Volume 6, Number 5, Page 4

BRAZIL MINING LAW

The National Mining Agency

By Noronha Advogados

Draft Bill foresees the creation of the ANM - National Mining Agency

The Ministry of Energy and Mining officially presented a draft of a Bill for public consultation that provides for reform in Brazilian mining legislation. Once converted into Federal Law this Bill would revoke thirteen laws and six decrees that currently regulate mining activity.

Among the main proposals contained in the Bill, the following are most important. The National Mining Agency (ANM) will be created, under the same structure as the recently established National Oil Agency (ANP) and the National Electric Energy Agency (ANEEL). Not only will the ANM be concerned with the planning, inspection and exploitation of mineral resources, but also with providing flexibility and enhance development in the sector. These developments can be comprised of concession of mining exploitation rights with more efficiency, as well as the exercise of regulatory power by the State, including inspection at regional offices.

In the future, the ANM will be subject to a special governmental agency regime, being granted management, financial and net asset autonomy for the purpose of avoiding State interference in the Brazilian mining activities. The possibility of appointing inspectors and independent auditors will definitively reduce administrative costs and burdens. The inspectors and auditors will be in charge of evaluating research activities, which will be carried out through delegation of the Agency's functions to other public organs.

Another important innovation is the simplification of the concession and authorization process. This process will be comprised of a Mining Exploitation Right (TDM). The TDM is a document similar to that of real estate and shall include every phase of research and production, exempting a separate document for each phase, such as license for research and a production license. For the purpose of issuing the TDM, the Agency shall only require from the applicant the commitment of investments in research, thereby extinguishing the so-called complex Research Plan, which must currently to be approved by the DNPM.

Therefore, control exercised by the Agency and its regional offices over mining production will be directed to the results and not to the formal and bureaucratic compliance required nowadays.

The proposal for the creation of a National Mining Agency as well as further alterations contained in the Bill will complete the series of reforms in the sector.

Because of the reform of mining legislation, with the suppression of complex and confusing rules and guidelines, and the creation of an efficient regulating organ, the mining sector will become more attractive, especially to foreign investment.