RIO DE JANEIRO/BRASILIA, Nov 23 (Reuters) – Brazil’s Vale SA , the world’s largest iron ore producer, said on Thursday that a hike in the country’s royalty rates for the mineral could compromise its ability to maintain high-cost mines and would hurt its ability to compete.
Congress passed the higher royalties in votes on Wednesday with the bill now moving to President Michel Temer for signature. Vale said in a statement that it hoped Temer would veto some of the changes to the proposal made by Congress.
“Congress has made profound changes to the original text, resulting in a model that affects our competitiveness, especially at a time of depressed prices, as well as compromises the maintenance and operation of high-cost mines,” Vale said in a statement.
The higher royalties are one of three planks of Temer’s reform proposal for the sector aimed at boosting the economy, even as Vale praised separately the proposed creation of a new mining regulator to speed up approvals.
Proponents argue that the new regulator, along with a third proposal to streamline the mining code, offset the impact of higher royalties with greater efficiency. Congress has yet to fully approve those other measures.