2017.11.2216:30:00UTC+00BRAZIL: House Passes Mining Royalties Bill

The Brazilian House of Representatives passed the government's proposal to establish new mining royalties rates and determined that municipalities should receive almost two-thirds of the fees. The bill still needs Senate approval before heading to the presidential sanction.

The Brazilian government's decree changes the calculation method and raises the rates of Financial Compensation for the Exploration of Mineral Resources (Cfem), which regulates royalties paid by companies that extract these raw materials in Brazil.

The new rule provides that the royalty charge will focus on companies' gross revenues from minerals sales. Until now, compensation applied to net sales - that is, sales after taxes, transportation and insurance expenses arising from the sale.

Also, the government raised the royalties charges. For iron ore, the rate will have a 3.5% ceiling, and the exact level will depend on the iron ore price in international market. There are still no details on how the mechanism will work.

Other minerals will also face higher rates, as gold (from 1% to 1.5%), niobium (from 2% to 3%) and diamond (from 0.2% to 2%).

Meanwhile, in the case of potassium, phosphate rocks, rock salt and other substances used in the production of fertilizers, the rate will be 0.2%.

The newly created National Mining Agency (ANM) will be responsible for deciding on any reduction of the rate based on the iron content, the production scale, the payment of taxes and the number of employees in order not to damage the economic feasibility of low-performance deposits.