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Brazil Mulls Mining Royalties Hike

August 2011 - Projects, Energy & Natural Resources . Legal Developments by Hassans.

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Brazil is considering plans to increase the rate of royalties paid by mining companies as part of wider reform of legislation governing the sector.

Mines and Energy Minister Edison Lobao has revealed that under the proposals, Brazilian mining companies are likely to face a doubling in the levy charged on domestic iron ore production.

The government is apparently considering increasing the rate from 2% to 4%, with president Dilma Rousseff expected to table legislation to that effect in parliament within a month.

Iron ore forms the most substantial part of Brazil's mining industry, and demand from China has driven up prices in recent years - a trend repeated elsewhere in Brazil's economy.

Were the legislation introduced, a cap on royalty payments of 10% of revenues is also anticipated.

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