'Fat cow' times: Brazil stands out as one of the world's main exporters of iron ore, lithium, niobium and graphene

The mining industry in Brazil is going through a phase of significant changes, with the prices of iron ore, lithium and niobium reaching historic highs in international markets. In recent times, the international market has particularly witnessed a constant escalation in the price per ton of iron ore. This trend, to a large extent, is fueled by China's voracious demand for ore, which, for example, does not hesitate to pay up to US$118,05 for a ton of iron, with delivery scheduled for January 2024.

However, even in the face of this bonanza, Brazil, which stands out as one of the world's main suppliers of iron ore, lithium and niobium, is experiencing an impasse: some mining companies are reluctant to pay Financial Compensation for the Exploration of Mineral Resources ( CFEM) in a fair way, which generates controversies in relation to taxation and environmental impact.

The fiscal and environmental liabilities of mining companies in Brazil

An additional challenge is the limited capacity of the National Mining Agency (ANM) to adequately monitor the amount of minerals extracted and ensure that mining companies comply with their fiscal and environmental obligations. This raises questions about the effectiveness of sector regulation and the need for more stringent measures to ensure compliance.

Federal deputy Dandara, representative of Minas Gerais, one of the main mining hubs in Brazil, announced a relevant initiative in the Chamber of Deputies. It proposes increasing the CFEM not only for iron ore, but also for lithium and niobium, from 2% to 4%.

The parliamentarian highlights that mining companies in Brazil accumulate invaluable tax liabilities, while states and municipalities face financial difficulties in dealing with the damage caused by mining activity. Such damage is manifested in urban mobility, roads and public safety, and it is imperative that mining companies assume a fair share of responsibility in this equation. “The fiscal liabilities of mining companies in Brazil are invaluable, while states and municipalities live in poverty, repairing the damage they cause to urban mobility, roads and public safety”, concluded Dandara.

As mineral prices continue to rise and pressure for a more robust CFEM grows, it is clear that the mining sector is facing a time of assessment and change in Brazil. It is imperative to find a balance that promotes economic development, but also guarantees the protection of the environment and the fair distribution of resources generated by mineral exploration.

Export of ores and graphene in Brazil

In addition to traditional ores, such as iron, lithium and niobium, Brazil has stood out in the export of high-tech materials, such as graphene. This substance with unique properties has been the subject of research and development around the world. The expansion of this market could represent a new source of revenue for the country, but it also raises questions about appropriate regulation and taxation.