Brazil mining bill to test Rousseff's relationship with investors

Mon Jun 17, 2013 3:45pm EDT
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* Bill seen doubling mining royalty to 4 percent

* Govt. expected to set up new mining regulator

* Some future rights likely to be sold at auction

By Jeb Blount

RIO DE JANEIRO, June 17 (Reuters) - Brazil, the world's second-largest producer of iron ore and a major producer of key metals, plans to unveil a bill overhauling its 46-year-old mining law on Tuesday in President Dilma Rousseff's latest effort to tighten state control of natural resources.

The bill will also test the government's efforts to reduce tensions with investors, many of whom believe Rousseff's economic polices are erratic and her attitude toward business "heavy handed".

Her previous reforms of the oil and electricity industries, designed when she was chief of staff to her predecessor and implemented during her presidency, have triggered a surge in costs and a decline in revenue in those industries, causihg share prices to fall.

In addition to iron ore, Brazil is also a major producer of copper, gold, bauxite, nickel and manganese.

The mining industry also faces a slowdown as growth eases in China, the main mineral and metals markets. When the bill was first proposed in 2009, the industry was in one of its most prosperous periods ever, despite the impact of the U.S. real estate and banking crisis.   Continued...