Reuters: Regulatory News: Brazil mine bill eyes regulator, mineral rights auctions

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Brazil mine bill eyes regulator, mineral rights auctions Aug 22nd 2012, 20:19 Wed Aug 22, 2012 4:19pm EDT * Bill opens door to auctioning Brazil mineral rights * Proposed agency modeled on oil, telephone regulators * Mine potential crimped by existing law, bill says By Jeb Blount RIO DE JANEIRO, Aug 22 (Reuters) - A bill presented to Brazil's Congress seeks to create an independent mining regulator with the power to auction mineral rights, set minimum investment levels and cancel concessions for companies that violate contracts, a draft seen by Reuters showed. The bill, put forward last week as the first part of a proposed overhaul of the country's 1967 mining code, is aimed at increasing government control over one of the country's main export industries. It also aims to force holders of mining rights for iron ore, bauxite, potash, copper and other minerals and metals to work their concessions and mines actively or lose them. "I'm in favor of auctions for mining rights, I think that's best for the public," Senator Gim Argello, the sponsor of the bill, said in an interview with Reuters on Wednesday. "Some of the same families that owned mine rights 50 years ago still own them today and have not developed them." Argello is a member of the Brazilian Workers' Party, part of President Dilma Rousseff's ruling Workers' Party-led coalition. Brazil is the world's No. 2 exporter of iron ore and a major producer of bauxite, copper, nickel, clays and precious stones, and has large untapped reserves of potash and uranium. Brazil's Vale SA is the world's second-largest mining company and the biggest producer of iron ore. Local companies such as MMX Mineracao e Metalicos and foreign operators such as Anglo American Plc are looking to Brazil to increase their metals reserves. Vale expects to become the world's largest nickel producer this year. Reuters reported in June that the government was considering cancelling some strategic mine rights and studying an auction system as a way to sell mineral rights, which are now doled out under a first-come, first-served permit process. The proposed regulator, to be known as the Agencia Nacional de Mineracao, or National Mining Agency, is modeled on Brazil's National Petroleum Agency (ANP) and electrical and phone system regulators ANEEL and ANATEL, according to the draft of the legislation obtained by Reuters. The creation of the ANP in the late 1990s led to the end of a state monopoly on oil exploration and production, and helped bring about an explosion of oil development in Brazil. The country, a major oil importer before the ANP's creation, is now nearly self-sufficient in supplies. "Even though Brazilian mineral reserves are super-rich and diversified and the industry has enormous potential, the industry's contribution to the development of the country is smaller than we have hoped," Argello said in his preamble to the bill. The legislation is known as "Senate bill number 306 of 2012". Link this Share this Digg this Email Reprints

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