Brazil plans to boost iron-ore royalties, cut fertilizer tax

Date:10-11-2011

Brazil plans to boost taxes on iron ore while cutting the levy on fertilizers as part of a plan to overhaul mining regulations in the South American nation, a Mining Ministry official said.

The government is studying a plan to double the royalty on iron ore to 4 percent of gross revenue from 2 percent of net sales now, Claudio Scliar, the ministry’s secretary for geology and mining, said in an interview. The levy on fertilizers may be reduced from 3 percent to prompt producers to increase domestic output of the crop nutrients, he said, declining to specify the size of the cut.

"For some minerals, the idea is to cut the tax,” Scliar said. “We want to encourage the production of potassium in the country instead of importing it.”

Brazil’s government has shifted its focus to mining after boosting state control over the oil industry in 2009. The ministry aims to send Congress three bills this month to alter minerals royalties, change the way mining concessions are granted and create a new regulating body, Scliar said.

President Dilma Rousseff is likely to make final changes in the new rules and prices, he said, adding that the government is working to craft legislation that won’t make Brazilian companies less competitive in foreign markets.

Vale SA, the world’s largest iron-ore exporter, is studying a “significant” rare-earth deposit in Brazil, he said. The company acquired the deposit when it purchased Fertilizantes Fosfatados SA in 2010. Vale’s press office declined to comment.

Vale rose 59 centavos, or 1.5 percent, to 39.29 reais in Sao Paulo trading at 2:51 New York time. The stock has fallen 19 percent this year, less than the 24 percent drop for the Bovespa index.