According to the bill’s author, Congresswoman Dandara (PT)), the bill seeks to increase the funds destined for the sustainable development of areas impacted by mineral exploitation and allocate part of the profits from the activity to foster social areas, science, technology, and the environment. The bill now awaits the opinion of the Mines and Energy Committee (“MME”).
On September6, 2023, Bill No. 4367/2023 was filed with the Brazilian House of Representatives, amending Law No. 8001/1990 to increase the CFEM rate levied on lithium from 2% to 4%. The bill also authorizes the Federal Government to establish the Social Lithium Fund.
The bill’s author, Congresswoman Dandara justifies that the current level of the CFEM rate charged in Brazil for the exploitation of lithium is, in her words, "relatively low", compared to other countries. By way of example, she mentions that regulations in Australia establish a fixed rate of 5% over the sale value of lithium concentrate, while in Chile, royalty rates are charged according to the levels of revenue and margin obtained from the sale of lithium, ranging from zero to 34%.
The Congresswoman also argues that the growth of lithium exploitation in the country in 2022 ("lithium rush") caused environmental and social impacts that must be balanced to protect ecosystems and local communities, particularly in the region of Vale do Jequitinhonha/MG. This, according to the author, justify the increase in CFEM levied on its exploitation.
In general terms, the bill establishes that the Lithium Social Fund:
(i) aims to create a source of resources for the social development of regions affected by mineral exploitation, in the form of development and anti-poverty programs and projects in several areas;
(ii) At least 50% of the fund’s resources must be invested in education and at least 10% in scientific research and development (R&D);
(iii) will be financed by an additional 1% rate of CFEM over lithium exploitation activities, the proceeds of financial investments, and other resources destined for it by law.
The bill will follow the ordinary procedure and will be submitted to the aforementioned CME, as well as the Finance and Taxation Committee ("CFT") and the Constitution, Justice, and Citizenship Committee ("CCJC"). The bill was received by CME last Thursday (September 21, 2023).
Please refer to the full text of Bill No. 4367/2023 here.
The Mining and Tax Law Teams of Cescon Barrieu are available for any clarifications on the matter.
