There are many more points relating to mining laws and processes in Brazil , but here is at least 7 which appear to relate directly to what seems to be the unfolding JV project at Itapitanga. Must be being conducted under the ' Research ' aspect as highlighted below and not exactly a small task in shipping this amount of Volume.
All things considered and whilst only the start of great things to come , it re-affirms IMO that some sort of financing , placement , off-take or combination thereof may indeed be just around the corner. Best to keep some powder dry I would think......
1. What are the main rules of law governing mining activity in your jurisdiction?
The fundamental principles regarding to mining activity is the Federal Constitution, which provides the main rules and authorities for mineral exploitation in Brazil. There are also important statutes that provide significant regulations about mining: Brazilian Mining Code (Decree-Law n. 227 of 1967, currently under review), National Environmental Policy Law, Law 7,805 of 1989, Law 9,314 of 1996, Water Code and certain resolutions from the National Environmental Council.
The main rule on the subject is that mineral resources are sole property of the Federation, hence, their exploration and further exploitation require special authorization from the Federal Government. In addition, ownership of mineral resources is considered apart from the ownership of the land.
2. How are mining rights acquired from the State?
The Federal Government controls the exploration and exploitation of the soil by means the National Department of Mineral Production (DNPM), a federal agency subject to the Ministry of Mines and Energy.
The Research Permit is granted to a period of three years and generally may be renewed only once. The request must be presented to DNPM along with, among other requirements, payment of applicable fees, indication of the substance to be researched, description of the area to be explored and its current situation, and an exploration plan with budget and schedule.
During this period the explorer is expected to perform all technical works aiming to define the extension of the deposit, resource evaluation and study the technical/economical feasibility of its exploitation. After the exploration, the researcher must present to DNPM a final report addressing these major points.
When the report concludes upon the existence of a deposit with technical/economical exploitation feasibility the report is approved by the DNPM. The explorer in then entitled to apply for a mining concession that is ultimately analyzed by the Ministry of Mines and Energy, who will hear DNPM’s opinion before issuing a final decision.
When granted, Mining Concessions have no limitation of its duration; it shall be valid until the resources are exhausted. The concessionaire is allowed to exploit the mine in accordance with the mining plan and will have ownership over the mine production. Different from Research Permits, Mining Concessions cannot be granted to individuals, the concessionaire must be a company incorporated according to Brazilian laws whose corporate object must be mining, with headquarters and management based in Brazil. There is no restriction on the concessionaire’s shareholders nationality or capital.
There are other regimes for mineral licensing applied for restrict purposes, such as small scale mining and mining of substances for immediate use in civil construction.
3. How are mining rights acquired from private persons or companies?
The Research Permit, the right to apply for a Mining Concession, the request for a Mining Concession and the granted Mining Concession itself may be freely sold or otherwise transferred, as long as the receiver matches the legal requirements to hold that mining right. Ownership transference of mining rights is only valid after informed and approved by DNPM.
4. What types of rights and for how long they are acquired? How can they be terminated or lost?
The Research Permit is valid for one to three years, depending on the area and other characteristics of the intended research. It can be extended for another three years. The Mining Concession on the other hand shall be valid until exhaustion of the mine.
Both the Research Permit and the Mining Concession can be lost in restrict circumstances that demand a proper administrative procedure in which the explorer is granted full defending rights preceded by advertence and fine imposed by DNPM: abandoning the research or the mine; noncompliance with the deadlines to start the research or the mining; performing the research or extraction in disregard with the research plan or mining plan; exploit the reserve as to jeopardize its future economic exploitation; and non-compliance with DNPM’s orientations, which is considered after third fine applied in a one year term.
5. What are the restrictions for one operator to hold mining rights?
All companies incorporated in accordance to Brazilian laws regardless of the nationality of its shareholders or origin of their capital are entitled to own mining rights, explore and exploit mineral resources in Brazil, since the Federal Constitution grants equal treatment to Brazilian companies.
There will be no restrictions on the number of concessions granted to one company or person, but it is important to mention that mining activities performed within 150 Km from Brazilian national borders shall be subject to certain special regulations related to national security.
6. What are the main working/operating obligations?
The main obligations for the holders of Mining Concessions are: (i) start the mining plan within six months from the date the Mining Concession was granted; (ii) exploit the reserves in accordance with the mining plan approved by DNPM; (iii) extract only the minerals object of the concession; (iv) inform DNPM in case of finding other substances not expected as per the original mining plan; (v) remain liable before third parties for any harms caused by the mining activities; (vi) inform DNPM in case of suspension of the mining activities; (vii) present an yearly report to DNPM on the mining activities every March 15 of the next year; (viii) request from DNPM the possession of the mine within ninety days counted from the granting of the Mining Concession; (ix) pay the applicable mining taxes; (x) pay the land owner a monthly compensation equal to a minimum of 50% of the mining tax due.
One of the other main obligations is that the mining company interested in exploring a given area must present an environmental impact report and a recovery plan of the area impacted by the mining. The report and the plan are subject to review and approval prior to the installation of the mine. The mining company shall remain liable for any environmental damages.
Moreover, companies operating in Brazil need to comply with the Consolidated Labor Laws and the Labor Union Agreements in order to have employees in Brazil. Specifically in the case of the mining workers, the employer must comply with some specific security and health rules from the Ministry of Labor and Employment (MTE).
7. How are joint venture agreements or joint operating agreements regulated?
There is no specific regulation for joint ventures or joint operating agreements for mining activities, so that ordinary Brazilian corporate law is also applicable for mining enterprises. One point to bear in mind is that only companies incorporated in accordance to Brazilian law, with headquarters and management based in Brazil are able to hold mining rights. Therefore, foreign groups must incorporate a daughter company in Brazil, although it is not necessary to have a domestic partner.
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