CHAPTER 14 AN OVERVIEW OF GOLD PROSPECTING IN BRAZIL—AND—UBI LEX NON DISTINGUIT: MINING COMPANIES AND THE RELATIONS WITH PROSPECTING—THE CASE OF GOLD MINING IN BRAZIL
| Jurisdiction | Derecho Internacional |
(Nov 1997)
AN OVERVIEW OF GOLD PROSPECTING IN BRAZIL—AND—UBI LEX NON DISTINGUIT: MINING COMPANIES AND THE RELATIONS WITH PROSPECTING—THE CASE OF GOLD MINING IN BRAZIL
Carlos Alberto Lacerda
Maria Laura Barreto
Veirano e Advogados Associados
Rio de Janeiro, Brazil
AN OVERVIEW OF GOLD PROSPECTING IN BRAZIL
SUMMARY
I. INTRODUCTION
II. ASPECTS OF BRAZILIAN LEGISLATION
II.1. The New Federal Constitution
II.2. The Basis of Mining Legislation
II.3. The Principles of Environmental Legislation
III. PROSPECTING ACTIVITY IN BRAZIL
III.1. The Profile of the Brazilian Prospector
III.2. The Reality of the Prospecting Site
III.3. Prospecting Activity
III.4. The Juridical Nature of Prospecting Extraction
IV. CONCLUSION
VII. EXHIBITS
VIII. BIBLIOGRAPHIES
SUMMARY
I. Introduction
Competition among markets has become more significant since the end of the cold war. With the age of globalization, the world market for gold has sustained a systematic reduction in the price of the metal. It is unlikely that the price will reach the levels of the past. What is certain, though, is that the gold market more and more imposes its own rhythm; — and the countries which produce mineral wealth must adapt to global requirements.
Brazil could not remain outside this scenario. Today, mining directed to one sole market is practically unthinkable.
Let us take the case of prospecting activity in Brazil, which underwent dizzy growth in the seventies and eighties, mainly as a result of the price of gold, but which today faces an unprecedented retraction, in the face of current market conditions; — particularly the price of gold.
History has shown that mining activities require, and will require ever more, methods able to produce technically cheaper mineral goods. Unfortunately, prospecting activity is unable to keep its activities compatible with the current conditioning factors.
As a result, more and more mining companies which operate in Brazil are taking over this space, basically due to the excellent conditions of these geological ambients where the prospectors have been active.
This work will seek to demonstrate this opportunity.
II — Aspects of Brazilian Mining Legislation
II.1 —The New Federal Constitution
The Brazilian Constitution, promulgated on October 5 1988, lays down that the soil (surface lands) is separate from the sub-soil (mineral resources) for the purposes of exploitation and its industrial use. Thus, the owner of the land is not the owner of the sub-soil, and will only be entitled to a royalty on the value of the minerals extracted from his lands. Why is this? It is just that mineral resources and deposits belong to the Brazilian Government.
As mineral resources are state property, the Federal Constitution allows the Brazilian Government to transfer the right to exploit them, and whoever is authorized to this end will be the owner of the mineral good extracted.
Thus one notes that the mineral extracted received differentiated treatment from the authors of our Constitution. For as long as it is contained in its natural form, as a mineral resource, and in the deposit, it will belong to the Brazilian Government. When removed from the depths of the earth, it is transformed into merchandise — a commodity, and becomes the property of the party legally authorized to extract it.
The Federal Constitution determines, moreover, that only Brazilian citizens and Brazilian companies may act in mining, such companies to be constituted according to Brazilian law with their head office and management in the Country. The Federal Constitution, amended in 1995, allows for participation by foreign capital, in a totally autonomous manner, in the activities of authorization for exploration and the concession of industrial mining.
II.2. The Basis of Mining Legislation
The Mining Code (CODIGO), promulgated by Decree-Law No. 227, of February 28 1967, is the basic instrument which regulates the activities of the Brazilian Mining Industry. It lays down the forms of utilizing mineral resources, and establishes the rights and obligations of those who take part in mining activities in Brazil.
It falls to the National Department of Mineral Production (DNPM), an autarkic body linked to the Ministry of Mines and Energy (MME), which are organs of the Brazilian Government, to stimulate, inspect, and have fulfilled all the rules laid down in the Mining Code and complementary legislation.
The Code establishes some regimes for the utilization of mineral goods, although the present study will only address the regimes (i) of authorization and concession of industrial mining, and (ii) prospecting permits.
II.2.1. Regime of Authorization for Exploration and Concession of Industrial Mining
This regime is divided into two phases. The first is denominated authorization for mineral exploration, by which the interested party must apply to the DNPM for authorization to explore (research) a mineral deposit of the industrial type. After analysis of the application, and verification that the area sought is free, the Director of the DNPM issues the title of Exploration License, under which the interested party will have a certain period to carry out the works of identification and quantification of the mineral good he seeks.
Upon completing such works, the interested party will present a Report to the DNPM, which is to contain all the technical and informative elements which demonstrate, or not, the existence of an economically viable mineral deposit. The DNPM will then make an inspection of the site, so as to check the feasibility of the work, and provided the deposits are proven to exist, the DNPM will approve the report, by publication of a specific order in the Official Gazette. This step closes the phase of authorization for exploration.
From this point onwards, the second phase comes into play, known as the Concession of Industrial Mining, by which the interested party will have a term of 1 year; — counting from the date of publication of the order, to present to the DNPM the project for extraction and treatment of the mineral measured in the first phase. This period may be extended.
Once this project is approved, the DNPM will ask the interested party to obtain from the competent organ the ENVIRONMENTAL LICENSE, the object of which will be to establish the precautions and obligations to be observed by the interested party for the preservation of the environment in the location of the deposit. Only after presentation of this license will the Ministry of Mines and Energy issue the title of Mining Concession.
As of this time the interested party, now denominated concessionaire, will be legally qualified to extract, treat, industrialize and commercialize the mineral contained in the deposit. The Concession of Industrial Mining will have an indeterminate duration, and may be exploited until the bed is worked out.
II.2.2. Regime of Prospecting Permit
This is the immediate utilization of certain mineral goods established in Law No. 7,805, of July 18 1989, which instituted this legal mechanism, known generically as Prospecting Permit. Only Brazilian citizens and prospectors' cooperatives may apply, through submittal of a request to the DNPM. After an examination of the legal conditions of the application, and verification that the area is free, the DNPM will ask the interested to obtain the ENVIRONMENTAL LICENSE from the competent organ. Only after presentation of this license will the Director of the DNPM issue the Prospecting Permit. This permit for prospecting extraction will have a term of 5 years, and may be renewed, at the discretion of the DNPM.
As the mineral good will be utilized immediately, it will not be necessary for the interested party, denominated permit-holder, to effect the work of measuring the mineral deposit. Suffice, for instance, for gold to be found in its secondary form (alluvial, colluvial or effluvial), and the law will allow its exploitation under this regime.
II.3. The Principles of Environmental Legislation
The academics have always been concerned with the various forms of mining; — whether regular and undertaken by businessmen, or the government or prospectors. These academics have sought, through technical-scientific knowledge, to obtain the best methods and processes to make the extraction of mineral goods highly productive. Besides this, today it is almost impossible to develop industrial or prospecting extraction without the undertaking falling within the norms imposed by the environmental organs. Even the prospectors, who in the past did not respect even the minimum of environmental rules, today are adjusting to environmental matters.
In view of the importance of environmental issues, Brazil has become concerned with adopting all the practices necessary for equilibrium in the implantation and maintenance of mining undertakings, trying to attain sustainable and ecologically-correct development. One proof of this action is the recent conclusion of a work entitled "Environmental Guidelines for the Mining Sector — (1997)" drawn up by the Ministry of the Environment, Hydric Resources and Legal Amazonia, which addresses this theme in the following manner:
"AGENDA 21, an important outcome of the United Nations Conference for the Environment and Development, — UNCED, 1992, in its first chapter, stresses government responsibility in the establishment of strategies, plans and policies for compatibility between the environment and development.
In this context, the Ministry of the Environment, Hydric Resources and Legal Amazonia — MMA, with the support of the United Nations Development Program — UNDP, within the area of the project BTA/90/005 selected the mining sector as one of the priorities, and developed the document "Environmental Guidelines for the Mining Sector" which establishes the...
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