New rules applicable to the assignment and mineral leases of mining rights among companies of the same economic group
On December 22, 2022, Brazil’s National Mining Agency (acronym in Portuguese “ANM”) published Resolution No. 127/2022, which introduces significant changes to the requests of assignment and mineral lease among companies of the same economic group.
As a rule, transfers of mining rights and applications for mineral leases are subject to prior consent and registration by ANM. As a result, exploration and mining activities can only be carried out by the assignee and lessee, as the case may be, after approval and registration by the ANM.
Resolution No. 127/2022 was published in order to simplify the process of transferring and leasing mineral rights among companies of the same economic group. Despite maintaining the requirement for prior consent and registration by the ANM, the Resolution establishes that in case the registration of applications for assignment and total leasing of mineral rights among companies of the same economic group is still pending, the assignee or lessee is entitled to:
i. carry out exploration or mining activities; and
ii. carry out other measures required to fulfill mining obligations and preserve mining rights.
Consequently, the Resolution equated applications for full mineral leases and assignment of rights among companies of the same economic group to the treatment previously established by the legislation, in regard to the assignment of mineral rights as a result of incorporation, merger, spin-off, bankruptcy or mortis causa of the holder.
In addition, the Resolution establishes that within the period between the filing of the application for assignment or lease and its respective registration by ANM, the assignor and assignee, and the lessor and lessee will be jointly liable for all mining obligations.
This change significantly impacts the operation of such parties, given that, within the context of assignments and applications for the registration of total leases among companies of the same economic group, the assignee or lessee can initiate exploration and mining activities immediately after such applications have been filed before the ANM.
As it is well known, the large volume of applications pending before the ANM has resulted in extended terms for analysis of applications for assignment and registration (extending to years of wait), which, in turn, resulted in considerable delays in operations.
The new rule entered into force on January 01, 2023.
Easement of government’s monopoly on nuclear minerals, possibility of pledging other types of mining rights as collaterals, and additional changes introduced by law no. 14,514/2002
On December 30, 2022, Law No. 14,514/2022 was published, introducing important changes to the mining sector. Among such changes, we highlight:
a. Simplification of rules applicable to the carrying out of operations involving the Government’s monopoly on nuclear minerals. This allows activities carried out by Indústrias Nucleares do Brasil S.A. (“INB”) – including exploration, mining activities and trade of nuclear ores and respective concentrates – to be carried out by private legal entities contracted by INB.
b. Extension of the maximum term of the exploration authorizations, from three to four years, extendable for another four years, except in cases expressly provided for in ANM rules that admit more than one extension of the term.
c. In addition to the mining permits and “manifestos de mina”, other types of mining rights (such as exploration authorizations and small-scale mining consents) can now be pledged as guarantee for financing purposes. Such measure was highly anticipated by the mineral sector.
d. Replacement of proof of funds or loan commitment for the implementation of the Plan for Economic Exploitation (“PAE”) – documentation required for the application for mining permits–, for a funds availability statement or a statement of commitment to seek financing, in order to effectively carry out the PAE and initiate operations in the mine, according to current or future regulation established by ANM.
c. ANM will be in charge of creating and overseeing the national register of mining structures, which will also encompass waste piles, mineral processing facilities and other structures provided for in the PAE.
The innovations brought by Law No. 14,514/2022 extend beyond the mere conversion of Provisional Measure No. 1,133 into law, introducing changes aimed at reducing red-tape procedures and stimulating access to financing for mining projects.
Decree establishes dam monitoring standards
On December 27, 2022, Decree No. 11,310 /2022 was published, which brought changes to the Brazilian Dam Safety Policy established through Law No. 12,334/2010 (acronym in Portuguese “PNSB”). The Decree also created the Interministerial Committee for Dam Safety.
It is worth noting that the PNSB does not apply solely to mining dams, but also to dams built to retain water for any type of use or industrial waste.
Below are matters provided for in Decree No. 11,310/2022:
Monitoring and inspection of dams
Inspection carried out by supervisory bodies will consist, among other procedures, in monitoring the fulfillment of entrepreneur’s responsibilities regarding the maintenance and safety of the dams, as well as investigating potential violations.
Communication with civil defense and protection authority
Supervisory bodies must inform the competent civil protection and defense authority if there is any risk of accidents.
Responsibilities of supervisory bodies
Supervisory bodies can:
• Establish complementary and specific criteria for the classification of dams according to risk category, potential associated damage and volume, provided that the overall criteria established the Brazilian National Council for Water Resources are met.
• Establish rules providing for the definition of high-risk dams. However, application of the PNSB based solely on such high-risk category will be subject to a future specific rule.
• Establish templates or standards for a Dam Safety Plan and an Emergency Action Plan, considering the requirements provided for in the Decree. Self-Rescue Zone and Secondary Safety Zone
The Decree establishes that the definitions of “Self-Rescue Zone” and “Secondary Safety Zone” must take into consideration:
• studies carried out to define the boundaries of the flood map;
• estimated time for downstream wave impact; and
• the area’s hydrodynamic risk.
Such requirements can be waived for water-retention dams whose potential associated damage is classified as low, or whose potential rupture does not present a risk of human death, provided that the entrepreneur implements the standards established by the supervisory body.
Guarantees
The requirement for security, insurance, surety or other financial or propter rem guarantees provided for in the Law that established the PNSB, will apply primarily for dams that are in alert conditions.
Another highlight of the Decree is the creation of the Interministerial Committee for Dam Safety – connected to the Executive Secretariat of the Presidential Chief of Staff – which will be deliberative and executive in nature, and whose competences will include:
• establish guidelines for the development of programs related to the implementation of the PNSB, within the scope of the Federal Government;
• coordinate the structure of ministries in regard to the implementation of the PNSB within the scope of the Federal Government;
• propose – to the Brazilian National Council for Water Resources and the central body of the National System of Protection and Civil Defense (SINPDEC), as well as other competent authorities –, guidelines regarding the alignment of the Brazilian Safety Dam Policy, the National Protection and Civil Defense Policy (PNPDEC) and other sectoral government policies; and
• monitor the activities of federal government bodies related to compliance with guidelines established by the Interministerial Committee for Dam Safety, as well as the recommendations provided by the Brazilian National Council for Water Sources to improve the safety of the works, if necessary.
The Interministerial Committee will be formed by representatives of:
• the Executive Secretariat of the Presidential Chief of Staff (coordinating duties);
• the Institutional Security Office of Brazil; and
• the Ministries of Agriculture; Livestock and Food Supply; Science, Technology and Innovations; Regional Development; the Environment; and Mines and Energy.
Click here to access the Decree in full.
Demarest’ Mining team is monitoring the updates of the industry and is available to provide any further clarifications that may be necessary.
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