Brazil: Overhaul of mining sector likely to face significant political resistance

23 Nov 2016

Brazil: Overhaul of mining sector likely to face s...
  •   President Michel Temer is in the process of an ambitious attempt to attract investment to the mining sector through a planned overhaul of the mining code and reforms to key regulatory agencies. 
  •   Although many of these initiatives will be welcomed by investors, particularly plans to simplify the acquisition of mining licences, popular opposition and political instability could still delay the plans.
  •   Rewriting the mining code is likely to be particularly challenging in the current political climate, increasing the risk to mining investors, who could face tougher terms and protracted uncertainty.


As part of broader efforts to stimulate the economy and improve the investment climate, President Michel Temer’s government has prioritised attracting greater private investment in the mining sector. Since assuming office in May, Temer has reshuffled personnel and prioritised efforts to create more opportunities for private companies. In November, the government opened bidding for mining projects in Pernambuco, Paraiaba, Rio Grande do Sul, Goias and Tocantins states as part of a larger infrastructure concession programme. The administration hopes to build on this over 2017, when mining agency National Department of Mineral Production (DNPM) plans to sell some 22,000 mineral exploration rights across Brazil. In addition, the government also plans to offer nine strategic mining concessions in 2017. This flurry of activity follows the appointment of Eduardo Ledsham, a former top official at Brazil-based mining giant Vale, as head of the geologic survey mineral geological survey agency (CRPM). 

Despite an ambitious agenda to create more investment opportunities, the government has acknowledged the need for further reforms to attract higher levels of investment. In an interview with Reuters published in October, Ledsham said that Brazil’s mining sector had been frozen since 2012 and that his goal was to bring about more transparency and greater certainty to reassure investors. The CRPM chief noted that Brazil had around 30 percent of the mining investment per square kilometre of mining giants Canada and Australia. Lower levels of investment and activity in Brazil stem in part from regulatory concerns, including an outdated mining code and political uncertainty related to far reaching corruption scandals, structural economic challenges and political deadlock.  

Political realities will make it difficult for Temer to resolve the country’s deeper challenges, but his administration has made some progress in removing obstacles to greater private investment in key sectors, including in oil and gas where Congress voted in October to relax rules on state oil company Petrobras’ participation in offshore projects. In the mining sector, the government has also backed specific reforms. For example, CRPM head Ledsham has pledged to simplify rules for acquiring mining licenses and to improve coordination between his agency and DNPM, steps that would address key concerns raised by mining companies. The government has also said it supports introducing a new mining code, but previous attempts to introduce new legislation have been stalled for several years due to political and industry resistance. A new mining code was drafted under President Dilma Rousseff, but the current administration has said that that version was too focused on increasing the state’s share of revenues and has called for it be rewritten to focus on incentivising investment.  

Although the Temer administration has established solid pro-business credentials, any attempt to carry out an overhaul of the mining sector would increase the level of uncertainty facing investors. Moreover, the outcome of such a process is not guaranteed given the current political situation. Temer’s pro-businesses reforms are popular with investors, but his economic policies have provoked mass protests and strikes while his personal unfavorability rating rose to 52 percent in October according to pollster MDA. The president and a number of senior figures in government and Congress have been implicated in corruption scandals that could eventually make their positions untenable.  

As such, the long-term prospects for the current administration are uncertain and the persistent cycle of political crises facing the government will only add to the complexity of an already challenging process to rewrite Brazil’s entire mining code. Any process to draft new mining legislation will be influenced by lingering resentment over the deadly collapse of a dam at the Samarco mine in November 2015, which could make it difficult for lawmakers to resist pressure to enact tougher environmental and safety requirements on the industry. In the important mining state of Minas Gerais, where the Samarco disaster took place, officials have called for greater oversight at the national level and activists have said existing regulations rely too heavily on self-reporting by industry. Based on the current political climate, a more effective approach may to be focus on specific terms or areas of the code, as Congress has already done in oil and gas, rather than reworking the entire regulatory regime.  

Share this article


Your free global geopolitical
risk dashboard

PGI’s Risk Portal tool provides daily intelligence feeds, country threat assessments and analytical insights, enabling clients to track, understand and navigate geopolitical threats.

The Risk Portal gives users up-to-date information and analysis on global affairs.

The Risk Portal allows users to visualise information in a unique and instantly understandable way. Mapping filters enable the visualisation of incidents by threat category, time period, perpetrator and target type.

Risk Portal users can upgrade their accounts to include the Report Builder and Country Profile Generator features. The Report Builder allows users to select information, data and images from the Risk Portal and create bespoke reports and emails.

Subscribers to PGI’s Bespoke services receive tailored analysis on specific sectors and geographies of interest, delivered at a frequency they determine.

Visit the Risk Portal

Subscribe to our Cyber Bytes Newsletter

Keep yourself in the loop with PGI by signing up to our Monthly Cyber Bytes email. You will receive updates, tips and narrative around what has been happening in the world of information security.

Get in touch today

For more information on how we can help you or your business, please contact us via:

Related News

CISMP, CISSP and CISM - what's in an acronym?

20 Mar 2017

There is a wide range of different security courses available, and a mind-boggling array of certific...

Read news article

International Womens Day - Pioneering Women in Tec...

08 Mar 2017

Pioneering Women in Technology – Katherine JohnsonThe Oscar season has been and gone. The...

Read news article

Law Firms and why they need cyber security

06 Mar 2017

Suffering a data breach can be devastating for any company but for law firms the impacts can be part...

Read news article
Back to the News Hub

Follow us

+44 (0)207 887 2699
©2017 PGI - Protection Group International Ltd. All rights reserved.
PGI - Protection Group International Ltd is registered in England & Wales, reg. no. 07967865
Registered address: Cascades 1, 1190 Park Avenue, Aztec W, Almondsbury, Bristol BS32 4FP