Brazilian president Michel Temer signed on Tuesday two decrees in an effort to update and modernize the nation’s 50-year old Mining Bill, also known as the Mining Code.
The two decrees set new rules for miners to pay the government the Mineral Resources Financial Compensation (CFEM) tax, also known as the “mining royalty” tax.
Under the terms of the two decrees, non-producing cities which are somehow hit by mining activity through commodities transportation, will receive 15 percent of the revenues coming from the CFEM tax.
Producing cities will receive another 15 percent of the income coming from the CFEM tax, while states and the federal government will have a 15 and a 10 percent share of the tax revenues, respectively.
Last year, Brazilian miners, including Vale, paid a combined BRL 1.8 billion in mining “royalty” taxes.
The decrees also set stricter requirements for miners, which will be obligated to recover degraded areas.
Brazil’s move aims to lure investors and bring more investments for the local mining sector, which is home to giants like iron ore producer Vale.
The new rules also allow miners to use their mining rights as a guarantee for financing.
The rules expect to boost investments and generate demand for financing and new credit lines.