An Analysis of the Rate for Controlling, Monitoring and Supervision of Exploration and Mining Activities of Mineral Resources (TFRM)

Abstract

Recently, the Brazilian media reported the withdrawal of the rate on profit from mining of coal and iron ore by the government of Australia. In Australia this rate was created in 2012 to finance social programs. However, due to the drop in the value of mineral commodities, the government has reversed this trend and seeks to quash the law that created such a rate, while keeping its social program financial support. One can observe the opposite in Brazil, where the states of Minas Gerais, Pará, Amapá and Mato Grosso do Sul, created the Rate for Controlling, Monitoring and Supervision of Exploration and Mining Activities of Mineral Resources (TFRM). These states' rates have been grounds for numerous political, economic, administrative and legal discussions. This paper presents an analysis of state laws that created the TFRM, examines the ways taken by mining companies to question the constitutionality of these laws and concludes that the levy of TFRM breaks the principle of equality, penalizes mining, violates the precept contained in article 152 the Federal Constitution of 1988 and helps reduce the competitiveness of Brazilian mining.

Mining Law: In Search of Sustainable Mining

“…Normally, the presence of mining activity leads people to form villages around industries due to the availability of jobs and prospects for improving infrastructure in the region [36], causing a redistribution of the population in mining regions [40]. In fact, mining companies promote improvements such as paving the roads to access the villages, among others [26]. However, when the mining activity is no longer economically viable, incurring the closure of the mine, there is a real risk of becoming an environmental liability that society will need to bear.…”

“…In these studies, there are surveys about the environmental impacts, as well as the activity's social contributions [44]. Among the social functions of the activity, there is the generation of jobs, the increase in public collection through taxes, the provision of resources for production chains, improvement in local infrastructure, with the construction of roads, basic sanitation works, among others [16,26].…”