Brazil mining code unchanged as Senate fails to vote on bill

Brazil’s Senate has not approved a temporary decree issue by President Michel Temer in July changing some sections of the current mining code, aimed at making the country’s industry more competitive and sustainable.

Before opening Tuesday’s session, Brazil’s lower house of Congress removed from the agenda the discussion of the provisory measure No. 790, which modified the country’s mining law.

Among the proposed modifications there was a shift in responsibility for environmental monitoring away from government and to the companies, which many saw as a risky move, as they thought it could have meant more mining accidents.

Congress did approve another bill, which creates an autonomous regulatory agency for the mining sector, a move aimed at accelerating slow licensing approvals in the country.

According to local paper Jornal do Brasil, the lawmakers mostly opposed a provision allowing the use of firearms by geologists, mining engineers, economists and chemists, which they didn’t see as helping the industry’s development.

Without the Senate’s vote, Temer’s temporary decree expired and the original code remains in place.

Congress did approve another bill, which creates an autonomous regulatory agency for the mining sector, a move aimed at accelerating slow licensing approvals in the country.

Such bill was approved as amended by the lower house to eliminate a new tax on miners that would have supported the agency’s operations while increasing its staff. The agency, known as ANM, will replace current regulator DNPM.

Last week, however, lawmakers passed a related proposal that hikes mining royalties as part of the same reform agenda. Iron ore producers will now pay a 3.5% royalty instead of the previous 2%. That amount would be calculated of gross revenue instead of net revenue as is presently done, which would notably increase collections.

Gold royalties were set at 1.5%, up from the previous 1% and potassium’s at 0.2%, down from 3%.

While the higher royalties have been met with criticism from the industry, particularly local miner Vale (NYSE:VALE), the world’s top iron ore producer, the government has argued that more efficient regulation under a new agency could offset the higher levies.

Temer will have 15 days to sign or veto the tax-related bill once it arrives at the presidential palace.