Federal government discourages mayors of mining towns – 08/24/2023 – Market

When President Luiz Inácio Lula da Silva (PT) announced that the Ministry of Mines and Energy would be headed by a miner, mayors of mining towns in the country were hopeful.

The representatives were betting that, with a politician from Minas Gerais at the helm, the portfolio could meet the dammed-up demands of the municipalities that collect money from the sector —after all, the state is the stronghold of Brazilian mining.

However, almost nine months have passed since Alexandre Silveira (PSD) took office, and mayors say they haven’t seen much happen. This Thursday (24th), the federal government published in the Official Gazette a decree that changes the distribution of mining royalties to municipalities impacted by the sector.

These cities are those that do not have minerals in their territory, but are home, for example, to processing plants and piles of tailings and overburden, material removed from a mine with the aim of developing mining and which is not economically usable.

But, for the mayors, the document came late.

The heads of municipal executives have been asking for the decree to be published since December, when then-President Jair Bolsonaro (PL) signed a law that changes the distribution criteria for royalties, favoring cities that are home to the industrial part of mining companies and those cut by railroads.

“This decree was to have been published eight months ago, and three months ago Amig itself [Associação dos Municípios Mineradores de Minas e do Brasil] sent a model of the text to the ministry”, says Waldir Salvador, former mayor of Itabirito (MG), a mining town, and a consultant for the association.

With the delay, those impacted municipalities were unable to receive their royalties. This is because, for legal certainty, the ANM (National Mining Agency) cannot distribute the amount based on the rules that regulate the old law. Thus, these cities have been without royalties for almost nine months.

And there is no forecast of when they will be received again.

This is because the decree needs to be regulated by the ANM, which needs to hold hearings with the mayors. But the agency’s employees have been on strike since the beginning of the month, and the process is likely to be delayed.

ANM, responsible for regulating the sector, in addition to calculating and distributing mining royalties, is precarious, with little revenue and half of the staff.

The problems, point out the mayors, come from past administrations, but it was expected that Silveira would be quicker to solve them. The MME told the Sheet that strengthening the regulatory agency is one of the portfolio’s priorities.

The current minister is experienced in Minas Gerais politics: he was a federal deputy for two terms (elected in 2006 and 2010), state secretary for two portfolios in the government of Antonio Anastasia (2010-2014) and a senator for almost a year — he was an alternate for the former head and took office after Anastasia was appointed Minister of the TCU (Union Court of Auditors).

Silveira was also a candidate for the Senate in 2022, with the support of Lula, who was running for the Presidency. He came in second place, but expanded his support network with mayors — including those who today charge him with solving problems.

The pressure increased on the 14th, when Amig mayors participated in an event in the ministry’s auditorium precisely for the presentation of the decree published this Thursday. The association represents 51 cities, mostly from Minas Gerais, which concentrate almost 80% of the country’s mineral production.

In a note on the Amig website, the mayors said they left the event at the ministry dissatisfied.

“We were called to a ceremony full of pomp in which our voice was not really heard”, said the president of the association, José Fernando Aparecido de Oliveira (MDB), mayor of Conceição do Mato Dentro (MG). The organization has been asking for meetings with the minister for months.

After giving a speech about the publication of the decree, Silveira left the auditorium. According to those present, he needed to travel to Paraguay with President Lula, from where they would accompany the inauguration of the newly elected Santiago Peña. The following day, the minister had to return to Brazil, in the midst of a national blackout.

It was then left to the secretary of Geology, Mining and Mineral Transformation, Vitor Saback, to listen to the mayors.

“We want this ministry to stop being just the ministry of energy, oil and gas and start laying mines, and that this agency [ANM] be an important agency for the country”, said Oliveira in a loud voice.

“I’m not here to run my hand over anyone’s head or talk nice. I’m here to make a dramatic appeal regarding this situation that can no longer be prolonged,” he said. He was applauded.

The main demand is to resolve the ANM situation. In 2017, the DNPM (National Department of Mineral Production) was transformed into an agency, guaranteeing greater autonomy to the body. Since then, however, the agency has lost employees, who are retiring or migrating to the private sector.

According to Sinagências, the union that represents employees of regulatory agencies, the DNPM had 1,196 employees in 2010. According to the ANM itself, when the agency was created there were 840 and today there are 654 – one third are eligible for retirement.

The problems also delayed the royalties transferred to the municipalities that have ore reserves in their territories – the transfer is two months late.

To analyze the self-declarations of the mining companies that serve as the basis for calculating royalties, the agency has only four inspectors, points out the entity.

Today, 7,387 companies pay royalties, and according to the ANM there are 35,000 processes in the queue to be inspected. Thus, each of the four employees would have to oversee at least 8,000 processes.

ANM did not respond to the amount of the dammed amount. However, considering the monthly average of the government’s estimate in relation to the collection of royalties this year, the value would be R$ 1.83 billion.

Last Friday (18), Silveira met with Sinagências and promised to commit to resolving the imbroglios. In a note, the MME stated that the minister “maintains a direct dialogue with representatives of the category and with the Ministry of Management to seek a solution”.

The folder also said that it hopes to have a solution agreed with the servers by the 31st, the deadline for submitting the 2024 budget bill.

When contacted, the Ministry of Management and Innovation stated that the government proposed to increase the salary of civil servants in a staggered way over three years and said it was sensitive and “doing what is possible, within the budgetary limits of the federal government”.

The folder also said that it plans to authorize a new public tender for the ANM later this year.

Meanwhile, Silveira is urged to come up with solutions. “If you are a minister, you have to fight within the government so that your area has personnel, money, public policies, but we have not seen the minister have a single attitude to structure the agency”, says Salvador.

Marco Antônio Lage (PSB), mayor of Itabira (MG) and supporter of the minister in last year’s campaign, calls for agility.

“We understand that there are eight months of government with many problems inherited from the past administration, but, taking into account that mining is one of the most important sectors in the country, what we expected is that there would be quicker responses”, he said. “If you end the year this way, the expectation will turn to frustration.”