TOUGH TALK

Mining in Brazil

In the Brazilian mining business, companies are subject to federal statutes and rules enacted by National Department of Mineral Production – DNPM and the Attorney-General’s opinions have a binding nature on controversial matters, but not limited to them.

There are other laws affecting the mining industry. The most relevant are the Labor Law, due to the hiring of manpower to operate and work at the mines; the Tax Law, due to the payment of major taxes and the general rules applicable to royalties and some other taxes that arise from mining activities; the Environmental Law, due to the requirements to comply with environmental matters and obtainment of licenses to operate mines and plants; and the Competition Law, to avoid concentration and abuse of dominant position in the mining industry.

Not less important, there are special laws, regulations and ordinances related to landholding, indigenous and traditional population matters, among others.

I can affirm, without reservations, that Brazil is experiencing ongoing discussions related to all subjects above. Very positive ideas to improve the business are on the table for discussions and they are more than welcome. However, minor groups opposing any mining activity, acting as crusaders in a holy war, could jeopardize the probable benefits of such discussions and the possibility of have a new modern Mining law. Such groups frequently base their arguments on ideological criterion and - on a tricky way - manipulate data, fashion evidences and never present feasible alternatives. Such groups are occasionally supported by other stakeholders which have different needs. This must stop!

Have that said, there is a Rule of Thumb that mining entrepreneurs follows as The Ten Commandments:

1 Geological potential for target mineral;

2 Profitability of potential operations;

3 Security of tenure and permitting;

4 Ability to repatriate profits;

5 Consistency of minerals policies;

6 Realistic foreign exchange controls;

7 Stability of exploration terms and conditions;

8 Ability to pre-determine environmental obligations;

9 Ability to pre-determine tax liability; and

10 Stability of the local legal regime.

Cristal clear or clear as cristal. If those commandments are not respected, there will be no investment, jobs, social+environ development, technology.

The country cannot pay for this lose -lose game. More Fair (and Wise) Play is what we need.

My best!