Special Issue
A new mining code: what happens if it happens?
The proposal ideas for a New Regulatory Framework, in replacement to the current Mining Code of 1967, have been discussed in and by the specialists of the mining and environmental sectors over the last years. At the beginning of 2011, indeed, the 2030 National Mining Plan of the Ministry of Mines and Energy - PNM 2030 - was issued aiming to be used as guidance to the policies and rules for the development of the mining sector in Brazil for the next 20 years.
PNM 2030 officially introduced the proposal to create the National Mining Agency (replacing the current National Department of Mineral Production – DNPM) and the National Council for Mineral Policy. The new entities would promote the rational use of the mineral resources in Brazil and the supply of mineral resources to remote and difficult access areas. The PNM 2030 indicates the idea for consolidation of the regulatory framework for the sector, and the creation of a differentiated policy for the royalties.
Pursuant to the official statements, the New Mining Regulatory Framework would mainly involve three bills of law. Two would encompass the New Mining Code – the modernization of the normative parameters of the current Mining Law and the controversial royalties´ policy of the sector – the so-called Financial Contribution for Mineral Exploitation (CFEM). The third bill comprises the creation of the National Mining Agency. It is possible to see that an effort will be made to adapt to the socio-environmental and technological context and to the current economic needs, including matters such as sustainability. Changes with a view to incorporating practices into the Brazilian legal framework which are already adopted by the international mining market, which foster investment in the sector and minimize the legal uncertainty, are also under evaluation.
An example of one of the potential changes comprises the permit for mining exploration and prospecting activities – Autorização de Pesquisa (it currently complies with the chronological order principle and the priority right in the granting of the mining concession) and pursuant to one of the proposals, it would be replaced by a regimen for the granting of authorization or concession depending on the nature of the mineral and its strategic and economic relevance to the country, preceded, each one, by its own public bidding.
There is also a revaluation of which mineral deposits would be considered strategic or with increased economic potential, being those subject to the mining concession regimen, pursuant to competitive public bidding procedures.
As regards the CFEM, among the discussed propositions, there is the payment of a so-called “special participation” of a minimum percentage by the mineral producer, in the event of large production volumes or ample profitability in the exploitation of mineral resources. Another proposed change, comprises that the special participation would be calculated over the gross mineral production revenue, minus the investments in exploration, operational costs, depreciation and the CFEM itself.
In the same purpose of a legislation modernization, the Brazilian federal government has enacted the New Forest Code, Federal Law No. 12.651/2012, which establishes protection measures to natural resources, amongst other goals. Such law has recognized that mining activities are especially important for the economic growth, in a way that they have been recognized of public utility. Moreover, since the same law allows intervention in permanent preservation areas in case of public utility, the mining activities are now permitted in such areas. In this regard, if we consider that permanent preservation areas are highly relevant for protection of water resources, geological stability, biodiversity and control of erosive processes, than we may conclude that the current environmental legislation – considered one of the most stringent of the world – also takes into consideration the importance of the Brazilian economic development.
