Chinese state companies’ entrance at the Brazilian mineral sector makes urgent the approval need of a new legal mark to replace mineral legislation in force that is from 1940. The alert has been done by the Deputies connected to the theme who says the subject has not been receiving the due repercussion at the Congress and Executive.

Since the end of the last year, Chinese enterprises have been arriving a lot at the Country, and buying mining companies to furnish an industry at accelerated growth. Instituto Brasileiro de Mineração (Ibram) evaluates that the Chinese already have 1.5% of Brazilian iron reserves.

Chinese state companies have been purchasing medium and small mining companies that have deposit concession. With a lot of financial resources, they can get mines at reasonable prices. “It is a Chinese business”, Deputy José Fernando Aparecido de Oliveira said. In 2008, the Brazilian mineral production had generated R$ 51 billion.

Different Game
Representatives’ preoccupation is that state companies’ presence makes the game different to Brazil: instead of market rules, these state companies are moved by China’s sovereign needs. “A private company is worried about profits, supply and demand but a state company is subject to the Chinese government. That makes all different and can turn it difficult for the Country’s autonomy”, Deputy Arnaldo Jardim said.

He and the other Representatives insist to emphasize that Brazil cannot adopt a xenophobic attitude against the foreign investment, but should require safeguards in some cases. “The international capital should come for the Country’s development. When it is backed by a foreign nation, this should be analyzed carefully. There has been negligence for the government and the Congress, and more than this, there has been a legislative vacuum”, Jardim said.

For him, Chinese state company entrance at the mining market raises a discussion similar to that of land purchase by foreigners. The same observation has been done by the President of Committee on Foreign Relations and National Defense, Deputy Emanuel Fernandes. “We are worried about it. We must raise these two issues that have to do with the Country’s sovereignty”, Fernandes said.

He affirmed that both the debates can be done together during the procedures of the Bill 5655/09 from the Executive that replaces the current Foreigner’s Statute (Bill 6.815/80).

Agency
Deputy José Fernando Aparecido de Oliveira believes that the Chinese state company presence is only the tip of a major problem: the lack of an adequate legislation for the mineral sector. According to him, Brazil needs a new legal mark for this activity that encloses a regulatory agency creation and the value redefinition of royalties paid to the producer states and cities. “We need to have an institutional framework for the mining, and start seeing it as an Estate policy and not as a palliative government policy with free concessions and miserable royalties”, Oliveira said. He is the author of five projects on mining, and of Proposal to Amend the Constitution (PEC) 433/09, which authorizes a regulatory agency creation, responsible for mineral resource exploring concession.

The Deputy believes that the mineral will be the most important commodity of the century, because it does not have perfect substitutes. That, according to him, requires from Brazil a long-term policy adoption, in order the Country to be able to extract better earnings from this wealth. “We have been going toward a decarburized economy. Petroleum can be replaced into the car, but not the mineral. Do you think iron can be replaced nowadays?”, he asked.

Aparecido de Oliveira criticized the government for not having sent, until now, a project with the new legal mark for mining. For him, this subject should be dealt with the maximum urgency by the Executive and the Congress.

Translation - Grupo Solucion-SP Language/Márcia Regina Monteiro Ferreira