Mining industry


What is the nature and importance of the mining industry in your country?

The mining industry has significant relevance to the Brazilian economy, accounting for approximately 4.2 per cent of Brazilian GDP in 2016 (the most up-to-date official data available). Since 2006, mineral exploitation has increased, reaching its production peak in 2011 with approximately US$53 billion generated in proceeds from mining activities. In 2017, Brazilian production reached US$25 billion, and the difference in comparison with 2011 is primarily owing to the decrease in mineral commodities prices, particularly iron ore, which accounts for three-quarters of Brazilian mineral production.

Mining has also historically been an important sector of the Brazilian economy. In recent years, however, the sector has struggled owing to the expectation of a bill of law (5,807/2013) that rose from a government proposal to introduce new mineral regulations in Brazil in 2013, which caused many companies to delay their investment decisions until further clarity was obtained about the changes. However, macro- and microeconomic circumstances in recent years have resulted in a rise in investment opportunities for investors looking for mining assets, owing to fluctuations in the Brazilian currency that substantially increased the value of the US dollar in relation to the real.

The enactment of Law No. 13,575 on 26 December 2017 shows that the Brazilian government is aware that creating a transparent and independent regulatory agency for the mining sector (replacing the current National Mineral Production Department) is a step in the right direction to guarantee the legal certainty and clarity required for the attraction of the investments necessary to reboot the mining industry’s job-generation capacity and development.

Target minerals

What are the target minerals?

Considering Brazil’s extensive territory it holds a great geological diversity of metallic and non-metallic minerals, including some that have gained global relevance owing to recent technological breakthroughs (eg, lithium niobium and tantalite) and whose size of mineral reserves stands out. However, the target minerals, as per the amount exported by Brazil in 2015 and 2016, are iron ore, bauxite, aluminium, niobium, copper, manganese, kaolin, gold and others. Rare-earth reserves have been actively prospected in Brazil, and if some projects in south-east Brazil become viable this will certainly increase the general interest in these minerals in Brazil.


Which regions are most active?

The most active mineral regions in Brazil are in the states of Minas Gerais (reserves of gems, iron ore, gold, manganese, aluminium, graphite, bauxite, rare earths and niobium), Mato Grosso (reserves of manganese and iron), Pará (reserves of gold, iron ore, aluminium, copper, nickel and manganese), Bahia (reserves of bauxite, iron, nickel and chrome) and Rondônia (reserves of tin, gold, manganese and diamonds). There are mineral activities in other Brazilian states as well, but they are not so mature.

Legal and regulatory structure

Basis of legal system

Is the legal system civil or common law-based?

The Brazilian system is civil law-based. The Federal Constitution, enacted on 1988, organises the country as a federal republic formed by the union of the states and municipalities, and the Federal District (Brasília). Each of the 27 states of the union is empowered to adopt its own constitution and laws observing the principles and provisions stated in the Federal Constitution.


How is the mining industry regulated?

The National Mining Agency (ANM) is the federal agency entitled to regulate mining activities in Brazil. The main legislation regulating mining activities in Brazil is Decree Law No. 227/1967, the Brazilian Mining Code and Law No. 13,575/2017. Although primarily regulated by the Federal Constitution and federal laws, mining activities are also subject to state and municipal laws, particularly on taxes, environmental and soil usage matters.

What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws? Were there any major amendments in the past year?

The Federal Constitution and mining laws at federal level regulate, primarily, the mining industry in the country, along with other state and local regulations in relation to taxes, environmental licensing and soil usage matters.

The Brazilian Mining Code (Decree No. 227/1967) grants authority to the Ministry of Mines and Energy and the environmental protection authorities, especially the Brazilian Environmental and Renewable Resources Institute (IBAMA) and the state environmental agencies, which, along with the ANM, are the main regulatory bodies supervising mining activities.

The legislative branch has powers to enact all the laws that are relevant to the mining industry. Nevertheless, the ANM (formerly known as the National Department of Mineral Production - DNPM), has powers to issue regulations to set the operational guidelines of the Brazilian mining industry. Regulations issued by the ANM must stay within the general competence attributed to that body under applicable law. In this sense, ANM as a regulatory agency, has powers to inspect, regulate and sanction the industry players, within the limits of the powers granted to it by federal laws.

For many years now a new mining code has been expected. However, no major amendment was passed last year, except the enactment of Law No. 13,575/2017, which resulted in the creation of the ANM to replace the DNPM.

Classification system

What classification system does the mining industry use for reporting mineral resources and mineral reserves?

There is no classification system for reporting mineral resources and mineral reserves set in Brazil by the ANM. There is no distinction between resources and reserves, as in other jurisdictions, and Brazilian mining legislation only establishes standards for determining different levels of certainty on the existence of a deposit, such as in measured reserve, indicated reserve and inferred reserve.

In this sense, a measured reserve is the tonnage or volume of ore calculated by the dimensions verified in surface geological mapping, underground trenches, galleries, underground work and drilling, and in which the amount is determined by the results of detailed sampling. The inspection, sampling and measurement must be as thorough as possible and the geological characteristics well defined to ensure that the geological features (dimension, form and grade of the deposit) can be accurately determined. The tonnage and grade must be rigorously defined within the limits established with a margin of error of no more than 20 per cent.

An indicated reserve is the tonnage and grade of ore partially measured based on specific samples or production data and partially by estimates based on geological evidence at a reasonable distance from the actual sampling. Finally, an inferred reserve is an estimate made based on the knowledge of the geological characteristics of the mineral deposit, with little or no exploration work carried out.

Notwithstanding the above, the JORC Code is the most common system contractually used by private parties for assessing mineral resources and mineral reserves for projects in Brazil.

Mining rights and title

State control over mining rights

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

The Federal Constitution determines under article 20, item IX, that the Union (ie, the Brazilian federal state) has ownership over all mineral resources on the ground, including metallic minerals. Private parties obtain the right to explore the minerals through the granting of an authorisation by the federal government represented by the ANM. The exploitation rights over any minerals, however, are granted through a concession issued by the Ministry of Mines and Energy.

There is no entailment of ownership or possession rights in connection with the mining rights for the land underlying the mining rights. However, the mineral rights holders shall have access to and use of the areas to be explored and exploited, and rights of way and easement over private and public lands. Should the surface rights belong to a third party, they may be acquired by mutual agreements between the mining company and the surface rights holders. If surface rights are not acquired by the mining companies, their holder shall be entitled in any event to a compensation fee for the occupation of the area, and an indemnification for any damages caused to the land, as further explained in question 10.

Publicly available information and data

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

Mining investors and new players interested in engaging in exploration and other mining activities in Brazil may obtain general information related to the area, statistics on mining activities and general technical information through the ANM’s website. The ANM provides preliminary publicly held information on existing exploration licences and mining concessions, geographic coordinates of mining titles and information on titleholders. However, mineral assessment reports are not publicly released to third parties even though holders of exploration licences must file it with the ANM.

The Brazilian Geological Survey Company (CPRM), a government-held company subordinated to the Ministry of Mines and Energy, carries out regularly geological studies and evaluation of the Brazilian natural resources. Because of that, the CPRM accumulated geological and georeferenced information and construed a comprehensive database of documents, charts, maps and images. The CPRM’s website contains studies, surveys and mineral evaluations that are openly available to the general public.

Acquisition of rights by private parties

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

Private parties may acquire two main types of mining rights in Brazil: exploration licences and mining concessions. Exploration licences work on a first-come, first-served basis, providing the licence holders with the right to access the properties and execute exploration activities, having previously executed an agreement with the surface owner, as the case may be.

Exploration licences can be granted for a period of one to three years, being its extension permitted upon its request by the titleholder to the ANM and its respective authorisation, for an equal period. The exploration licence represents a preliminary stage upon which the licensee must carry out the exploration work and, if successful, submit the supporting evidence of such success to the ANM on the existence of mineral reserves in the licence area.

The following obligations must be complied with by the titleholders:

  • initiate the exploration works within 60 days, counted from the date of publication of the licence or from the obtainment of access to the relevant properties;
  • inform and notify the ANM of any discoveries of ores not included in the titleholder’s authorisation;
  • not interrupt the exploration activities without reason for more than three consecutive months or for more than 120 non-consecutive days during the term of the licence;
  • pay all relevant fees;
  • request the ANM’s previous authorisation (ie, an extraction permit) before removing any substances from the licence area for analysis and industrial experiments;
  • pay any required compensation to the surface owner or possessor for purposes of occupation of the land and any losses or damages caused to it in relation with the exploration works; and
  • prepare and present the final exploration report to the ANM.

Upon the analysis and approval of the exploration report by the ANM, the licence holder may apply for the mining concession within the term of one year. Additionally, the individuals or companies holding exploration licences must comply with the following conditions, among others, in order to obtain the mining concessions:

  • successfully conclude the exploration programme of the mineral reserves;
  • provide proof of economic feasibility to exploit the explored reserves;
  • provide proof of its financial capability in order to execute such exploitation; and
  • provide the required environmental licences for the project.

On the other hand, the mining concessions may be granted to companies or individuals in relation to specific types of mineral deposits in the concession area, being valid until total depletion of such mineral deposits. Should the concessionaire find any other types of mineral in the concession area it is required to notify the ANM of such finding and, upon its request to the DNPM, may include the other mining rights in its mining concession.

As provided in the Brazilian Mining Code, the request to obtain a mining concession is made to the Ministry of Mines and Energy, containing the detailed geological and geophysical information on the licence areas under request, and including:

  • the description of the mineral deposits to be exploited;
  • the description of the mining field’s topographical location and the indication of its neighbouring concession areas;
  • a map of the area to be mined, appointing its boundaries and the properties affected by the intended mining activities, with the names of the surface landholders;
  • reference to any easements that may be required in the area;
  • the exploitation’s working plan with a description of the mining method, scale of production and processing facilities; and
  • evidence that there are enough sources and availability of funds to complete the work on the mine.

Once the mining concession is granted by the Ministry of Mines and Energy, the concessionaire has to comply with a series of obligations, such as:

  • begin the mining operations within six months of the publication of the concession’s granting announcement in the Official Gazette of the Union;
  • execute the works in the concession area as provided for in the Plan of Economic Development of the deposit, which was approved by the ANM;
  • as mentioned above, extract solely the substance indicated in the concession or its addendum;
  • inform and notify the ANM of the discovery of any new substance not included in the concession;
  • follow the mining activities as provided in the applicable legislation;
  • have a qualified individual supervising the work;
  • refrain from intentionally obstructing or hampering the future development of the deposit;
  • accept liability for all losses or damages caused to third parties as a result of the mining works;
  • refrain from causing air or water pollution as a result of the mining works;
  • use the water sources in accordance with technical instructions and requirements, protecting and preserving it;
  • refrain from suspending the mining works for more than six months without the ANM’s previous authorisation;
  • maintain the mine in good conditions throughout any suspension period;
  • rehabilitate any areas degraded by the mining activities; and
  • pay royalties to the government and landowner.
Renewal and transfer of mineral licences

What is the regime for the renewal and transfer of mineral licences?

Mining concessions are granted for an indefinite period of time and, therefore, are not subject to renewal. All provisions related to the renewal of the exploration licence are listed on the answer to question 10. Additionally, applications for mining rights are also not transferable in Brazil.

The applicable law authorises the free transfer of mineral licences subject to the ANM’s approval. The assignment of mining licences or concessions requires that any interested individual or company comply with the requirements laid down in the law and in the applicable ANM regulations for the purposes of completing the transfer.

The transfer of interests in mining companies, the tangible or intangible assets of the mining operation and product sale contracts do not require the ANM’s prior authorisation. However, the execution of a security interest upon these assets may compromise the development of the mining concession in itself. Furthermore, the transfer of interests in mining companies will be subject to the ANM’s prior authorisation in case the mining rights are located within an area of 150km of Brazil’s borders.

Duration of mining rights

What is the typical duration of mining rights?

Both the application for mining rights and the mining licence are valid, each one, individually, for a period of one to three years, and may be renewed for an equal period upon authorisation from the ANM. Mining concessions are granted for an indefinite period of time and, therefore, are not subject to renewal.

Non-compliance by the licence holder or mining concessionaire of the obligations provided in the regulation may result in sanctions that will range from warnings, fines or forfeiture of said mining licence or mining concession. In addition, if verified by the ANM, the following infractions will result in the forfeiture of the application for mining rights, mining licence or mining concession:

  • formal abandonment of the mine;
  • non-compliance with the term to begin or restart the exploration or exploitation works, despite previous warnings or fines;
  • deliberate practice of exploration works in disagreement with the conditions provide in the authorisation licence, despite previous warnings or fines;
  • continuance of ambitious exploitation or extraction of a substance not included in the Exploitation Authorisation, despite previous warnings or fines; and
  • non-compliance with repeated audit requests, characterising a third repetition within an interval of one year of infractions with fines.

Further, the ANM may declare void all mining licences or mining concessions when these are granted or issued in disagreement with the provisions of the Brazilian Mining Code. This annulment will be promoted ex officio on the following cases: intentional imprecision on the definition of the exploration or exploitation areas; and when transfers or assignments of mining licences or mining concessions are in noncompliance with the legal and regulatory requirements, including its approval by the ANM of said transfer or assignment.

Acquisition by domestic parties versus acquisition by foreign parties

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

The Brazilian Mining Code determines that only domestic individuals or companies may apply for or acquire mining rights in Brazil. This does not restrict, however, foreign companies or individuals to hold total ownership of Brazilian entities active in the mining sector, as long as the company applying for or acquiring a mining right is duly incorporated and headquartered in Brazil.

This rule is excepted only by mining rights located within an area of the country called the ‘border zone’, which is defined as the area within 150km from the dry borders of the country. Any mining companies holding mining rights or willing to carry out exploration or exploitation activities in the border zone must be controlled and managed predominantly by Brazilians. Thus, mining rights located in the border zone may not be acquired by foreigners nor by a Brazilian company controlled by foreign parties.

Protection of mining rights

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Brazil has an independent judicial system under which the ruling of courts and domestic arbitration awards can be enforced against any party in any part of the Brazilian territory. Its judicial system is organised under the rule of law and based on constitutional principles such as due process of law and full defence. The rule of law and due process are also followed by the authorities on the administrative level, as provided in the applicable legislation. Intermediary administrative decisions can be challenged or appealed before a superior court, and a final decision of the administration can be challenged with the competent judicial courts.

As mentioned above, domestic arbitration awards are freely enforceable in Brazil, however, foreign arbitration awards require prior ratification by the superior courts, whereby it is confirmed that the validity of the arbitration procedure and the due process of law were followed. This ratification does not modify the award’s decision.

Surface rights

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

The Brazilian Constitution provides that there is no entailment of ownership or possession rights with the mining rights for the land underlying them (the mining rights), which belongs to the federal government. The mineral right holders have access and use to the areas to be explored and exploited, and rights of way and easement over private and public lands. Should the surface rights belong to a third party, they may be acquired by mutual agreement entered into by the mining company with the surface rights holders upon the determination of a compensation fee for the occupation of the area and indemnification for the damages caused to the land.

Should the mineral rights holder and the surface rights holder not be able to reach an amicable understanding, the miner may resort to legal action with the local courts to establish the compensation fee that shall be paid to the surface rights holder. This compensation must be paid to the surface rights holder because of the occupation of the area and any damages that may be caused to the property by the execution of the mining activities therein. Courts generally grant reasonable market prices.

In addition, the federal government has some limitations on the acquisition and lease of rural lands in Brazil by foreign individuals and legal entities with foreign control. These limitations, however, have to be analysed on a case-by-case basis depending on the size of the land, since they could require prior approval by the government.

Participation of government and state agencies

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

The government and state agencies are not allowed to take part or participate in mining projects in Brazil.

Government expropriation of licences

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

There are no provisions in law regarding government expropriation of licences. We are not aware of any expropriation of mining licences taking place in Brazil.

Protected areas

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

The Brazilian Forestry Code designates as a protected area (known as legal reserves) 20 per cent of every rural property in Brazilian territory. The exceptions to this rule are for properties located in the Cerrado or in the Amazon Forest regions, in which the legal reserve is extended to 35 per cent and 80 per cent, respectively. In both cases, these legal reserves must be demarcated and registered by the landowner with the Real Estate Registry. In this sense, the law also determines requirements that must be met: the legal reserve must be duly forested or under a reforestation plan, with native vegetation that cannot be used for developing industrial activities. The reforested vegetation cannot be cut down within the legal reserve if the company wants to change the location of the reserve, except if previously authorised by the local environmental protection agency. If the regeneration is being carried out in areas of the Atlantic forest, the cutting down of vegetation may be a prohibitive obstacle to the environmental licensing.

Should the property contain caves or archaeological sites these must be mapped and a study prepared to assess their relevance, and then submitted to the environmental protection agency. The environmental protection agency shall decide on the preservation or not of the caves or archeological sites, as well as if a compensation for these areas will be necessary, upon the analysis of the assessment studies.

The national conservation units system is regulated by Law No. 9,985/2000, which consists of an area so declared by the government with important environmental features and resources with the purpose of conversation and sustainable development. Conservation units are classified into two types: full protection or sustainable use. Full protection conservation units have the purpose of preserving nature, allowing only the indirect use of its natural resources. On the other hand, sustainable use conservation units have to make nature conservation compatible with the sustainable use of part of the natural resources.

Also, ANM may establish that certain areas are off-limits for mining activities because of strategic interest, for instance, if certain areas are necessary for the development of infrastructure projects and it is established that mining activities conducted in that area may impact the projects. All off-limits areas are indicated on the ANM’s system and can be identified by parties interested in applying for mining rights.

Duties, royalties and taxes

Duties, royalties and taxes payable by private parties

What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based?

The main taxes, duties and contributions levied on mining companies operating in Brazil as a condition for them to obtain or continue the mining concession are:

  • annual fee per hectare (TAH);
  • financial compensation for the exploitation of mineral resources (CFEM);
  • payment due in connection with surface rights;
  • inspection taxes on mining resources;
  • corporate income tax (IRPJ);
  • social contribution on profits;
  • import duty;
  • excise tax (IPI);
  • social integration plan (PIS) and social welfare tax (COFINS);
  • state VAT (ICMS);
  • property tax;
  • municipal service tax (ISS);
  • financial transaction tax (IOF); and
  • payroll taxes.

These taxes, duties and contributions are required to be paid in different moments during the development of the mining activity, depending on the stage of the exploration works or during the entire period of the concession, and all payments have to be made in kind and in Brazilian currency.

Below is a short description of each of the taxes, duties and contributions mentioned above.


A fee owed for purposes of occupation and use of the area, under which all exploration targets are subject to the TAH. Currently the annual fee corresponds to 3.42 reais per hectare covered by a licence for mining exploration, increasing to 5.1 reais per hectare, upon the extension of the licence’s term.


This is a royalty payment serving the purpose of compensating the states and municipalities for the economic use of the mineral resources in their territory, similar to a tax. It is owed by the legal entities that exploit or extract mineral resources, payable upon sale of the mining product from the mine or other mining deposit or beneficiation of the mining product or its consumption by the mining entity. It varies as a percentage of the net revenue from the sale of mineral products, depending on its type. In general, the rates vary from 0.2 per cent to 3 per cent depending on the kind of mineral product. Upon the calculation of CFEM, transport, sales, tax and insurance costs are deducted.

Payment due in connection with surface rights

Brazilian mining law provides that the surface rights holder of the location of the mine has the right to a statutory royalty equivalent to one half of the CFEM (which is calculated as mentioned above).

Inspection taxes on mining resources

It is a tax imposed on mining activities in the states of Pará, Minas Gerais, Mato Grosso and Amapá, levied at amounts of up to approximately US$3 per tonne or exploited ore, payable to the state where the ore is exploited. Some of the mining companies and mining associations are challenging the legality of these state laws in view of the Federal Constitution.


This is the corporate income tax, of which the basic rate calculation is 15 per cent based on yearly or quarterly ‘adjusted actual profits’. When the taxable income exceeds 240,000 reais yearly or 60,000 reais quarterly, an additional 10 per cent rate is added to the standard 15 per cent rate.

Social contribution on profits

This is the contribution payable on profits and the current applicable rate is 9 per cent on yearly or quarterly adjusted book profits for all companies (excepting financial institutions).

Import duty

Heavy mining equipment brought to Brazil may benefit from tax incentives or full exemption; nevertheless, all products imported are subject to import duty that shall be levied on the ‘customs value’ of such product, pursuant to GATT rules and calculated on the cost insurance and freight value. This duty rate is selective and will depend on the product’s tariff classification.


This the value-added tax paid upon the importation or sale or other transfer of industrialised and partially industrialised products. The rate depends on the type of product.


PIS and COFINS are social contribution taxes levied at different percentages on the company’s gross revenues. There are two applicable regimes: cumulative - rates of 3 per cent and 0.65 per cent, respectively, without any generation or use of credits; or non-cumulative - rates of 7.6 per cent and 1.65 per cent, respectively, with generation of credits in the acquisition of goods or services that can be offset with debts of the same contributions. Such contributions are also levied on the importation of services (with rates of 7.6 per cent and 1.65 per cent) and goods (with rates of 2.1 per cent and 9.65 per cent).


This is levied on the distribution of goods, intercity and interstate transportation and communication services. It is payable during all stages of the product’s sale not only by the producer, but also by the consumer.

Property tax

In general, there is a levy of rural land tax (ITR) for mining activities, for which the triggering event is the property, usage and possession of real estate located outside the urban area, and its calculation depends on the value of the property alone, without taking into consideration any improvements.


This is a tax imposed on any kind of services performed by companies or self-employed professionals, with a maximum rate of 5 per cent, its assessment being based on the price of each services and also assessed on services provided by non-residents to Brazilian residents (import of services).


This is a tax assessed on certain credit transactions (including loans) and currency exchange transactions, among other financial transactions, being levied at rates that varies according to the nature of the transaction.

Payroll taxes

Certain taxes and contributions payable by the Brazilian companies in benefit of their employees, depending on the total value of their remuneration, such as social security contributions and severance funds. These taxes and contributions may increase payroll costs by roughly 28 per cent to 35 per cent of gross wages.

Tax advantages and incentives

What tax advantages and incentives are available to private parties carrying on mining activities?

Brazilian authorities have the prerogative of granting tax benefits and incentives to private parties executing mining activities. The main incentive programmes available in Brazil at federal level are:

  • the Amazon Development Programme, offered by the Amazon Development Agency for mining projects located in the Amazon region;
  • the North-east Development Programme for projects in the north-east part of the country, supported by Banco do Nordeste;
  • the Special Regime for the Acquisition of Equipment and Machinery by Exporters;
  • tax-related programmes to enhance Brazilian exports (eg, the special customs regime of the drawback programme and the internal drawback programme); and
  • a regime that allows the reduction of import duties on machinery and equipment not available in Brazil (special customs regime Ex-Tarifário).

Additionally, at state level, the most common tax benefits are related to state tax exemptions (ICMS, ie, state VAT), deferral, assumed credits and suspension or reduction of the assessment basis. State governments also hold the prerogative of granting incentives to mining operations either through a reduction in the taxable base of the ICMS of through deferral.

Further, local tax authorities may grant tax benefits to mining companies on a case-by-case basis through direct negotiations.

Tax stablisation

Does any legislation provide for tax stabilisation or are there tax stabilisation agreements in force?

Brazil in principle does not enter into tax stabilisation agreements. The general limits to increase and create taxes are set in the Brazilian Federal Constitution and valid for all taxpayers.

Carried interest

Is the government entitled to a carried interest, or a free carried interest in mining projects?

The government is not entitled to any carried interest or free carried interest in mining projects in Brazil.

Transfer taxes and capital gains

Are there any transfer taxes or capital gains imposed regarding the transfer of licences?

There is no transfer tax imposed on the transfer of licences. However, there are taxes on capital gains that shall be levied as a withholding tax over the positive difference between the total investment made in connection with a mining licence and the amount obtained with the sale of said licence to any third party. The withholding income tax over capital gains is based on a progressive rate (the rates vary according to the amount of the capital gain, within the range of 15-22.5 per cent).

Distinction between domestic parties and foreign parties

Is there any distinction between the duties, royalties and taxes payable by domestic parties and those payable by foreign parties?

There is no discrimination between the duties, royalties and taxes payable by domestic and foreign parties.

Business structures

Principal business structures

What are the principal business structures used by private parties carrying on mining activities?

There are several types of contractual frameworks that may be used for the purposes of developing a mineral project in Brazil. Investors may operate through stand-alone vehicles (ie, incorporated entities) or in association with one or more foreign or local partners. Those arrangements are typically set up through joint ventures, partnerships, risk-sharing agreements or option agreements.

Taking into consideration that only local companies incorporated and headquartered in Brazil are authorised to hold mining rights, the incorporation of a local subsidiary is necessary for the purposes of any stand-alone initiatives. In this sense, limited liability companies (LLCs) are usually the preferred vehicles for holding mining rights and carrying out exploration initiatives. In Brazil, LLCs must have at least two stakeholders, which can be either legal entities or individuals holding the company shares and executing the company’s articles of incorporation. In an LLC each stakeholder is responsible for the payment in full of its equity in the company’s capital stock, although all stakeholders are jointly and severally liable for any amounts of capital not fully paid-in. Recently a specific type of LLC was introduced (EIRELI) where its incorporation may take place with only one stakeholder. In contrast to a standard LLC, in an EIRELI certain requirements of minimum capital shall apply.

Another option is to incorporate a more complex, sophisticated and costly type of legal entity, very similar to a corporation, typically called an SA. The capital stock of an SA is divided into shares, and the company is allowed to raise capital through public or private subscriptions. Similarly, the shareholders of an SA are liable solely for the value of the shares purchased or subscribed for. SAs are authorised to increase capital stock and raise funding through public offers at local markets if they are duly registered with the Brazilian Exchange Commission. In this case, their shares may be traded on the local stock exchange or on the over-the-counter market. SAs not listed on the stock exchange are authorised to sell their shares only through private trading. The management consists of a board of directors or a board of officers, where the board of directors must have at least three members and the board of officers is required to have at least two members.

Local entity requirement

Is there a requirement that a local entity be a party to the transaction?

Only local companies incorporated and headquartered in Brazil are authorised to hold mining rights. However, those local companies can be held by non-Brazilian entities. The only exception to non-Brazilian ownership is when mining activities are carried out at the ‘border zone’ (as defined in question 48) since any companies developing mining activities in the border zone must be controlled and managed predominantly by Brazilian individuals.

Bilateral investment and tax treaties

Are there jurisdictions with favourable bilateral investment treaties or tax treaties with your jurisdiction through which foreign entities will commonly structure their operations in your jurisdiction?

In 2014, the Brazilian Ministry of Foreign Affairs developed a new model for bilateral cooperation and investments treaties. Several of those treaties were executed by the Brazilian federal government over the past two decades, but none has been ratified by the Brazilian National Congress to date.

Brazil is signatory of double taxation avoidance treaties with 33 different countries, namely: Argentina, Austria, Belgium, Canada, Chile, China, Czech Republic, Denmark, Ecuador, Finland, France, Germany, Hungary, India, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Peru, Philippines, Portugal, Slovakia, South Africa, South Korea, Spain, Switzerland, Trinidad and Tobago, Turkey, Ukraine and Venezuela. These treaties, in general, provide tax relief in the form of reduction or elimination of taxes withheld on dividends, royalties and interest payments remitted abroad. In addition, corporate taxes paid in other countries through foreign subsidiaries operating in Brazil may be used to offset income tax paid in Brazil.

In addition, Brazil is a founding member of MERCOSUL, which is also known as the Southern Cone Common Market, and the purpose of the MERCOSUL treaty is to promote, along with the other members, the free movement of goods, services, people and currency, with the adoption of a Common Standard Rate (TEC) and a common regional commercial policy. The countries that are part of MERCOSUL are Argentina, Brazil, Paraguay, Uruguay and Venezuela (currently suspended for non-compliance with political requirements). Associate members are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname.


Principal sources of financing

What are the principal sources of financing available to private parties carrying on mining activities? What role does the domestic public securities market play in financing the mining industry?

Mining companies in Brazil have available the following financing options:

  • the banking system;
  • the securities market upon the company’s registration with the São Paulo Stock Exchange;
  • the international capital markets; and
  • the international financing markets.

Considering that in Brazil interest rates are among the highest in the world, using local banking system is not an effective option unless funding can be obtained with the Brazilian Development Bank (BNDES) through some of its subsidised credit lines. Also, the São Paulo Stock Exchange does not have a history of fund-raising for greenfield projects. In fact, there are only a couple of mining companies today listed on the São Paulo Stock Exchange.

Having said that, typically funding for non-major mining companies in Brazil is obtained through the international capital markets or international financing markets. For example, the Toronto Stock Exchange in Canada is a major hub for companies raising funds to invest in mining projects in Brazil.

Direct financing from government or major pension funds

Does the government, its agencies or major pension funds provide direct financing to mining projects?

The BNDES through its subsidiary Bradespar and some of the major pension funds in Brazil through private equity funds do provide direct financing to mining projects. However, owing to their financing policy the projects considered for investment are normally large projects and nowadays non-greenfield.

Security regime

Please describe the regime for taking security over mining interests.

Mining companies holding a mining concession are allowed to encumber their rights in accordance with the Mining Code. However, any liens (such as pledges, leases, etc) to these concessions have to be registered with the ANM for purposes of validity and enforcement. Taking security over exploration permits and other kinds of applications are currently not allowed.


Importation restrictions

What restrictions are imposed on the importation of machinery and equipment or services required in connection with exploration and extraction?

No restrictions or limitations are imposed on the importation of machinery and equipment or services required in connection with exploration and extraction activities. However, in Brazil heavy taxes are applicable to the importation of goods and services in general (ie, not only those related to mining activities), which may end up acting as practical restrictions on its importation.

Standard conditions and agreements

Which standard conditions and agreements covering equipment supplies are used in your jurisdiction?

There are no standard agreements when it comes to contracting suppliers in Brazil. There are certain contractual principles in Brazil that cannot be ignored by the parties when entering into a contract. The Brazilian Civil Code provides for mechanisms to avoid unbalanced contractual obligations. As a matter of fact, a contract perceived to be unfriendly to a party could be argued as null under Brazilian law.

In the past decade there was an increase in Brazil in the use of alternative dispute resolution methods, those being through arbitration, based in Law No. 9,307/1996, or through mediation, which is a far newer concept established relatively recently by Law No. 13,140/2015. When it comes to arbitration, this kind of alternative dispute resolution mechanism has been successfully and commonly used in Brazil also in equipment supply agreements. However, considering the costs associated with an arbitration there are certain types of equipment supply agreements where such dispute resolution method although efficient may not be recommendable.

Mineral restrictions

What restrictions are imposed on the processing, export or sale of minerals? Are there any export quotas, licensing or other mechanisms that prevent producers from freely exporting their production?

No restrictions or limitations are imposed on the processing, export or sale of metallic minerals, and they can be freely processed or sold domestically or outside of Brazil. There are no export quotas, licensing or other mechanisms to limit the mining production’s exportation. Manufactured products on the other hand may enjoy some tax benefits and incentives for purposes of exportation.

Import of funds restrictions

What restrictions are imposed on the import of funds for exploration and extraction or the use of the proceeds from the export or sale of minerals?

Brazilian legislation currently does not impose limitations on the import of funds or use of the proceeds from the export or sale of metallic minerals. Thus, all of the export transactions’ proceeds may be kept abroad, what is usually useful in pre-export financing. All foreign-exchange transactions are carried out through authorised local commercial banks with the participation of a registered broker at the commercial exchange rate, except for certain transactions that are authorised at the tourist exchange rate. Access to foreign exchange can be obtained through those local authorised commercial banks and are in no way tied to export performance.


Principal applicable environmental laws

What are the principal environmental laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

The Brazilian Constitution provides that the federal union, the states and municipalities are all entitled to supervise compliance with environmental laws and impose administrative sanctions such as fines, interdictions or restrictions on activities.

Each state has its own environmental agency, that along with IBAMA (the federal environmental agency covering interstate projects or activities with high potential for environmental impact) are the main governmental bodies responsible for environmental licensing of mining activities. There is no environmental code compiling all environmental laws, which are laid down through numerous federal, state, and municipal regulations. However, the main environmental related principles and rules are stated in the Brazilian Federal Constitution, the Forestry Code, Federal Laws Nos. 6,938/1981, 7,805/1989 and 9,605/1998. Decrees Nos. 97,632/1989, 6,514/2008 and 9,406/2018 and regulations from the Environmental National Council (CONAMA).

Environmental review and permitting process

What is the environmental review and permitting process for a mining project? How long does it normally take to obtain the necessary permits?

With the purposes of assessing and preventing potential risks to the environment the licensing process in Brazil is typically conducted by the state environmental agency where the mining project is located, and is divided into three stages: grant of the preliminary licence, grant of the installation licence, and, finally, grant of the operation licence.

Before starting any project constructing stage, mining companies must apply and obtain a preliminary licence upon submitting an environmental impact study report (EIA/RIMA) to the respective environmental agency. After the environmental control, reclamation and decommissioning plans have been approved by the environmental agency the mining company will be able to apply for the installation licence, prior to the commencement of construction. Finally, actual mining activities can only take place after the issuance of the operation licence, which presupposes the implementation of the requirements indicated in the environmental control plan.

Additionally, other permits may be necessary for the development of activities and products’ use, such as:

  • if used, transportation, storage, trade or manufacture of certain chemicals and explosives considered controlled products;
  • use of chainsaws to clear the area;
  • co-processing the final disposal or transportation of residues;
  • use of residues in rehabilitation or degraded areas;
  • wastewater discharge;
  • deforestation; and
  • water capture, among others.
Closure and remediation process

What is the closure and remediation process for a mining project? What performance bonds, guarantees and other financial assurances are required?

Mining companies have to submit studies to the environmental authorities related to the mitigation and compensation measures to obtain its installation licence. These studies must address the reclamation and decommissioning of the mined areas, containing the measures to be implemented throughout the mining process and at its end in order to prevent severe degradation of the area and to minimise impact on the environment.

The decommissioning plan for the project must also be filed with the ANM for purposes of evaluation and determination of further measures and requirements in relation to the efficiency and safety of the mining activities as well.

When mining companies file their applications to close a mine, those applications must also present:

  • a report on the work performed to that date;
  • characterisation of the remaining resources;
  • a topographic and landscape report considering stability, erosion control and drainage aspect; and
  • a work and financial timeline of the proposed decommissioning activities.

Therefore, approval for mine closure is granted by the Ministry of Mines and Energy when the applicant can prove compliance with the decommissioning plan, especially environmental conditions.

Restrictions on building tailings or waste dams

What are the restrictions for building tailings or waste dams?

Federal Law No. 12,334/2010, DNPM Ordinance No. 70,389/2017, and Resolutions No. 143/2012 and No. 144/2012 enacted by the National Council of Water Resources provide the main regulatory framework for construction of tailing and waste dams. Tailing and waste dams require a prior dam safety plan, which shall be composed of:

  • general information in relation to said dam;
  • plans and procedures;
  • registries and checks;
  • periodic safety revision of the dam; and
  • in the case of dams with a high potential of damage to the environment and local communities, the dam safety plan must also contain an emergency action plan.

The level of detail of the content of each of those items will vary depending on the complexity of the dam.

The person in charge of the dam safety plan must be the engineer registered with the Regional Council of Engineering, Architecture and Agronomy as the one technically responsible for implementing the plan in all of its aspects.

Revision of said dam safety plan may vary from three to seven years, depending on how the dam is classified in terms of potential risks. Also, revisions shall occur whenever there are any structural changes or amendments in the classification of the tailings or waste deposited in the dam. The team executing said revision shall be multidisciplinary. Regular inspections also have to be executed by the mining company at least every 15 days.

Law No. 12,334/2010 determines in its article 15 that the National Policy of Dam Safety shall provide the population with an education and communication programme on the safety of dams.

Finally, mining companies are liable for identifying and declaring emergency situations, and take all actions described in the applicable dam safety plan, especially with regard to the local population of potentially affected zones, local public authorities, environmental authorities and the ANM.

Health & safety, and labour issues

Principal health and safety, and labour laws

What are the principal health and safety, and labour laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

The Ministry of Labour and ANM are the main bodies responsible for issuing health, safety and labour laws applicable to the mining industry. Regulatory Norm No. 22 of the Ministry of Labour and Employment provides the mainly work, health and safety rules on the mining industry. Furthermore, DNPM Ordinance No. 237/2001 enacted the Mining Regulations, which under item 22 also provide the work, health and safety rules that should be observed by mining companies. These rules determine standards for work procedures and safety conditions, emergency operations and personnel training, among others.

Additionally, the Consolidation of Labour Laws, which is equivalent to a labour law code, regulates work health and safety programmes that must be observed by all companies, including mining companies, covering the occupational health control programme, prevention programme for environmental risks, in-house commission for prevention of accidents in mining activities and risk-management programme, among others.

Management and recycling of mining waste

What are the rules related to management and recycling of mining waste products? Who has title and the right to explore and exploit mining waste products in tailings ponds and waste piles?

DNPM Normative Opinion No. 46/2012 determines that, while the waste products of mining areas have no economic value, they shall not be assets of the union nor the mining company. Therefore, mineral substances that may exist in the tailings or waste are subject to the same legal treatment as of in situ minerals (ie, not exploited). This means that to enjoy any economic benefit from products wasted or in tailings, a mining company depends on the existence of a specific licence.

Use of domestic and foreign employees

What restrictions and limitations are imposed on the use of domestic and foreign employees in connection with mining activities?

In order to work in Brazil, foreign employees must obtain work or residence visas. The law provides that two-thirds of a Brazilian company’s employees must be Brazilian citizens, and two-thirds of its payroll must be reserved to pay Brazilian employees. Exceptions are only allowed to individuals from member countries from MERCOSUL, also known as the Southern Cone Common Market, Argentina, Paraguay and Uruguay. Those limitations are valid for any kind of activity in Brazil and not only for mining activities.

Further, for each US$200,000 invested in a Brazilian company a permanent visa can be obtained for a foreigner to occupy a managerial position (ie, be an officer) in such Brazilian company. Said amount may be reduced if a certain number of jobs are created in Brazil within a certain period of time.

Social and community issues

Community engagement and CSR

What are the principal community engagement or CSR laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

There are no specific corporate social responsibility laws or obligations applicable to the mining industry. In terms of community engagement or CSR, the mining industry in Brazil is subject to the same general environmental laws and regulations applicable to other kinds of activities with environmental impact, as described in question 34. The Brazilian environmental agency (IBAMA) is the principal federal regulatory body for administering those laws and regulations, including licensing and enforcement.

Rights of aboriginal, indigenous or disadvantaged peoples

How do the rights of aboriginal, indigenous or currently or previously disadvantaged peoples affect the acquisition or exercise of mining rights?

Brazilian legislation does not authorise mining activities in areas reserved for indigenous populations. Specific laws determine which areas are indigenous. The Federal Constitution also determines that any mining activity in indigenous areas require prior approval of the Brazilian National Congress, and that the indigenous communities have the right to receive royalties from the exploitation of any deposits located in their lands. Nevertheless, these specific provisions related to the payment of royalties have to be regulated by the Brazilian Congress prior to its implementation.

In Brazil there is also another type of traditional community known as the Quilombolas, which is composed of the descendants of slaves who escaped from slave owners before the abolition of slavery in 1888. The Federal Constitution provides that Quilombolas are in essence entitled to obtain title deeds and the ultimate ownership of the land they occupy. Mining activities in these areas, although not prohibited, will engender payment of compensation rights by mining companies to those local communities in order to operate.

In sum, mining rights in Brazil cannot exist on indigenous land. On Quilombolas lands they can. However, to carry out mining activities under those rights, mining companies must deal with local communities and agree on the compensation to be borne by the mining company.

International law

What international treaties, conventions or protocols relating to CSR issues are applicable in your jurisdiction?

The enactment of Decree No. 5,051/2004 obliges Brazil to apply the International Labour Organization Convention (ILO) No. 169, dated 27 June 1989, also known as the ILO Indigenous and Tribal Peoples Convention, that references the rights of ownership and possession over lands occupied by an indigenous population and the natural resources pertaining to the land. Pursuant to the Convention, previous consultation shall be made to the indigenous people concerned in order to determine whether the interests of these traditional communities would be impaired or not, and to what extent. The people concerned should participate whenever possible in the benefits that the mining activities, and receive equitable compensation for any damages they may suffer as a result of these activities.

Anti-bribery and corrupt practices

Local legislation

Describe any local legislation governing anti-bribery and corrupt practices.

Federal Law No. 12,846/2013 provides on the administrative and civil liability of legal entities for the practice of acts against the public administration at national or foreign level, among other matters. Although still in the earlier stages of enforcement, the successive corruption scandals and the ongoing investigations hatching all over the country caused companies to look seriously into this legislation and increase internal controls and put in place effective compliance systems as ways to reduce and limit exposure for their business, management and stakeholders in general.

Foreign legislation

Do companies in your country pay particular attention to any foreign legislation governing anti-bribery and foreign corrupt practices in your jurisdiction?

With several Brazilian companies doing business abroad and seeking public and private finance in the US, the UK and Europe, the attention of Brazilian companies has shifted in recent years from an isolated internal Brazilian view to a much broader one seeking to understand and assess exposure under the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, for instance. Also, the enactment of Federal Law No. 12,846/2013, described in question 45, and the increasing enforcement abroad against Brazilian companies of foreign anti-corruption regulations, have also contributed to forcing Brazilian companies to pay closer attention to foreign legislation governing anti-bribery and foreign corrupt practices, especially the FCPA.

Disclosure of payments by resource companies

Has your jurisdiction enacted legislation or adopted international best practices regarding disclosure of payments by resource companies to government entities in accordance with the Extractive Industries Transparency Initiative (EITI) Standard?

EITI standards are not currently implemented in Brazil and therefore the country has not enacted any rules to adopt the applicable standards uphold by the EITI.

Foreign investment

Foreign ownership restrictions

Are there any foreign ownership restrictions in your jurisdiction relevant to the mining industry?

There are no foreign ownership restrictions in Brazil considered rele-vant to the mining industry in Brazil, except for:

  • mining activities carried out within an area of the country called the ‘border zone’, which is defined as the area within 150km from the dry borders of the country. Any mining companies willing to carry out exploration or exploitation activities in the border zone must be controlled and managed predominantly by Brazilians; and
  • the acquisition and lease of rural lands. Any acquisitions or leases of rural land by foreigners and local companies controlled by foreigners must follow the restrictions set forth in the law, which essentially limits the size of the properties to be owned by foreigners and local companies controlled by foreigners in Brazil.

International treaties

Applicable international treaties

What international treaties apply to the mining industry or an investment in the mining industry?

Brazil is a founding member of MERCOSUL, which is also known as the Southern Cone Common Market, and the purpose of the MERCOSUL treaty is to promote, along with the other members, the free movement of goods, services, people and currency, with the adoption of the TEC and a common regional commercial policy. The countries that are part of MERCOSUL are Argentina, Brazil, Paraguay, Uruguay and Venezuela (currently suspended for non-compliance with political requirements). Associate members are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname. A company incorporated under Brazilian law could benefit for the MERCOSUL treaty, although there are no specific benefits in the MERCOSUL treaty in relation to mining activities.

Apart from MERCOSUL there are no specific international investment treaties signed by Brazil applicable to mining activities undertaken or sponsored by foreign companies.

Update and trends

Recent developments

What were the biggest mining news events over the past year in your jurisdiction and what were the implications? What are the current trends and developments in 2019 in your jurisdiction's mining industry (legislation, major cases, significant transactions)?

The biggest news was the enactment of Law No. 23,291 on 25 February 2019 by the State of Minas Gerais, which established the State Policy for Dam Safety. The law stipulates that the accretion, final or temporary disposal of tailings and industrial or mining wastes by means of dams of any kind must be avoided whenever there is a better technique available. For a new dam to be authorised, the EIA must prove that there are no other viable techniques, such as dry stacking. In the event of a disaster arising from non-compliance with the provisions set forth in the law, the administrative fine may be increased by up to 1,000 times. Pursuant to the law, the environmental licensing for dams shall be conditioned to the presentation of environmental bond, with the purpose of ensuring social and environmental recovery for cases of loss and decommissioning

Considering the recent history of disruption of mining dams, notably the B1 Dam at the Sapecado Retreat Mine, on 10 September 2014, located in the Municipality of Itabirito, State of Minas Gerais; of the Fundão Dam of the Germano Mine, on 5 November 2015, located in the municipality of Mariana, State of Minas Gerais; and Dam B1, of the Córrego do Feijão mine, on 25 January 2019, in the municipality of Brumadinho, State of Minas Gerais. And taking into account that the these dams were built in the upstream method, ANM enacted Resolution No. 04/2019 which sets forth precautionary regulatory measures aimed at ensuring the stability of mining dams.