RIO DE JANEIRO Brazil's new mining code, a flagship policy of President Dilma Rousseff first announced in 2009, is unlikely to be passed before next year and could be ditched entirely if the government changes in upcoming elections, industry insiders say.
The impasse has meant miners have had projects delayed, others have rushed to lock in current terms, and some avoided the country altogether.
The shared experience – uncertainty and confusion in a sector which has often helped keep Brazil's accounts in the black - is indicative of issues plaguing Latin America's largest economy as government intervention has eroded investor confidence.
"In Brazil right now it is fair to say that we have four different mining codes," said Gilberto Calaes, a consultant specializing in relations between government and the mining industry.
"The one that is currently in use, Dilma's one, the edited version that is currently with congress and a rival one drawn up by the industry group for exploration companies," he explained.
Mining is a vital part of Brazil's economy, accounting for about a third of exports. The saga over this law comes when the sector is already out of favor due to concerns of a slowdown in China.
Industry group IBRAM estimated last year Brazil had missed out on 20 billion reais ($8.89 billion) of investment due to the uncertainty surrounding the code.
A resolution remains far off, according to the world's largest exporter of iron ore, Brazil's Vale (VALE5.SA).
"I don't think even the politicians can predict how long it will take given there are still so many stages," CEO Murilo Ferreira told reporters on a call last month.
The code is currently with the lower house of Brazil's Congress. It will then be passed to the Senate, where if any changes are made it will have to return to the lower house. When a consensus is reached it moves to the president to be made law.
Far from the corridors of power, the delay has hit smaller mining companies.
One young gold prospector trying to set up his first project had a crucial claim put on ice, resulting in extra costs difficult to bear as a start-up.
"Our first big claim was rejected due to a three-year freeze in claims processing to accommodate a new law that never even came to be," said the prospector, who asked not to be named to avoid any difficulties in future dealings with government agencies.
Brazil's department for mineral production DNPM declined to comment because the code remains in Congress.
It is not just lack of progress that has caused concern. A number of experts have issues with the code itself, saying it would kill exploration by squeezing out smaller players who often drive the discovery of new deposits.
As it was sent to congress, the code replaces a first come, first serve system for claims with an auction.
The idea was to stop miners from sitting on mineral-rich land by awarding rights to those with the means to develop it, not just whoever found it.
But such a system would penalize juniors unable to compete with bigger firms in a bidding war. For metal hunters it changes the whole motivation and skill of exploring.
Gone, they argue, will be the hours of perusing forgotten seismic surveys in dusty archives for an overlooked vein. It will be replaced by prospectuses and the gavel.
ALL ABOUT THE MONEY
A key government motivation for changing the 47-year-old code was to get more revenue from the mining industry - at the time thriving with commodity prices near record highs due to China's rapid growth.
Brazil wanted to raise its 1-2 percent royalty rate to be in line with regional peers of around 2-5 percent. It was also keen to mirror the influence it has in the oil sector where a central regulator sells rights to exploration and production blocks.
Today things look very different. Miners have had to cut costs and projects as they struggle to raise cash from investors angered by wasted profits during good years.
The oil boom in Brazil has also failed to live up to its hype, with government intervention cooling global interest.
As the markets have moved, so have Rousseff's priorities and influence.
"To push the mining code through now requires a level of political will and capital that the government is no longer able to afford," said Guilherme Vieira da Silva, a partner with Mayer Brown in Brazil. "Nothing is going to happen until next year."
And with the October election now wide open due to the late entry of Marina Silva following the death of presidential candidate Eduardo Campos in a plane crash, the code's fate is even less certain.
"If we see a new government come in, chances are the new code will be put aside," said Eduardo Martins, head of metals and mining at KPMG in Brazil.
For some this wouldn't be a bad thing.
Francisco Rohan, a partner at Mayer Brown and formerly the top lawyer at Vale, compared the code to a smelly goat.
"What happens when you take the smelly goat out of the room?," Rohan asked. "The room stops smelling and everyone is happy."
($1 = 2.25 reais)
(Editing by Todd Benson and Andrew Hay)