM), which will be annually due by the companies of the sector, holders of research authorizations, mining concessions, licenses and of small-scale/alluvial mining licenses), whose value will vary between 500,00 and R$ 5,000.00, seeking to the cover ANM’s inspection costs.