Brazil Mining: A New Hope

Brazil has defined its president for another four years and, with the tiring and highly distracting election process now over, the nation´s mining sector can start getting back to business. Well, almost…

As in the last few years, 2015 will begin with a big legislative cloud hanging over the Brazilian mining sector. Even after more than six years of development, plans for a new mining code remain at the mercy of a cumbersome federal government, now as divided as ever. Beyond the closest presidential result in years, Brazil´s new Congress includes representatives from 28 parties, up from 22, with new alliances and oppositions sure to emerge as key issues are tackled. Furthermore, a number of state governments have also changed, including those of some of the key mining states, which may further complicate matters.

That being said, given the problems up to now there is a possibility that the new make-up actually favours the mining sector. For example, Fernando Pimentel, the new governor of Minas Gerais state, origin of over 50% of Brazil´s R$2.38 billion in “Financial Compensation for the Exploitation of Mineral Resources (CFEM)” tax, is from the same party (PT) as president Dilma Rousseff and previously her trade and development minister. Given the country´s second most populous state was, from 2003-2014, in the hands of opposition party PSDB and, importantly, the incubator for Dilma´s new nemesis, Aecio Neves (governor from 2003-2010), Pimentel should have much greater sway when it comes to promoting Minas Gerais´ strengths amongst the future federal priorities.

Indeed, some players are adamant that the mining code´s passage was subtly hampered by the ruling party to avoid a pre-election windfall for the two main mining states, Minas Gerais and Pará, and their respective PSDB governments. Although Pará, home of Vale´s Carajás mine and related mega-projects, remains firmly in the hands of Neves´ PSDB party, Minas Gerais is a much more important battleground and the mining sector can only hope that this important new federal-state alignment will help smooth the way for the mining code´s implementation as early as possible in 2015 and the sounder business environment it promises.

With huge swathes of Brazil currently not on speaking terms, this is at least a glimmer of hope for the country´s mining sector in 2015.

Notícias de Mineração Brasil (Mining News Brazil) will be following this situation closely over the coming months, ahead of the launch of its new website and English-language version in mid-2015.

Simon Tarmo is the Brazilian General Manager for Aspermont Limited, publisher of Notícias de Mineração Brasil, Brazil´s number one source of daily mining news and information.