Mining Rights in Brazil
Mining Right Tenure in Brazil
The main source of mining legislation in Brazil is the Federal Mining Code (Feb. 1967), updated by Law No. 9314 (1995), and supported by the 1988 Federal Constitution. Amarillo Gold Corp.’s wholly owned subsidiary Amarillo Mineracao Do Brasil LTDA (100% ownership) holds all of Amarillo Gold’s mining concessions, and conducts all of the company’s mineral exploration and mining activities in Brazil.
- Mining legislation may only be enacted by the General Assembly.
- Surface rights and Mineral rights (sub-surface rights) are administered separately (with rare exceptions); Mineral rights are the jurisdiction of the Federal Union.
- Mineral exploration may only be carried out by Brazilian citizens, or legal entities incorporated in Brazil, under authorization by the federal government.
- Mining activities may only be conducted by legal entities incorporated in Brazil.
- There are no restrictions on foreign participation in these legal entities.
- The mining concession holder has ownership of the minerals extracted.
- Landowners , Municipal , State, and Federal governments are entitled to a royalty, which varies from 1% to 3% Gross Overriding Royalty (GOR) depending on the mineral and state.
- Mining activities are subject to environmental licensing (State and Federal)
- Holders of mining concessions are legally obligated to restore areas degraded by mining, in accordance with a plan previously approved by the respective environmental departments.
- The mining laws are administered by the National Dept. of Mineral Production (DNPM) which has an office in each state capitol. Each state office reports back to the DNPM in Brasilia.
- The website http://sigmine.dnpm.gov.br/ displays the exploration and mining concession disposition by state and is typically up to date within 24hrs. This is generally deemed to be an excellent system.
- Mining in Brazil is governed in a fashion similar to any other business (excepting the royalty structure) and is subject to similar (‘normal’) taxation. Previous expenditures on a mineral property may be written off. Taxes vary from state to state but are typically approximately 30%.
Exploration Concession Process
- Exploration Licences range from 1 to 3 years in duration, and may be renewed once to extend for 1 to 3 years subject to the judgment of the DNPM inspector.
- Exploration Licences are granted on a ‘first come first serve’ basis. A licence is exclusive once granted.
- Applications are submitted into a map-based system at the DNPM office at the state capitol.
- There may be a considerable time period between the application for a licence and the granting of it, depending upon which state holds the property. Other entities may apply to supersede an application, but the first application submitted will receive the licence (‘first come first serve’ basis). Time considerations on the licence begin on the day of application.
- The size of a granted licence may vary from 50 hectares (ha) to 10000 ha, subject to which state issues it; most states permit a maximum 2000 ha, but some of the more remote states permit 10000 ha. Licences may take any shape bordered by right angled corners.
- The application must state the primary mineral or minerals exploration programs are focused toward, if exploration discovers a separate economic commodity, the DNPM must be notified and this information will be noted on the title.
- The annual fee in the first term is US$1.03 per ha, with a subsequent US$ 1.55 per ha annual fee in the second term.
- The licensee must submit an exploration plan, time line, and budget to the DNPM; there are no other required work or expenditure commitments.
- Each licence requires a yearly report demonstrating data, interpretations, and expenditures.
- The law guarantees access to the exploration licence on any land whether surface rights are publically or privately held.
- The holder of the exploration licence must compensate the surface owner for occupation and any losses caused by the work.
- There is no legal framework for compensation, and at the exploration stage of mining each case will be treated on an individual basis.
- The renewal of a licence requires the licensee to have met with reporting requirements by presenting works conducted during the first 3 years and describing the necessity for an extension of the licence including the submittal of a new work plan and budget.
- Licences may be transferred subject to DNPM approval.
- A final report is due at the end of the term or on relinquishment.
- Most state DNPM offices DO NOT have a data library system that gives access to previous work. A new holder of an exploration licence can request access to previous work.
- A formal database showing past holdings does not exist.
- Once an exploration licence is relinquished the DNPM puts the licence up for auction ("Disponibilidade"). The concession is given to the party that presents the most aggressive exploration plan providing it has the apparent financial and technical means to conduct this work.
- If a period of 6 months passes without a bid on a concession that land becomes open.
- There may be very rare exceptions wherein the ministry permits an exploration title to remain intact for more than 6 years.
- There may be other departmental restrictions (State or Federal) placed on the access to sub-surface titles if the government has planned other uses for the land, be they environmental or industrial.