The world's largest iron ore miner, Vale SA of Brazil, through its CEO Murilo Ferreira, said that the government's plan to double the charges for royalties for the sector would result in a major impact on the mining companies operating in the company.
While the total revenue for mining royalties would increase from 1.7 billion reais to 4.2 billion reais or US$1.93 billion.
Brazil for its part has been studying since 2008 on revisions to its mining laws, such as the increase of royalties charged to mining companies. Currently, the Brazilian government has been charging participation taxes at a rate of 40% on oil projects. The prospect of a new levy has been hanging over the head of Vale and other mining companies.
According to the statement, Edison Lobao said "We are re-examining the special participation tax and we may not include it in the new framework because of domestic and international reasons. We are increasing royalties quite a bit, practically doubling them. We are leaning toward not having a special participation."
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