Brazil's House of Representatives on Wednesday approved a bill raising mining royalty rates on a wide range of commodities from iron ore to gold. The measure will now move on to the Senate.
Iron ore royalties would rise to 3.5% from the current 2%, instead of doubling the rate to a 4% value of gross revenue indexed to the S&P Global Platts IODEX price as initially proposed.
It was maintained a provision that the royalties would be calculated off of gross revenue instead of net receipts as is currently done.
Brazil's biggest miner, Vale, told deputies that the increase in iron ore royalties would hurt the company's operations against other international miners because of the so-called "Brazi-cost" and other taxes, such as income taxes, which would be higher than in other countries.
Gold royalties would increase to 1.5% from 1%, instead of a proposed rise to 2%.
Royalties on potassium would be lowered to 0.2% from current 3%, still below the 1% rate proposed in committee.
Last year, Brazil collected Real 1.8 billion ($557.27 million) in mining royalties. The mining ministry said the initially proposed rate hikes would raise collections in about 80%.
NEW MINING REGULATOR
The House also approved the creation of a new mining regulator with greater autonomy and ability to levy fees for operational expenses, in a bid to accelerate regulatory approvals for the sector.
"The reduced rate will be up to the new regulator, taking into account the iron content, the scale of production, payment of taxes and the number of employees, seeking not to undermine the economic viability of deposits low performance and profitability," the House in a statement.
The bill, proposed via a temporary decree by President Michel Temer as part of his sweeping reform agenda aimed at bolstering the economy and government finances, must receive full congressional approval by November 28 or face expiry.
