08/09/08

The most urgent needs for the new Brazilian mining code being drafted are the creation of a regulatory agency, a new tax policy and the modernization of the environmental code, according to national mining institute Ibram`s president, Paulo Camillo Penna.

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With Brazil using the same mining code since 1967, congress will debate after the November municipal elections the possibility of creating a new mining legislation.

“In the new law, we are aiming to create an agency so we can execute a policy for the industry,” said Penna. “We also need a national mining council to outline this policy. Before mining, there has to be a policy.”

In terms of taxes, Penna said Brazil is missing out on the opportunity to increase its competitiveness because of heavy tax burdens. Penna mentioned the example of Brazilian potassium and phosphate miners, which he said pay the highest amount of taxes in the world.

In addition, Brazil has to rely less on minerals coming from abroad. The country imports 90% of the potassium it consumes and 50% of phosphates. Penna stressed the need to achieve self sufficiency in production of the two minerals. For that to happen, the new code has to provide more flexibility on the current rules that give government a monopoly on phosphate and potassium extraction.

“When it comes to potassium and phosphate, Brazilian companies are the biggest importers and also the most taxed in the world,” he said, adding the country is losing its competitiveness on mineral exports to Australia, which has greater proximity to China, the world`s biggest consumer of minerals.

Environmental laws are also in dire need of changes, he said. Every time a company has to explore a site they have to restart and repeat their licensing processes, wasting time and money.

“All we are asking for is to have all phases condensed into one,” said Penna. “Environmental legislation must be reviewed.”

Another objective of the new code is to speed up processes by curtailing steps such as documentation analysis and granting of mining concessions.

Penna did note, however, that changes have to be carefully assessed to avoid scaring away investors.

“Our current code is not bad but we are still a long way from having an ideal legislation,” he said. “We just have to make some adjustments. Throughout the years, the mining sector in Brazil has shown an enviable performance.”

BN Americas