Brazil new mining code ‘too rushed to be good’— critics

After four years of discussing a new regulatory framework for Brazil’s mining sector, the country’s government has decided to allow only 90 days for public debate on the contents of a revised draft of its 46-year old mining code.

The bill, being enacted on a “legal urgency” basis, includes a polemic proposal to potentially double royalties to 4%.

However, the massive protests sweeping the country lately have impacted the Congress’s priorities, said lawyer Luiz Arthur Bihari from Osler, Hoskin & Harcourt LLP. He highlights that no timeframe for approval is certain at the moment.

“Uncertainty regarding the content of this much-anticipated regulatory proposal has been blamed for the slowdown in investments in the Brazilian mining sector. Once approved, the new mining code should bring a measure of stability to the sector and re-ignite domestic and foreign interest in Brazilian mineral resources,” he wrote.

For Carlos Bittencourt of the Brazilian Institute of Social and Economic Analysis, the fact most companies consider the proposed law positive is not surprising. In a recent interview (in Portuguese) he declared that mining companies “were able to negotiate details of the proposal prior to its submission to Congress, for example, on the issue of taxation and royalty rates.”

On the other hand, Bittencourt said the sense of sudden rush with this legislation exposes the Brazilian government’s positioning “against debate and citizen participation, especially as unions, NGOs, and other civil society actors were practically absent from discussions.”

The South American nation is one of the world's largest producers of iron ore, bauxite, gold, nickel, manganese and other minerals.

Image of Brazil’s president Dilma Rousseff announcing the reforms in June. Screenshot from GloboTV News.