A package of three presidential decrees issued on July 25 this year included an update to the country’s legal framework for mining and significant increases in the CFEM, a tax applied to mining revenues – also known as royalties.
“The increase in mining costs is the most important outcome of these changes,” Valdir Farias said. Farias is ceo at Fioito Consultoria, a consultancy firm specialising in mining taxes.
“The main change is in the CFEM,” Pedro Henrique Jardim, a lawyer with consultancy Machado Meyer, added.
The tax rate on iron ore, for instance, would vary from 2% to 4% depending on international prices, compared with a previous flat rate of 2%.
Also, royalties for niobium would increase to 3% from the current rate of 2%; gold royalties would rise to 2% from 1%; while the rate for diamonds would go from 2% to 3%. But the royalties for mining goods used in construction would...