UPDATE OF THE BRAZILIAN MINERAL LEGAL FRAMEWORK

The new legal framework of the sector can be divided in three main actions, developed by the Ministry of Mines and Energy (MME): the creation of the National Mining Agency (ANM), that will substitute the National Department of Mineral Production (DNPM); the alteration of the rules of the Financial Compensation for the Exploitation of Mineral Resources (CFEM); and the modernization of the Mining Code regulation.

The creation and implementation of the National Mining Agency, in substitution to DNPM, has as objective to fortify the regulating role of the State as well as to offer an environment of stability, previsibility and, mainly, transparency as to the deeds of the Public Power in the management of mining rights. Similar to the other Brazilian regulating agencies in the infrastructure area, ANM will have administrative and financial autonomy and its regulatory decisions will arise from a board of directors, in order to be independent and aim at a safe and steady regulatory environment for mining investments.

The current Mining Code, although edited in 1967, has the merit of being a stable legislation, that has offered the legal security demanded by the investors and guaranteed important advances to the mineral sector since it came into force. In this context, the Ministry of Mines and Energy has simply modernized its regulation, aiming at updating some devices, facilitating its operationalization and resulting in profits for the mineral sector.

The Decree established (I) the possibility of the miner to continue the research after the Final Report is delivered; (II) the introduction of the concept of Resources and Reserves aligned to the international concept; (III) the possibility of using the mining concession as a guarantee for funding; (IV) the incentive to the exploitation of tailings and steriles, among others. It also modified the methodology for offering the available areas, which will now be offered in an electronic auction.

Another change regards the rules of the Financial Compensation for the Exploration of Mineral Resources that have been modified as from 2017. On the whole, it has modified the incidence hypotheses, the calculation basis, some aliquots, and sanctions for the breach of the royalty contract. The objective was to contribute for a better previsibility and legal security for the development of mining activities.

The new legislation also modified CFEM distribution rules by establishing new percentages for the entities of the federation and to include a new criterion for distribution: cities affected by the mining activity, when production is not in their lands. This innovation made it possible to correct a historical mistake of the mineral legislation, based now on the understanding that, since it is not restricted to a geopolitical territory, the production and commercialization of mineral goods may cause impact in cities that do not have a deposit.

The modernization of the Brazilian mineral sector legislation, with its new institutional design comprises the creation of the National Mining Agency (ANM); the new rules of the Financial Compensation for the Exploitation of Mineral Resources (CFEM) and the modernization of the regulation of the Mining Code are to bring a greater transparency, agility and legal security to the sector, thus allowing the attraction of investments and even more growth to this important segment of the country.