The Brazilian government announced on Tuesday new rules for the local mining sector, including a new regulator and a new mechanism for defining iron ore royalty rates.
The new rules are effective immediately, but they need the approval of the Brazilian National Congress, the legislative body of Brazil's federal government, in order to become a provisional decree.
Brazil’s mines and energy minister, Fernando Coelho Filho, said the measures should increase the share of the mining industry in the local GDP from 4 to 6 percent.
The provisional decree sets new royalty rates for the local iron ore producers. The rates can vary according to the commodity’s price in the global markets and are limited to 4 percent. Local iron ore producers including Vale will pay the iron ore royalty.
The Brazilian government has also set new rules for its Mining Code. Under the new rules, the timeline for companies to make an economic feasibility study for areas of mineral exploration will increase from one to three years to four years, with the possibility to extend it once for four more years. Mining companies will also be responsible for recovering affected areas as a result of their activities.