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Brazil hikes iron ore royalties
Source:Sydney Morning Herald   Time:2017-07-26 11:10:02

Brazil's government unveiled sweeping changes to its mining code, boosting royalties in the latest move to reduce a budget deficit amid a sluggish recovery from the country's worst recession on record.

Royalties for iron ore will rise to as much as 4 per cent, depending on market prices, from 2 per cent currently. The new rules, effective immediately, include the creation of a new agency to oversee the mining industry.

Brazil has tried to modernise mining regulations dating from 1960, but a bill drawing up a new mining code has been stalled in Congress for years, creating uncertainty in the industry and discouraging investment.

Political turmoil and a collapse in commodity prices impeded the advance of reforms, but efforts to control a bulging budget deficit have led the government to focus on raising royalties.

Officials said in December that the government would break the bill into three parts to ease passage through Congress: the creation of a new regulator, government revenue from the sector and rules governing mineral extraction.

Brazil's Vale this month said iron ore output would close the year near the bottom of its forecast of 360 million to 380 million tonnes, despite record production for a second quarter in the April-to-June period.


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