Brazil’s Para, the state where Vale SA (VALE5) has a third of its iron-ore output, will implement a new tax on mining production next month to increase control over natural resources, Governor Simao Jatene said.
Yesterday, Jatene presented to Brazil Mines and Energy Minister Edison Lobao two reports saying the proposal to charge 6.9 real ($3.78) a ton tax is legal.
“The tax is in effect starting in April,” Jatene said in an interview from Brasilia. “It will finance the state so it can form a database of mining activities, who does it, where and how much they’re doing it.”
The new tax, which was approved by the local house of representatives in December, initiated a debate over state rights. The tax comes at a time the federal government is pursuing legislation to increase royalties for the industry and Vale faces delays and cost increases in developing new projects to replace diminishing reserves at existing properties.
Vale, based in Rio de Janeiro, operates the world’s biggest iron-ore mine in Brazil’s Para state.
“It’s ruled by a reasonable principle, you can’t charge a tax that will bring the company down,” Jatene said.
To contact the reporter on this story: Maria Luiza Rabello in Brasilia Newsroom at mrabello@bloomberg.net
To contact the editors responsible for this story: Helder Marinho at hmarinho@bloomberg.net; Dale Crofts at dcrofts@bloomberg.net
Yesterday, Jatene presented to Brazil Mines and Energy Minister Edison Lobao two reports saying the proposal to charge 6.9 real ($3.78) a ton tax is legal.
“The tax is in effect starting in April,” Jatene said in an interview from Brasilia. “It will finance the state so it can form a database of mining activities, who does it, where and how much they’re doing it.”
The new tax, which was approved by the local house of representatives in December, initiated a debate over state rights. The tax comes at a time the federal government is pursuing legislation to increase royalties for the industry and Vale faces delays and cost increases in developing new projects to replace diminishing reserves at existing properties.
Vale, based in Rio de Janeiro, operates the world’s biggest iron-ore mine in Brazil’s Para state.
“It’s ruled by a reasonable principle, you can’t charge a tax that will bring the company down,” Jatene said.
To contact the reporter on this story: Maria Luiza Rabello in Brasilia Newsroom at mrabello@bloomberg.net
To contact the editors responsible for this story: Helder Marinho at hmarinho@bloomberg.net; Dale Crofts at dcrofts@bloomberg.net
