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Brazil should speed permits to offset royalty hike: Vale

Keywords: Tags  Brazilian mining code, Vale, Murilo Ferreira, Franklin Feder, mining code, Murilo Ferreira, CFEM, Carolina Guerra

SÃO PAULO — Brazil must speed up procedures for obtaining mining permits to compensate for any increase in mining royalties under its new mining code, Vale SA president Murilo Ferreira said, according to local media reports.

"The emphasis of the regulatory framework on the fiscal aspect causes concern. However, any measure that simplifies and accelerates the process (of obtaining permits) is welcome," Ferreira told Brazilian official news agency Agência Brasil.

"The mining sector share in Brazilian GDP (4 percent) is too low in comparison to other countries," he added.

According to the new mining code proposed by Brazilian president Dilma Vana Rousseff and mines and energy minister Edison Lobão this week, the Brazilian royalties—financial compensation for exploiting mineral resources, or CFEM—would be calculated taking gross revenue as a reference instead of adjusted revenue.

Proposed aliquots are set to vary from 0.5 to 4 percent, up from the current 0.2 to 3 percent.

Royalties to be paid for each ore are to be defined by a national decree.

The framework proposes to substitute the current mining code and will be subject to the approval of the Brazilian congress.

The national government considered increasing mining royalties up to 6 percent in addition to charging an extra rate for iron ore producers, according to information from a local newspaper. This idea was subsequently discarded.

Brazil needs to modernize its mining laws, "but imposing new costs to the sector creates a great concern,"Marcos Ramos, president for Latin America and the Caribbean at Pittsburgh-based miner Alcoa Inc., was quoted as saying in the report.

A version of this article was first published by AMM sister publication Metal Bulletin.

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