Brazil’s mining reforms are increasing operation costs while failing to generate increased interest for investing in the sector, said a Reuters media report citing a Vale executive.
Brazil has approved a mining bill that creates a new industry regulator, the National Mining Agency (ANM), and sets iron ore royalty rates that can vary according to the commodity’s price in the global markets but which are limited to 4 percent.
Brazil wanted to bring more transparency to the market with the new rules. However, that has not been the case, according to Vale Executive Director Clovis Torres.
“If it was already difficult to attract external investment for mining, the outlook became even more cloudy (after the reforms),” Torres said at an industry conference.
Despite being effective immediately, Brazil needs the approval of the Brazilian National Congress, the legislative body of Brazil's federal government, in order to validate the new rules. Torres said miners were in part frustrated that the reforms were announced by decree, a move that limited public discussion.
"Vale has gone years without opening a new mine because we can't get a license ... how is a junior company going to wait for years?" Torres asked.