* Mining sector says languishing as new rules awaited
* Quarter of expected Brazil mining investment on hold
* Congress could shelve vote on bill
By Leonardo Goy
BRASILIA, May 23 Brazil's government plans to
submit its mining reform bill to Congress in June rather than
this month, energy minister Edison Lobao said on Thursday,
prolonging a wait that is slowing investment in mineral
The bill, first unveiled in 2009, is expected to create an
independent regulator, establish auctions for strategic minerals
and impose tougher exploration and development schedules for
The expected changes are significant enough to have prompted
companies to delay billions of dollars in planned investments as
they wait for a clearer idea of the legal framework that will
govern them and help determine their bottom line.
Government sources said the wait could be further extended
because President Dilma Rousseff does not want to put the bill
before lawmakers any time soon due to growing divisions in her
coalition majority in Congress.
Rousseff's government is just getting over intense wrangling
within its 18-party coalition to pass a law that would open the
country's ports to more private investment, boosting efficiency.
Lobao, however, denied accusations that the government was
deliberately delaying the mining legislation to allow the dust
to settle in Congress.
"The Congress is settled, the government has a functioning
base there," Lobao said, without answering a reporter's question
on whether the draft bill had been finalized.
Mining is an important part of some states' economies and
revenue. Legislative reform of the oil and gas industry has been
one of the most difficult and lengthy bills the government has
tried to move through Congress. The fight among states over
royalty redistribution in the oil reform bill is being settled
by the Supreme Court.
Brazil is the world's top iron ore exporter and produces a
variety of other minerals, with gold and copper output in
particular expected to surge in the next few years. Interest is
also growing in its reserves of rare earth minerals.
Plans to revise the mining code have been a bone of
contention between the government and private sector. The
government is likely to raise royalties, which it says are lower
than in many countries. Miners counter that a host of other
taxes payable make Brazil an expensive place to mine.
Cinthia Rodrigues, head of research and development at the
Brazilian mining industry association Ibram, said about $20
billion of $75 billion in expected mining investments between
2012 and 2016 was being delayed as miners waited for a clearer
idea of the sector's long-term future.
A former senior government mining official now working in
the private sector said royalty hikes the government would
likely introduce showed it was out of touch with changing
realities in the sector since the bill was announced.
Mining activity plunged then made a rapid recovery around
the time of the 2008/09 financial crisis but cooling demand in
China, Brazil's top iron ore buyer, for example, has lowered
prices for the steel ingredient and tightened producer margins.
The private-sector miner said his and other companies had
begun to lay off staff, particularly geologists, since the
government halted issuing new exploration permits while it waits
for the bill to pass.
"A year ago you couldn't find an experienced geologist
anywhere. Now you've got more senior geologists sending in their
CV," he said.
(Additional reporting by Jeferson Ribeiro and Peter Murphy;
Writing by Peter Murphy and Reese Ewing; Editing by Caroline
Stauffer and Dale Hudson)