Mining rights and title in Brazil

Mining rights and title

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.