Brazilian minister talks about suspension of licenses and new mining code

The Brazilian government confirmed late last week that it has suspended the issue of new exploration and production licenses in new mining claims until the new mining code comes into force. Mines and Energy minister Edison Lobão told newspaper “Valor Econômico” about it, and the paper said more than 5,000 applications for research and production in new prospects and 55 acts of the National Mineral Research Department (DNPM) are pending approval. On the flipside, mining companies are threating to file lawsuits against the government and argue the halt will impact economics and exports.

“There already is an excessive amount of research and production licenses around”, Lobão said. The officer confirmed some topics of the new bill of law, like the auctions to grant new mining rights. In a move to boost competition between mining companies, the government will auction rights for 30 years of exploration, which may be renewed for a further 20 years. Currently there is no auction and the rights are granted to the miner that first applied for the area.

Edison Lobão also told “Valor” miners will have a seven year term to bring the areas into production, and this term will not be extended. New royalty fees will average 4% and have a 6% cap, up from current 2% and 3% respectively. The bill of law of the new Mining Code had being announced for at least four years and now it is slated to be sent to the Legislative in December, with priority status.

The two legislative houses will have 90 days to deliberate the bill, with the term probably beginning February. The approval could happen in May and the code would be signed by president Dilma Rousseff in June. Meanwhile, only licenses for a few minerals such as sand, pebble, crushed rock and mineral water are being are being granted by DNPM.

Also on Brazil’s Ministry of Mines and Energy, the office said on Thursday that Cláudio Scliar, secretary of Geology and Mines and Energy, is stepping out and will be replaced by the deputy secretary Carlos Nogueira.