- Title: Brazil hikes mining royalties to ease budget deficit
- Date: 26th July 2017
- Summary: MINAS GERAIS, BRAZIL (FILE - NOVEMBER, 2015) (REUTERS) MINING TRUCKS CARRYING IRON ORE MINING EQUIPMENT IN OPERATION HILLSIDE MINE VARIOUS OF EXTERIOR OF BRAZILIAN MINE
- Embargoed: 9th August 2017 16:55
- Keywords: Brazil Mining Regulations Michel Temer
- Location: BRASILIA AND MINAS GERAIS, BRAZIL
- City: BRASILIA AND MINAS GERAIS, BRAZIL
- Country: Brazil
- Topics: Commodities Markets,Economic Events
- Reuters ID: LVA0046RCUIBN
- Aspect Ratio: 16:9
- Story Text: Brazil unveiled plans on Tuesday (July 25) to raise revenue from mining royalties by 80 percent, the latest measure to shore up government finances, and cut red tape in attempt to attract more foreign investment amid a weak economic recovery.
President Michel Temer, at the policy launch in the presidential palace, said that this fit into his broader plans to modernize regulation across sectors to draw investment and boost the economy. Temer announced the first changes to the mining code since the early 1990s via a temporary presidential decree, which will require approval from Congress within 90 days. The royalties would go into effect in November, if approved, while other rule changes take effect immediately.
Brazil's slow economic recovery has weighed on tax revenue, forcing the government to find new sources of funding. Last week, the government said it would raise taxes on fuel and increase a public spending freeze by 5.9 billion reais ($1.9 billion) this year. The government will also create the National Mining Agency to replace the National Department of Mineral Production that officials said would increase transparency and reduce bureaucracy.
While some in the sector voiced support for the new measures, mining industry body IBRAM, which counts Brazil's largest miner Vale as a member, criticized the policy, saying there was no way to cut costs enough to offset the higher levies. The reforms, however, could help attract billions of dollars in venture capital to Brazil's mining sector by creating an investor-friendly environment, said Ana Cabral-Gardner, a board member at miner Sigma Lithium and veteran mining banker.
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