What miners can expect for environmental licensing under Lula

Oversight of Brazil’s mining sector is likely to step up during the new administration of Luiz Inácio Lula da Silva.

Government efforts to improve the reputation of the sector in the eyes of international investors are expected to focus on showing that the country is committed to combating illegal mining, especially gold extraction.

Eduardo Leão, sustainability manager at Canadian firm G Mining Ventures and a director of Brazil’s mining regulator ANM between 2018 and 2021, spoke with BNamericas about environmental licensing in the mining sector.

Leão also updates the status of the US$427mn Tocantinzinho gold project under development by G Mining in Pará state.

BNamericas: Under the new federal government, do you believe that environmental licensing procedures for mining projects in Brazil will be more rigid?

Leão: I don't think they'll be more rigid, because the environmental licensing procedures in Brazil have always been very strict.

At least with regard to mining projects, I can say that the licensing procedures with [environmental regulator] Ibama have always been very complex, even during the previous administration [of Jair Bolsonaro] when some people said things were slack. But in fact, this didn't happen in terms of licensing.

What I think will change in this current administration will be the issue of inspections, which I believe will be more rigid.

The current environment minister, Marina Silva, has a very strong agenda related to environmental preservation and, in view of this, what we can expect is more inspections, more supervision, more presence of authorities assessing whether there is illegal activity in regions sensitive to the environment, such as the Amazon, the Pantanal and regions of the Atlantic Forest.

BNamericas: The mines and energy ministry announced the creation of the national mineral policy council [CNPM]. What does that mean?

Leão: This news is very important. Since I was in the ANM I have tried to encourage the creation of this council.

This is important because it sets up a council that includes all stakeholders that are related in some way to mining projects, from companies and authorities to society.

This is a tool that, in the short term, will of course create a lot of debate among all the parties involved in projects, but it's a good tool to align interests.

Before the CNPM, the communities around the projects were the last to know that a mining project was going to be constructed and this created an atmosphere of animosity between the parties from the beginning. This will help improve the relationship between companies and communities.

BNamericas: How do you evaluate current efforts in Brazil to step up the fight against illegal gold mining?

Leão: Major inspection is nothing new for companies that already work in a legal way, as is the case of G Mining, which is in compliance, has external audits and works in a completely legal way.

What will be impacted are those small miners who operate informally and who put the gold they extract on the market, without using an electronic invoice, because the controls are fragile.

In fact, this is a major challenge in combating illegal mining, imposing the electronic invoice model. At ANM I tried to implement this, but we couldn't because it had a cost of 15mn reais [currently about US$3mn] and there was no budget to do it at that time.

BNamericas: Could the fight against illegal mining be beneficial to the sector in the medium term?

Leão: It should bring greater legal security to the investors because it shows that Brazil is taking this issue seriously, inhibiting any illegal activity.

This will have a positive effect on companies as well, as it improves the reputational perception of the entire segment.

BNamericas: Now talking about G Mining's Tocantinzinho project, at what stage is the project in terms of licensing?

Leão: We have about 700 people working on this project, we already have the mine installation license and the dam installation license.

The only thing I can't say is that the licensing procedure is 100% completed because we have to make some updates to this procedure because we've changed some aspects of the project's layout, but by April this update will be completed.

These licensing procedures are all at the state level and not at the federal government level.

Production at this project is scheduled to start in August 2024.