Regulatory Governance in the Mining Sector in Brazil

1. Assessment and recommendations

Overarching issues

Assessment

Issue 1: There is a negative perception of the public towards mining activities in Brazil; an effective regulatory and policy framework and a strong and agile National Mining Agency are likely to contribute to reduce this perception, amongst other actions

A common element identified by the review team was the existence of a negative perception by the public towards mining activities in Brazil. Several groups of stakeholders – including public officials at federal and regional level, private and business representatives, academics and experts, amongst other – raised this as an issue, which seems to permeate across the Brazilian society.

The negative sentiment towards mining activities in Brazil could be traced to historic events and cultural attitudes, dating to colonial times or to the model of mining activities from several decades ago. In these historical views, the mining sector is characterised by having a diminished role in policy objectives on labour safety or environmental protection, in favour of economic profit, mainly by large companies.

Undoubtedly, one of the main reasons which appear to have exacerbated this negative perception are the safety accidents of Mariana (2015) and Brumadinho (2019). These accidents unveiled a combination of poor performance by the former National Department of Mineral Production (DNPM) in the case of the 2015 accident, the negligence of private companies in their reporting and risk-management duties, coupled with failures in the regulatory enforcement and supervision duties of government agencies. The Brazilian government has taken steps to remedy the consequences and to prevent any future similar events, both from the policy and regulatory angles, including reforms to create and strengthen the ANM. Yet, a negative perception on mining by both the communities where these activities take place and by society in general seems to be widespread.

This negative perception is at odds with the economic importance of the mining sector in Brazil, which in 2018 amounted to 2.44% of the GDP (Ministério de Minas e Energia, 2020[1]). The question to tackle is how to reconcile a sector of such an economic significance, which contributes to the creation of jobs and wealth for localities, regions, and for the country as whole, with the public perception.

There is a clear need to show the positive net effects of mining activities to the population. Additionally, there is a need to build community trust through transparency and ongoing engagement to demonstrate that the regulatory regime is effective in balancing commercial and social objectives. The Brazilian government is taking action to tackle this challenge as shown by the Mining and Development Program (PMD) launched by the Ministry of Mines and Energy in September 2020. The PMD defines the Government's agenda for the country's mineral sector. The PMD encompasses 10 plans and 110 goals for the period 2020/23 and aims at the quantitative and qualitative growth of mining in Brazil. In particular, the PMD has a series of goals related to improving the social perception of the Brazilian mineral sector, and whose actions for implementation are already underway.

While several government actions are needed to address these challenges, and many are already being undertaken as part of the PMD, an effective and transparent regulatory and policy framework and a strong, independent and agile National Mining Agency are also likely to contribute to address them.

Clear and cost-effective laws and regulations in the mining sector, and their effective implementation and enforcement, contribute to the achievement of public policy objectives, which should reflect a balance between economic objectives, as well as environmental and worker´s protection, amongst others. Similarly, well-resourced regulatory agencies in the sector, such as the National Mining Agency, with the capacity to foresee public policy challenges and tackle them timely and effectively, are a necessary element in the pursuit of these objectives.

Hence, it is key to address the issues identified in this paper, which include a combination of gaps in the regulatory framework for the mining industry in Brazil, the capacity to implement and enforce existing and future regulation, and an imperative need of resources by the ANM, amongst others.

Recommendations

Ensure implementation of the provisions of the PMD aimed at improving the perception of the public towards mining sector and carry out periodic assessments of their impact to complement and enhance the strategy.

Establish regular venues in which stakeholders can provide feedback and air their views and concerns on how the improvement of the regulatory framework in the mining sector and the performance of the ANM can increase their contribution to public policy objectives, such as economic performance, environmental and worker’s protection, amongst others.

Build trust, engage stakeholders and provide feedback. ANM could make available to the stakeholders information regarding the inspections plan, enforcement actions and the results of these activities from a compliance perspective. Publicly available data that is easily retrievable by citizens is a right step to increase trust in the performance of the Agency. Transparency and accountability should underpin all inspections and regulatory compliance activities.

The regulatory framework of the mining sector in Brazil

Assessment

Issue 2: There is room to update the Mining Code and complementary regulations to ensure the management of critical risks

The Mining Code (Decree Law No. 227/1967) is the main piece of legislation that regulates mining activities in Brazil. For the past years, there have been intermittent discussions as to whether a new mining code should be issued to make the process of regulation mining risks more efficient and effective, amongst other topics. Nevertheless, only a few amendments have been passed, amongst them the reform which led to the enactment of Law No. 13.575 that created the National Mining Agency (ANM) to replace the former National Directorate of Mineral Production (DNPM).1

The review team registered that there seems to be a consensus amongst stakeholders regarding the need to update the Code and complementary regulations. However, there was no clear definitions as to which areas require reforms to enhance the effectiveness of regulatory provisions in the mining sector, with a few exceptions.

One area that was pinpointed to require regulatory reform includes mining closure. There is a need for specific regulations to guarantee a proper management of the closure and remediation processes for a mining project. Despite some provisions on mining closure in other legal instruments, there is a gap which makes it difficult for mining companies to implement specific measures aimed at achieving a proper remediation of areas impacted by mineral extraction and processing activities, as well as to fostering an adequate closure of depleted mines.2 This specific issue is addressed further below.

There are also elements on safety and protection of workers that require attention to improve the corresponding regulatory framework. This includes safety standards for tailing dams, and other critical topics such a mine ventilation and rock geomechanics. This specific issue is addressed further below. Nevertheless, a further detailed assessment on safety and protection of workers in the mining sector is needed to ascertain the need for filling gaps or reforming existing provisions to reduce the risk of mining accidents an enhance the welfare of workers.

Issue 3: Brazil has recently updated its regulatory framework on tailings dams’ safety. The challenge is to ensure its full implementation.

In Brazil, the National Dam Safety Policy, established by Law No. 12.334/2010, states that the operator of a dam is legally responsible for the safety of the infrastructure. The ABNT/NBR Technical Standard No. 13.028/2017 regulates the safety of dams and specifies the minimum requirements for the preparation and presentation of mining dam slats. CNRH Resolution No. 143/2012 also establishes general criteria for classifying dams by risk category, potential damage associated to it and by the volume of the reservoir (the tailings pond).3

Much of the current regulation regarding the safety of tailings dams in Brazil addresses the gaps that existed before the accidents in Mariana (2015) and Brumadinho (2019) caused by the detachment of these structures. These two accidents in such a short period increased public concerns over the safety of tailings dams, in particular, those that have been declared inactive (MDNP, 2020[2]). There are high risks related to the safety of tailings dams. This topic has put the Brazilian mining industry and the mining sector worldwide, in the spotlight for the lack of adequate management measures to guarantee high levels of safety and environmental protection. A strong criticism coming from the civil society and industry associations was the lack of sufficient inspection of the tailings dams. To tackle this criticism, the Brazilian government conducted a process of revisions of the regulations in an effort to align them with international best practices.

After the accident of Mariana, the former DNPM issued Ordinance No. 70.389/2017 that modified the National Registry of Mining Dams, reviewed the classification criteria for tailings dams, revised the requirements of the emergency action plan, and established mandatory periodic inspections.4 In addition, the Integrated System for the Management of Mining Dams Safety5 (Sistema Integrado de Gestão de Segurança de Barragens de Mineração, SIGBM) was established, allowing remote supervision of the safety of the dams by ANM. This is a unique online database that provides ANM and the general public6 with access to key information on each registered tailing dam in the country. Likewise, the ordinance ordered the performance of mandatory periodic safety reviews of the dams (RPSB) based on their risk classification.

On the other hand, after the Brumadinho accident, ANM Resolution No. 13/2019 prohibited the construction of upstream dams in Brazil, which are characterised by being more susceptible to instability situations (especially in seismic areas) and by presenting a higher risk of detachment. These types of dams have been preferred by some mining companies in Brazil, as they represent the lowest construction cost. It is estimated that 84 mining dams were built with the same methods as the Brumadinho.7 Given its greater risk, this type of deposit was already prohibited in other countries in the region, such as Chile and Peru.8

Recently, the Brazilian government has enacted Law No. 14.066/2020,9 a bill that amends Law No. 12.334/201010 and imposes stringent safety rules and inspection for upstream tailing dams in the mining industry. This law forbids the construction or raising of tailings dams upstream, which are the ones built by placing successive layers of mineral waste one on top of the other (the same type that caused the Brumadinho disaster in January 2019). Besides, the law mandates the decommissioning of all these structures until 02/25/2022. Mining companies are also responsible for drafting an Emergency Action Plan, which execution is mandatory by those responsible for dams.11 Likewise, the law establishes that areas degraded by mining accidents or environmental disasters are among those that have priority to receive resources from the National Environmental Fund (FNMA). The new legislation also sets fines of up to US$200 million to mining companies if they fail to comply with the safety rules. It also forbids the construction of potential tailings dams close to communities that are within 10 km radius (inside the ZAS or the “self-rescue zone”)12 or within a distance corresponding to a flood wave arrival time equal to thirty minutes.

Despite the improvements in the regulation of the safety of mining dams, Brazil still has important gaps to be filled in the different stages of tailings dam management. In general, the legislation establishes important scopes for the safety of the dams during the operational phase of the mining project, such as that the inspection be carried out during the entire useful life of the project or that there be an emergency action plan (PAEBM).13 Additionally, in the operation stage, the safety of the dams is supervised by the ANM, which oversees the implementation of the safety plans of the mining dams. This can be done through the information registered in the Integrated System of Mining Dams Management (SIGBM) or through on-site inspections.

However, as discussed in an issue further below, the ANM faces severe restrictions in terms of resources and staff that hinders its ability to carry out enforcement and inspections activates. There are already efforts underway to tackle this challenge,14 although a long-term solution should be sought to aim for an effective supervision of rules in tailing dams.

Issue 4: Brazil could complement the provisions regarding the environmental impact of tailing dams and publish specific regulations for their closure.

Regarding the regulation of tailings deposits in the design stage, regional governments establish the legislation that obliges the mining concessionaire to carry out an environmental impact assessment (EIA) to start its mining activities. In Minas Gerais and several other states an environmental licence is required for each new addition/extension of a mine, including tailing dams.15 However, guidance on the impacts that should be considered when assessing tailings dams from an environmental perspective are yet to be defined.16

Brazil also lacks specific regulations regarding mining tailings in relation to a mine closure plan. In the closure stage, there are no legal provisions regarding the treatment of mining tailings inside a project of mine closure and rehabilitation of impacted areas.17 In that sense, Brazilian provisions differ from regulations such as those of Australia, where tailings “decommissioning” is aligned with the mine closure plan and, in addition, proposed tailings decommissioning designs are tested through closure trials during the operation phase. Therefore, the environmental impact assessment, which includes a plan for the rehabilitation of degraded lands, is used in Brazil to manage matters related to the abandonment of tailings ponds and dams.

Brazil is taking steps towards more efficient regulations regarding tailings management after the passing of Law No. 14.066/2020.18 However, there is still room for improvement. In this sense, Brazil could improve its regulatory framework by including specific regulations for the dismantling of tailings ponds after the closure of operations. Likewise, given the situation of its current mining dams, environmental impact assessments should be requested specifically for the decommissioning and abandonment of tailings dams.

Issue 5: Although Brazil has started a comprehensive review of safety standards for tailing dams, other critical topics such a mine ventilation and rock geomechanical stability have not been considered for an upgrade in the near term.

Reforms to improve mining regulations centred on controlling critical risks and preventing accidents are still pending. There are uneven efforts to modernise and update the mining regulatory framework with a strong focus on tailings dams’ safety in detriment of other areas, such as geomechanical and geotechnical standards,19 ventilation safety criteria, underground and open pit stability conditions, mine pipelines, etc. The current regulatory environment in Brazil is very reactive rather than preventive.

ANM has started a review of certain regulations through its Regulatory Agenda 2020/2021 (Resolution No. 20/2019). However, after the accidents of Mariana (2015) and Brumadinho (2019), reforms of safety regulations in the Brazilian mining industry have focused on increasing the security factor of tailings dams and on specific topics (tailings dam certification, reuse of tailings, fossils exports, economic plans for mineral usage, border strip licensing processes, and management of conflicts in geo-mining territorial ordering). Even though, the constant assessment of technical regulations is necessary to prevent accidents and reactionary policies, there is no plan to review safety regulations and other aspects of the mining regulatory framework such as safety standards and inspection processes.

Recommendations

Carry out regular public consultation exercises to collect feedback from stakeholders to identify specific areas in which there is need to carry out updates to the Mining Code and complementary regulations. The draft OECD Best Practice Principles on Stakeholder Engagement in Regulatory Policy (OECD, 2017[3]) can be employed to guide the exercises.20

Programme to undertake ex post assessment of specific topical areas of the Mining Code to ensure that critical risks are being properly regulated and managed. The OECD Best Practice Principles on Reviewing the stock of regulation (OECD, 2020[4]) can be employed to guide the exercises.21

One of the areas in which Brazil could undertake an ex post assessment of the regulation is on tailing dam's safety. This exercise should help to determine if there are any gaps in the implementation of the corresponding legal instruments, and the reasons for this, and whether the policy objective of enhanced safety is being achieved in a cost-effective manner. The results can help in preparing effective communications for the public at large of the achievements of the reforms to the regulatory framework and their implementation after the accidents.

Another area in which Brazil could undertake an ex post assessment of the mining regulation is on the overall management of risks to enhance safety beyond tailings dams. The assessment should allow for the identification of important aspects to fill voids and gaps in the issuance of new legal instruments, as well as the effective enforcement of existing rules. As denoted by the OECD Recommendation on Regulatory Policy and Governance (OECD, 2012[5]), the better regulation efforts in this area should comprise risk assessment, risk management, and risk communication strategies to the design and implementation of the regulations to ensure that they are targeted and cost-effective.

Establish mechanisms and actions that promote regulatory coherence between the federal government and the states to avoid gaps or overlaps in the regulation dealing with the environmental impact of tailing dams.

Promote the sharing and adoption amongst states of good examples of practices in the regulation dealing with the environmental impact of tailing dams.

Aim to complete the regulatory framework in order to consider mine closure as part of the mine’s lifecycle and include tailing management in relation to the dismantling of tailings ponds after the closure of mine operations.

Regulation of small-scale mining activities and policies to deal with informal and illegal mining operations

Assessment

Issue 6: A specialised regulatory framework that promotes safety and environmental regulatory compliance for artisanal small-scale mining (ASM) in Brazil is still to be completed

Many safety and environmental standards for ASM operations are the same as those applicable to large mines, which are not necessarily adequate to deal with atomised operations spread across large areas of the Brazilian territory. Furthermore, enforcement strategies of safety standards in artisanal mining operations are not adequate to ensure regulatory compliance.

Although Brazil has specific rules for ASM concessions and title granting (Law No. 7.805/1989, Law No. 6.567/1978 and Decree No. 9.406/2018), it does not have explicit safety and environmental regulations to manage artisanal mining activities. The legislation in place is not orientated to prevent pollution nor reduces safety risks related to a mismanagement of the extraction of alluvial ores and the beneficiation of precious metals (e.g., gold), gems (e.g., diamonds), and aggregate materials for construction (Law No. 6.567/1978).

Additionally, in Brazil occupational health and work safety legislation does not cover garimpeiros (i.e., ore diggers, artisanal mining workers) as these are governed by a specific legislation and not by labour standards because garimpeiros are not considered employees. This situation causes distortion in work relations, leading to the occurrence of degrading work situations affecting social and environmental policy objectives.

Issue 7: Plans to promote the formalisation of garimpeiros that perform informal mining activities should be implemented and incentives for formalisation should be increased.

The Brazilian legislation does not define informal mining, which makes it difficult to deploy policies and budgetary resources to formalise garimpeiros that do not comply with some regulations. The term informal mining describes locally based and small-scale exploration and extraction activities of precious and base metals, precious stones, and gems, as well as construction aggregates that may not abide by all the legal formalities corresponding to a licensed mining activity.22 The term “informal” denotes mining by individuals, groups and cooperatives that is carried out without the compliance of all formal regulations imposed by the State.23

In an attempt to formalise informal garimpeiros, the Congress passed Law No. 11.685/2008, which stipulates the rights and obligations of small miners. These comprise the requirements to recover the areas negatively affected by the mining activity, to comply with all labour safety and health regulations as well as to prevent child labour. However, according to the information provided during the stakeholders’ interviews, garimpeiros seem to face difficulties in having the necessary means to compensate the environmental damage caused by their operations, and thus they are unlikely to be eligible for an environmental licence, leaving them in the informality.

Additionally, the Ministry of Mines and Energy and ANM are working together in further efforts to formalise garimpeiros. These efforts comprise plans for the formalisation of small-scale miners in gold mining activities,24 and in general mining activities.25 The PMD also includes provisions to promote formalisation and encourage cooperatives in the mining activity; and to promote the adoption of good practices in gold mining.

Given the recent nature of these efforts, the challenge is to ensure implementation, carry out evaluation of their impact, and complement them with the right incentives to promote the compliance of legal regulations to protect the safety of miners and local communities, as well as to protect the environment from the damages of informal extraction activities.

Issue 8: Recent efforts to tackle illegal mining are encouraging, but they should lead to long‑term sustained efforts

One of the current avenues to tackle illegal mining in Brazil is the creation and agenda of the National Council for the Legal Amazon, established by Decree No. 10.239/2020 under the co-ordination of the Vice President of the Republic.26 Additionally, there are regular reports in the media of activities by the federal police informing of actions to tackle illegal mining. They comprise interdiction measures, such as the arrest of illegal miners and the destruction of mining equipment, amongst others.

The Brazilian authorities have also applied a combination of policies to deal with illegal mining extraction with some inter-sectoral articulation. This includes campaigns that ANM deploys to promote mining cooperatives among small miners. These cooperatives can induce the formalisation of small operations by creating a value chain around mineral processing, especially in the case of the extraction of aggregates, clay, gold, and diamonds.

These efforts are encouraging considering the expressions of concerns by the public opinion and the government regarding the adverse environmental impacts and criminal activities related to illegal mining.

Additionally, some stakeholders declared that there are cases in which large mining operations are conducted illegally, as they simulate to be operations performed by garimpeiros. A consistent policy to combat illegal mining is dependent on a successful policy of formalisation. Therefore, the efforts by the Brazilian government in this regard as discussed in the previous issue are welcomed.

These efforts are yet to be collected in a cross-sectoral cross-institutional articulated strategy to tackle illegal mining that leads to long-term sustained efforts. A key element for such efforts will be availability and access to better information and intelligence to combat effectively illegal miners. The current co‑ordination actions by the MME, ANM, the Ministry of Defence and other public security bodies with the objective of obtaining access to satellite image data and generating information regarding the occurrence of illegal mineral extraction activities is a step in the right direction.

Recommendations

In the ex post assessment of mining regulation related to the management of risks, ensure that a risk-based approach for artisanal small-scale mining, including garimperios, is applied. The risk‑based approach implies that rules and regulation should be proportional to the level of risks that the activities pose. The ex post assessment should help define whether the regulatory framework that promote safety and environmental protection is over or under regulating the risks that ASM and garimpeiros activities entail.

Consider complementary innovative approaches to seek the formalisation of garimpeiros. The reasons for informality in any economic activity are multidimensional, and therefore, the strategies to tackle informality should also be varied. Additional to ensuring the full implementation of the current government measures to diminish informality amongst garimpeiros, and to strive for a regulatory framework that is proportional to the risks garimpeiro’s activities convey – which should lead to less burdensome regulations and hence contribute to less informality – Brazil should consider other innovative approaches. They may include approaches informed by the use of behavioural insights. The OECD BASIC Toolkit: Tools and Ethics for Applied Behavioural Insights can provide guidance for these efforts (OECD, 2019[6]).27

Develop a cross-sectoral and cross-institutional articulated strategy to tackle illegal mining, which should gather the recent initiatives in this respect. The use and exchange of data and intelligence, and the strong use of ICT tools, should be at the centre of this policy.

Evidence-based decision-making in the National Mining Agency

Assessment

Issue 9: The work culture inside the ANM is in the process of changing, although there are still many obstacles to overcome to embrace a full and effective culture of rule-making based on evidence and of good regulatory governance

ANM was created through Law No. 13.575, published on December 2017, which extinguished the National Department of Mineral Production and replaced it with the National Mining Agency. The creation of the ANM responded to efforts by the Brazilian government to improve regulatory governance in the mining sector, amongst other objectives.

The law establishes clear provisions to install a culture of rule-making based on evidence and of good regulatory governance in the ANM. For instance, it obliges the ANM to conduct both stakeholder engagement activities and prepare a regulatory impact assessment when planning to take policy or regulatory decisions. It also sets obligations and responsibilities for ANM to increase transparency in administrative processes. The law also establishes provisions for the composition and decision-making mechanism of ANM´s board of directors. These provisions are consistent with principles and practices promoted by the OECD, such as the ones included in the 2012 Recommendation of the Council on Regulatory Policy and Governance (OECD, 2012[5]), on the Best Practice Principles for Regulatory Impact Assessment (OECD, 2020[7]) and on the Governance of Regulators (OECD, 2014[8]).

There is evidence that some of this culture is starting to take hold in the ANM. Stakeholders, including representatives from business organisations and officials from sub-national levels reported that they have experienced continuous and meaningful engagement with the ANM in the process of discussing policy and regulatory developments, which was not a common occurrence with the DNPM. ANM has also taken steps towards the implementation of RIA, which is now mandatory, by issuing a manual and conducting several analyses for selected regulations, including the publication of several RIAs.28 Reforms and updates in some of the administrative processes have also been undertaken in order to simplify formalities and reduce burdens for companies and other users, mainly through the adoptions of ICT systems, such as the Digital Protocol. With the entry into force of the rules regarding the broadcasting of the Board of Directors meetings and the disclosure of agendas and minutes, there was a significant advance in terms of transparency in ANM compared to the previous scenario in DNPM.

These are steps in the right direction, but in order to ensure full implementation of an effective culture of rule-making based on evidence and of good regulatory governance, efforts need to be intensified. The use of RIA should be systematic in order to safeguard that ANM bases its decision on evidence and not in bureaucratic inertia or other biases. There is also space to increase independence of decision making by ANM’s board. Burdensome and bureaucratic process are still common in the ANM. Decisive steps to simplify and digitise formalities should be taken (both issues are discussed further below).

In order to undertake these changes, the ANM faces a challenging environment: the need of budgetary resources, as well as intensification of capacity building and training of staff (these issues are also discussed further below). This should be part of a strategy by the Brazilian Government and the ANM to complete the required cultural change inside the agency.

Issue 10: ANM fails to collect and process data and information in an efficient and reliable manner, leading to little evidence-based decision-making

ANM relies on self-reported data from private agents to determine the level of risk of certain installations (e.g., tailings dams) and thus design the inspections and enforcement actions to follow. In some cases, mining companies have failed to submit accurate information and have declared a level of risk lower than the actual one. Using incorrect evidence to determine actions of regulatory delivery by the agency puts at great risk the credibility and transparency of the institution.

The agency has to verify the correctness of the information provided through in situ inspections, which leads to inefficiencies and delays in the processing of the data. In situ verifications of data are costly and difficult to carry out, as most of the mining operations in Brazil are located in areas distant from the state capitals where ANM’s regional offices are situated and the agency has a sub-optimal number of inspectors. Regulated companies input data on dam safety, amongst other areas, which include mineral production, reserves modifications, royalties, investments, in the SIGBM, which influences the risk classification of each dam, and thus the probability of inspections by ANM.

On the other hand, the Agency inherited more than 10 different information systems from the former DNPM. The platforms are not interoperable, making it almost impossible to crosscheck data and hinders its processing and analysis. Moreover, despite the existing of legal framework that promotes data sharing across institutions of the public administration, this is not yet common. Although the Law of Regulatory Agencies (2019) encourages the exchange of information, it does not solve the issue in practice.

Recommendations

Engage with the staff to intensify the communication of the new working culture of ANM, foster feedback loops and collaboration across different areas of the Agency. As a first step, the main elements of the new working culture that ANM wishes to promote should be clearly identified. The promotion of the new elements should be accompanied by the creation of communication channels between high management and staff. Employees should be able to provide comments and receive feedback on the new working methods. This would help legitimate central management decisions and ease their implementation. Moreover, foster collaboration across different superintendences and regional units to enhance the exchange of capabilities and best practices at the inside of ANM. An environment that acknowledges the success of the Agency as a whole and not necessarily on that of individual administrative areas could support the latter.

Stimulate the systematic use of data in the regulatory process. Employees from all levels, but particularly managers, should stand behind ANM’s new working culture in which data drive decisions. Clearly communicate the benefits of evidence-based decision-making and provide staff with the necessary inputs to utilise data and information efficiently. It is particularly important that officials use data throughout the entire regulatory cycle and constantly improve regulations and their delivery. Iteration is fundamental. For this task, a mapping of the core processes in ANM for the delivery of regulation (i.e., granting of licences and other processes for mining companies and regulated entities), the database employed, and the needs for interoperability should be carried out.

Embed RIA in the decision-making process and define a clear governance for it. Currently, the Board of Directors is responsible for assessing the content of the RIAs and makes decisions based on them. Transparency in the allocation of responsibilities and clear expectations should underpin ANM’s efforts to instil the use of RIA. Clearly define standards and requirements for the preparation of the impact analyses and offer training such that staff have the necessary resources. During the introduction phase of RIA, management and leaders inside ANM should work proactively with the technical areas performing the RIAs to highlight the benefits of this tool and avoid the perception that it represents additional bureaucracy. Regarding the application of RIA, limit the number of exceptions and in cases where RIA can be skipped due to emergencies, carry out an ex post evaluation to assess if the regulation attains its objectives.

Publish specific standards and reporting obligations by mining operators and put in place the right incentives to ensure that data are accurate. Make publicly available, when possible, data collected by the Agency. Information should be published in friendly and accessible formats that facilitate external scrutiny and foster transparency.

Resourcing

Assessment

Issue 11: ANM’s financial independence is compromised by the lack of adequate funding schemes and discretionary measures by the Federal Administration

ANM’s level of funding is inadequate given its responsibilities and limits its ability to function efficiently and to achieve its objectives. At the time of creation of the ANM, it was agreed that the agency would be established with zero cost for the administration. This meant that it would inherit the structure and budget of its predecessor, the National Department of Mineral Production, which was part of the Ministry of Mines and Energy. Although the political and economic context in Brazil at the time dictated the starting conditions for the new regulator, it is important to highlight that a strong regulatory agency requires clear, efficient and simple funding schemes to discharge its duties effectively (OECD, 2014[8]).

Regulated mining agents in Brazil are subject to a mining royalty (CFEM), which the ANM collects and distributes according to the criteria defined in the Law No. 13.540/2017. ANM transfers 90% of the royalties to those sub-national governments where the mining activity takes place or that are affected by it29 (e.g. have infrastructure used for the transportation of mineral substances). The remaining 10% goes to the Federal Government, which allocates the funds across federal institutions. The Ministry of Economy is responsible for transferring the resources to the ANM, which should account to 7% of the mining royalties. However, since the creation of the new regulatory agency, the Federal Administration has failed to transfer the full amount of funds and has capped the budget to approximately 3% of the total CFEM collected. In addition, the discretionary budget of the ANM can be limited further by the Federal administration, which curtails the ability of the regulator to operate efficiently and effectively.

Consistent with a broader fiscal policy applied by the Brazilian government, further cuts to ANM budget were applied recently. During 2019, the Federal government allocated approximately 41% of the ANM’s budget to the Government’s Contingency Reserve, an emergency fund for fiscal balance. This move further limited the capacity by ANM to comply with its duties.

The severe financial restrictions that the ANM face affect its regulatory functions, as certain inspections and regulatory enforcement activities seem hindered by the need to prioritise processes. After the tailings dams' accidents of Mariana (2015) and Brumadinho (2019), investigation reports pointed out to the chronical lack of financial resources of the ANM – and previously of the DNPM – as an important element preventing the mining regulator from discharging its functions properly. Nonetheless, the agency’s budget seems to decrease steadily, meaning that it is hard to undertake multi-year projects, given the financial uncertainty and instability.

Moreover, the agency has arrived at the the point of relying in other sources of financing, such as donations and public-private partnerships, to acquire software and technological equipment. The intensification of this type of funding from sources with conflict of interests may lead to reputational and capture risks.

Issue 12: ANM has significant staff restrictions that limit its ability to fulfil its responsibilities

ANM’s human resources structure is not adequate to fulfil all of the agency’s attributions, hampering the performance of the regulator. ANM’s mandate is broader than that of the former DNPM, which makes the staff limitations even more acute. For instance, ANM cannot fulfil its duty in matters regarding economic competition and antitrust in the mining industry because it lacks staff with the relevant expertise. Similarly, one of the most important responsibilities centres on regulatory enforcement and inspection, yet limitations in staff number and capacities of the existing personnel obstruct an effective performance in this area. Even though the agency recognises the importance of training and capacity building for its staff members, it cannot offer enough capacity building programmes due to financial restrictions.

In 2010 took place the latest exam to join the DNPM as public servant, limiting the influx of new officials to the ANM, which has had to rely on staff moving from other regulatory agencies to fill in some of the gaps.30 The Federal government has restricted even further the possibility of carrying out public service exams in the face of the current economic situation, making it practically impossible for the agency to attract new civil servants in the near future. Adding to the absence of new employees, a significant proportion (38%) of the current workforce is close to retirement, with the average age at the ANM being 56 years old. Several stakeholders showed their concerned about the potential scenario in which the ANM will not be able to replace the staff that retires, aggravating even more the situation.

Furthermore, the compensation scheme for those working at the ANM is not attractive. In comparison with the private sector and to other regulatory agencies in Brazil, wages at the Agency are not competitive, leading to high turnover rates and demotivated workers.

The agency requires a strong training programme for its workers, as the mining sector is particularly technical, entails high-risk activities and involves very diverse stakeholders. However, the ANM has been forced to postpone or cancel capacity-building activities in light of the financial restrictions. This point is particularly sensitive for staff located in ANM’s regional offices across the country, who deal directly with miners and mining operations but that many times do not have the necessary inputs to manage processes in the most efficient and adequate way.

Recommendations

Advocate for the advancement of ANM’s financial independence by promoting for an increase in the financial resources allocated to the Agency. The medium-term objective should be to reduce and eventually eliminate the gap between what Law No. 13.540/2017 establishes in financial resources for the Agency, and what it actually receives. Engage with the Ministry of Mines and Energy, the Ministry of Economy and Casa Civil to define high-level compromises that ensure a smooth and complete transfer of the budget to ANM. Even if a share of regulatory agencies’ budget is allocated to the National Contingency Reserve, in the case of ANM this proportion (approximately 41% in 2019) is somewhat disproportionate. Although ANM has independence in the way it manages its resources, uncertainty regarding the amount of funding that the Agency will actually be granted through the Annual Budget Law limits ANM’s performance.

The increase in budget should be accompanied by larger levels of transparency and accountability to the public. ANM could benefit from providing information that is clear and easily accessible regarding the way it uses its financial resources. Aligning ANM’s budget execution with its objectives and publishing information on the subject offers continuous monitoring, and thus feedback on the way ANM carrying out its duties. Moreover, the latter could increase society’s trust in the work of the Agency.

Make certain that ANM has the adequate number of staff with the appropriate expertise and competences to fulfil all of the Agency’s obligations. ANM’s current restructuring should explicitly consider the Agency’s needs of skills and capabilities (e.g., expertise on economic competition and antitrust) and it should factor-in the restrictions by the Federal government for new hires. While the increased use of ICT tools should make certain processes more efficient, specific tasks require personnel with a defined set of capabilities. The Ministry of Mines and Energy, the Agency and Casa Civil could engage to assess all the alternatives available to fill the gaps in terms of human resources and ensure that the Agency has all the necessary conditions in place to discharge its duties. This assessment should also consider the staff needs in the face of workforce retirement plans.

The National School of Public Administration (Escola Nacional de Administracao Pública, ENAP) can be an important ally for the ANM for its capacity development needs. ENAP not only has the infrastructure in place to offer trainings and courses, but also has a leadership competency model that builds on international practices and is transversal to the public sector

Carry out a benchmark study of compensations scheme for officials of the National Mining Agency vis-a-vis other regulatory agencies and private companies in Brazil to identify levelling needs. Such a study could help ANM improve employee benefits to attract better-qualified applicants and to reduce the turnover rates in the agency. Professionals working at the ANM could be further motivated by having the same compensation and benefit structure as its peers in other regulatory agencies or in private companies. This would be a driver for higher productivity.

Stakeholder engagement

Assessment

Issue 13: Important stakeholders from the public sector in the mining industry have not fully embraced the new attributions and scope of action of the ANM

Stakeholders have taken some time to adapt and respect the new independence and role of ANM. The creation of the agency changed the regulatory landscape of the mining sector in Brazil significantly. Adjustments go from the way the agency interacts with its stakeholders, the responsibilities that it has as an independent regulator to the approach that it follows in terms of internal management. Additionally, ANM’s mandate includes overlaps with that of other regulatory agencies and sub-national authorities, generating the need for co-ordination and co-operation to avoid duplications and inefficiencies.

Although the new regulatory and institutional arrangement of the mining sector in Brazil grants ANM independence in its decisions and in the way it manages financial and human resources, relevant stakeholders have yet to embrace the changes fully. The transition from the former National Department of Mineral Production to the newly created National Mining Agency changed the institutional context of the mining sector in Brazil significantly. The DNPM was an administrative area linked the Ministry of Mines and Energy and as such, it had limited independence and decision-making powers. The current relationship between the MME and ANM seems to show some inertia in terms of the former subordination of the DNPM to the MME.

ANM’s regional offices struggle to accept the new governing structure of the agency. Under the DNPM, ANM’s 25 regional offices operated in an autonomous way, even if administratively they were under the central management hierarchy. This de facto autonomy led to the politicisation of the regional units, which contravenes the agency’s attributions. Additionally, each office interprets the regulations differently, even if the mining laws are federal. To a certain extent, regional offices are yet to adapt fully to the governance and decisions-making arrangements at ANM headquarters, especially considering the collegiate board of directors and the standardisation of processes.

Issue 14: Co-ordination across Brazilian institutions involved in the regulation of environmental and safety standards in the mining industry should be strengthened, with a focus to reduce burdens for businesses and increase the effectiveness of the policies

There is a complex web of environmental and safety regulations at the state and federal levels with regards to mining activities. This situation might hinder the application of effective policies to manage safety risks and regulate the pollution generated by the extraction of minerals, while generating excessive burdens to businesses.

For example, state environmental regulators deploy enforcement activities that added to those conducted at the federal level by IBAMA and ANM, represent an excess of resources invested by both the government and business. Large burdens for enterprises resulting from aggregated layers of state and federal regulations in safety and environmental aspects also complicate the development of mining projects. According to reports by some stakeholders, installing a mine in Brazil involves large administrative burdens and long periods of development—up to 10 years.

Although both ANM and IBAMA have discussed elements of administrative simplification, co-ordination between both agencies is not systematic yet. Likewise, there is no evidence of systematic co-ordination between ANM and environmental regulators at state level. The level of co-ordination between ANM and the Special Secretariat for Social Security and Labour remains to be ascertained.

Co-ordination among ANM and the institutions involved in safety and environmental regulation in the mining industry is difficult, despite the existence of some provisions in the regulatory framework to promote it.31 The lack of collaboration obstructs the deployment of effective policies to guarantee high levels of safety compliance, the protection of environmental assets, mining workers, and local communities impacted by the mining activities.

Recommendations

Communicate ANM’s role and attributions to relevant stakeholders and to the public. This could be done through information campaigns, better definition of responsibilities and engagement with representatives of specific groups and communities around the country. Moreover, the Agency could elaborate materials that clearly state ANM’s scope of action specifically for those topics where functions may overlap with those of other institutions (e.g., labour, health, environment, state’s regulation).

Bring regional managers on board. By understanding the needs and conditions in ANM’s regional units, it would be easier for the Board of Directors and central unit to adjust requirements to the reality of local offices. Explain the rationale behind decisions made at the central level and share with regional units guidelines with best practices, checklists and clear requirements to ensure the smooth and standard implementation of regulations.

Promote regulatory coherence in the mining legal framework between the federal government and the states, and in the promotion of good regulatory practices, place special attention to issues on environmental licensing. These mechanisms should include mapping all the processes—federal, state and municipal—that mining companies have to undergo to start activities, and that have to comply during the operation. Using methodologies such as the standard cost model,32 measure the burdens to identify opportunities for administrative simplification using digital licensing and other alternatives, such as one-stop shops proposed by the OECD Best Practice Principles for Regulatory Policy: One-Stop Shops for Citizens and Businesses33 (OECD, 2020[9]). The identification and sharing of good practices at regional level should contribute to achieve aggregate streamlined process for regulated parties in the mining sector.

Define clear steps and milestones to ensure effective co-ordination with entities that play a role in the mining sector. Formalise and implement co-operation agreements that grant the necessary legal, technological and financial conditions to exchange data among IBAMA, the Federal Reserve of Brazil, the Special Secretariat for Social Security and Labour and state environmental agencies. Take advantage of the National Infrastructure of Open Data (dados.gov.br) and ensure that data is uploaded in adequate formats, updated regularly and used to inform decisions. Develop joint protocols for inspections and exchange information on compliance levels to better target interventions

Inspections and regulatory enforcement activities

Assessment

Issue 15: Inspections and enforcement activities could be improved significantly

ANM’s enforcement and inspection activities during the lifecycle of a mine are insufficient. The accidents of Mariana (2015) and Brumadinho (2019) re-defined the allocation of resources and prioritised the inspections of tailings dams. However, human and technological resources remain insufficient, limiting the ability of ANM to comply with all of its enforcement responsibilities. Additionally, co-ordination with other regulatory agencies and institutions engaged in mining regulation is not adequate to foster an efficient regulatory delivery.

ANM prioritises the inspection and enforcement of tailings dams’ safety standards. Currently, the SIGBM includes information on 862 dams in the country, out of which 436 are part of the National Policy for Dams Safety, meaning that they are under more intensive surveillance regimes. Dams are inspected according to resource availability and following criteria set up in the corresponding regulation, which include technical aspects of the dams, type of stored materials, potential environmental damage, amongst other criteria.

ANM still faces meaningful restrictions in terms of staff with the technical capacities to carry out in situ verifications of the dams, despite the recent efforts to address this shortfall.34 Inspections are limited further by the size of the country, the location of the mining operations and travelling costs for the officials. Moreover, ANM’s regional offices lack technological equipment to perform inspections remotely, meaning that for every inspection ANM deploys at least two inspectors. The agency strives to focus the visits to dams identified with the highest level of risk; however, in 2019 it managed to inspect only 51% of the dams planned due to lack of staff (Agência Nacional de Mineração, 2019[10]).

Additionally, ANM’s personnel usually verifies prospecting activities before the agency can grant an exploration permit. Despite the fact that pre-market verifications are not legally compulsory, ANM officials at the regional office have the discretion to carry them out. However, ANM considers prospecting activities as a low-risk operation that should not require a physical inspection. Therefore, the agency is preparing changes to eliminate the inspection for the prospecting phase altogether. ANM is conscious of the deficiencies in the inspection and enforcement processes. Despite this acknowledgment, the agency has included the topic as one of the strategic projects to carry out in 2022 (Agência Nacional de Mineração, 2020[11]).

It seems that several laws for artisanal small-scale mining activities are not enforced meaningfully, (Sousa et al., 2011[12]). Supervisory actions to promote the compliance of safety standards and the implementation of pollution control measures in small mining operations are inefficient due to the overlaps between ANM and the state environmental regulators.

Co-ordination with other regulatory agencies and inspection authorities remains low. ANM shares its inspection and enforcement responsibilities with environment, health and labour entities, many of which include state level authorities, but clear definition of responsibilities and effective coordination mechanisms remains challenging. Additionally, the agency verifies compliance of financial regulations and the payment of the CFEM. Nonetheless, data exchanges and joint inspections are rare, despite a few positive experiences mentioned by stakeholders.

Recommendations

Develop and implement a detailed and articulated policy on regulatory enforcement and inspections for the mining sector, in which the main elements should include inspections based on evidence, inspections based on risks, co-ordinated efforts across federal agencies and sub-national governments, intensive use of ICT, and a well-resourced programme on inspections. To develop this policy and carry out its implementation, the OECD Toolkit on Regulatory Enforcement and Inspections can be employed as guidance (OECD, 2018[13]).35 This policy should comprise not only the responsibilities in enforcement and inspection in the mining sector by the central offices of ANM, but also their regional offices. It should also include the enforcement and inspections actions of other ministries and agencies at both national and sub-national level.

As part of this policy, inspections should be carried out only where there is evidence that they reduce the associated risks. Inspections based on evidence means that scarce public resources – which include the time of inspectors – should be invested in activities that will return a public benefit, in this case a real reduction of risks of accidents or other damages. Laws and secondary regulations, as well as discretionary practices by central and regional offices at ANM should be well aligned with these criteria.

In this policy, define inspections and enforcement plans that consider the risks associated to each operation and ensures the proportional allocation of resources. ANM would benefit of having a clear understanding of the risks in mining activities and plan inspections and enforcement activities accordingly. In order to ensure better adoption and application of these concepts, specific guidelines and an inspection manual are key elements. In this context, a greater share of inspections that ANM performs during the year would be proactive and targeted to activities or installations that present the greater level of risk. Additionally, ANM could prepare guidance on enforcement actions following a risk-based approach to accompany the inspections manual mentioned above. In this way, scarce public resources will be targeted more effectively. Finally, stakeholders should be made aware of this methodology and expectations should be aligned among the regulator, the regulated parties and the public.

Collect information from inspectors: they are the ones on the ground and have valuable insights. ANM should foster feedback loops, where the agency collects information and comments from inspectors to improve the way inspections and regulatory enforcement actions are carried out. This will help re-inforce the criteria of inspections based on evidence, and will help to build risk-profiles to strengthen the objective of inspections based on risks.

As part this policy, establish formal mechanism to implement, oversee and carry out inspections in the mining sector that include all national and sub-national agencies with a stake in the sector. For instance, at national level this should include the regional offices of ANM as well as the authorities in charge of labour safety and hygiene. At sub-national level this should include regional and local offices on environmental protection. Co-ordinated inspections will reduce burdens for regulated entities, improve perception amongst the public, save public resources, and make the reductions of risks of more effective.

The use of ICT systems will be fundamental to apply a successful policy of inspections based on evidence and based on risks, and establish well-coordinated systems. ICT systems will allow for the processing and sharing of data, which will help assess and define what to inspect, when to do it and by whom. ICT systems will be fundamental for the construction of risk profiles of regulated entities and to assess the impact of the inspections. Inter-operability of databases will facilitate the co-ordination of inspections between agencies at all levels of government and will help in better planning. Besides the deployment of ICT solutions, it is important that agencies that perform enforcement and inspection activities of mining operations integrate and co-ordinate their tasks to avoid duplications and improve a more efficient use of resources. Approaches such as the delegation of functions and the systematic exchange of information and inspections’ results can help reduce administrative burdens while increasing regulatory compliance.

Ensure proper resources for the policy on regulatory enforcement and inspections for the mining sector. An effective application of the principles of inspections based on evidence, inspections based on risks, co-ordination and intensive use of ICT should result in efficiencies in budgetary needs, which should be covered fully for an effective implementation of the overall policy.

Consider regulatory enforcement strategies beyond the command-and-control approach. ANM could benefit from having in place diverse interventions aimed at improving enforcement and compliance. They can build on the specificities of the sector, and in particular on the characteristics of given regulated entities. For instance, the provision of guidance materials and information campaigns on how to comply with the regulation, might be more effective than putting sanctions on certain mining operators. Additionally, the use of behavioural insights or the introduction of performance-based regulation could enhance the sector’s performance. The OECD BASIC Toolkit: Tools and Ethics for Applied Behavioural Insights can provide guidance for these efforts (OECD, 2019[6]).36

Administrative simplification and burden reduction

Assessment

Issue 16: Additional efforts are needed to simplify the licences, permits and authorisations to start and carry out mining operations.

One of the most common complaints by a large number of stakeholders is the heavy burdens that the government administrative process generates for business on the mining sector, especially to initiate operations. According to stakeholders, the consolidated process to obtain all the necessary licences and permits from the several involved agencies at national and sub-national level, and undergo all the necessary pre-market inspections and assessment, could take up to 10 years. The government’s objective to boost the growth of mining activity might be at risk if this heavy bureaucracy is not tackled.

ANM has engaged in important efforts for the simplification of processes linked to the mining exploration and concession regimens under their remit;37 however, significant delays remain, and the agency has a backlog of over 20,000 files. Although ANM inherited many of these files from the former DNPM, the regulatory framework, the lack of technological equipment to carry out remote inspections and the subjectivity on the approval process limit the solutions available to tackle the problem.

The burdens for businesses from the administrative processes in mining regulation are compounded by the practice of pre-market inspections. For instance, before it can grant exploration permits, ANM’s regional offices usually carry out in situ inspections of the area where prospecting activities will take place, despite the fact that they are not compulsory but under discretion or ANM´s regional offices. This a can generate important delays, given the dimensions and location of the mining operations in the country. Even if the law would allow the agency to carry out remote inspections, ANM does not have the technical equipment to perform them. Additionally, the process for approval of these permits varies according to the person assessing the information, leading to uncertainty and slow processes.

One area in which the ANM has made progress is the digitisation and simplification of procedures according to the level of risk of the projects. The agency introduced a fast-track process for low risk activities in which it grants in 34 days the permission for mineral exploration. This scheme relies on the accuracy of the information declared by the requesting party and defines administrative and financial sanctions in case of false declarations. Currently this process is only available for the exploration phase, but there are plans in place to expand it to the concession phase. These efforts should be stepped up.

ANM has taken steps to speed up the digitalisation of its administrative procedures. The Protocolo Digital, a digital one-stop shop, offers the regulated parties the opportunity to submit their documents and reports online without going to ANM’s regional offices. This has reduced the burden that mining operators face to comply with the regulation and has allowed several of ANM’s processes to continue even during the COVID-19 pandemic. There are initial efforts to co-ordinate with sub-national authorities to streamline licences at these levels of government.38 However, the ANM and the MME do not have a mapping of all the government formalities, processes and inspections that enterprises in the mining sector have to comply with from all relevant agencies at federal, state and local level. This exercise, and the measurement of the related burdens, should be the starting point to take decisive and deeper efforts on administrative simplification in the regulation of the mining sector in Brazil.

Issue 17: However, several obstacles complicate the progress of the simplification and digitisation agenda of the ANM, including financial constraints and lack of adoption of new tools

ANM is facing several obstacles that hinders its better regulation efforts, specifically in the area of simplification and digitisation of processes. ANM is deploying ICT tools to improve the management of administrative procedures and generate evidence and intelligence for the mining industry. The agency inherited approximately 14 different systems that are not interoperable and that generate burdens in terms of internal processes, and that have a negative impact in the processes for granting licences and permits as well as in inspection activities. ANM has realised that to address this situation it requires platforms that ensure better data processing and that allow the streamlining of procedures

However, two important elements hinder this deployment, the lack of resources to acquire software and the resistance by a portion of the agency’s staff to use new tools. ANM has relied on alternative ways of funding such as donations or collaboration agreements with the private sector to access digital tools. Furthermore, an under adoption of the existing ICT alternatives available at the agency restricts the benefits of more systematised structures and data management. For instance, some officials rely on colleagues to input into the system data collected, as they are not comfortable using digital technologies.

Additionally, most of ANM’s regional offices interpret and apply regulations differently which leads to a lack of standardised processes and procedures, generating burdens for the regulated parties and fostering subjective decision-making. This heterogeneity increases administrative costs and reduces the incentives for compliance. Moreover, the divergence in process management can foster two opposite outcomes. Either a race to the bottom, where the application of regulatory requirements is reduced to the minimum or, on the other extreme, create a barrier to entry/operation of mining activities. In both scenarios, private operators need to allocate time and resources to understanding the different regulatory requirements in each state, leading to inefficiencies. Regional offices are usually the contact point between regulated agents and the regulator, and as such they shape much of the perception that citizens and businesses have of the regulatory agency (OECD, 2010[14]).

Issue 18: The Law of Economic Freedom establishes provisions to streamline government processes to benefit citizens and businesses; ANM could leverage on these elements to boost its simplification strategy

The Law of Economic Freedom was published in September 2019.39 Its main objective is to “set forth standards protecting free initiative and the free conduction of economic operations as well as provisions on the Government's actions as a normative and regulatory agent”.40

Hence, the Law of Economic Freedom establishes provisions aimed at streamlining government processes and formalities, with the intention to benefit citizens and businesses by reducing the burdens and other costs that the regulation creates. Two of these measures include defining a group of low-risk economic activities that will be free of any kind of government licence or permits to start or continue operations,41 and the instituting of the “silent-is-consent” rule in government formalities,42 with specific caveats and exemptions.

According to the Law, the agencies of the Executive Power should issue the classification of low-risk activities, which will be exempted of licences and permits,43 The ANM has started work on this list, but it has not been finished, nor it has been issued publicly.

The “silent-is-consent” rule means that applications for licences and permits, and other formalities, obtain a tacit approval in case the government agency does not provide an official response in the legally defined allocated time to do so. The Law of Economic Freedom establishes that this rule will apply, “except in cases expressly prohibited under law”.44 The Mining Code, which regulates the granting of concessions and licences on mining activities, contains provisions that rule out the “silent-is-consent” provision.

To boost its simplification strategy, the ANM could leverage on these elements to boost its simplification strategy. It could consider proposing further reforms to the legal framework on mining activities to allow for specific cases in which the “silent-is-consent” rule would apply, following a criterion of weighing the risk represented by these cases.45 Currently, exploration activities are considered to be of low-risk by the ANM. Yet, pre-market inspections are still required in order to bestow exploitation concessions.

Recommendations

Develop and implement a detailed and articulated policy on administrative simplification and burden reduction for all government formalities in the mining sector. This policy should lead to mapping all administrative procedures that mining operators need to comply with for each of the mining regimes, covering all the federal ministries and agencies involved, as well as the procedures from sub-national governments. This exercise requires a joint effort across institutions (e.g., IBAMA, ANM, the Special Secretariat for Social Security and Labour, state environmental agencies, among others) to assess all the possible user journeys and identify pain points, eliminate repeated requirements, overlaps and apply simplification actions. Streamline processes before moving to the digitalisation phase to avoid the digitising bureaucracy and inefficiencies. The use of the “silent-is-consent” rule could be extended to lower-risk activities. One option to be considered is the creation of a one-stop shop for mining formalities. The OECD The OECD Best Practice Principles for Regulatory Policy: One-Stop Shops for Citizens and Business (OECD, 2020[9]) could help in this exercise.

In this policy, prioritise the digital licencing efforts. Digitalisation of all administrative processes available cannot and should not be done all at once. Prioritise those processes that generate the greatest administrative burdens46 and streamline both the front and the backoffice. Generally, 20% of the formalities represent approximately 80% of the administrative burden, which is why it is important to devote resources to the identification of those critical processes.

Keep in mind the public policy objective when reducing administrative burdens. Given the risks and complexities inherent to the mining sector, careful attention should be paid to simplification activities, including the use of the “silent-is-consent” rule. Although the elimination of regulatory barriers is welcome, when adequate, it should be accompanied by an ex post evaluation or risk assessment of the regulations that are being modified or derogated. Bear in mind the public policy objectives (e.g., protect human health, ensure certain environmental outcomes) and enact reforms that do not jeopardise their achievement.

Reduce transaction costs by providing guidelines on implementation and interpretation of regulations to regional units and to stakeholders. Elaborate clear, easily understandable and accessible documents for regional staff on the way regulations should be interpreted and applied. Constantly engage with regional managers to share good practices and collect feedback on the difficulties of applying regulations on the ground. Moreover, ANM could consult with mining operators from across the country to assess whether differences in the implementation of the legislation persist.

References

[11] Agência Nacional de Mineração (2020), Planejamento Estratégico ANM 2020-2023, http://antigo.anm.gov.br/portal/acesso-a-informacao/acoes-e-programas/planejamento-estrategico/planejamento-estrategico-anm-2020_2023.pdf (accessed on 30 November 2020).

[10] Agência Nacional de Mineração (2019), Relatório Anual de Segurança de Barragens de Mineração, https://www.gov.br/anm/pt-br/assuntos/barragens/relatorios-anuais-de-seguranca-da-barragens-de-mineracao-1/relatorio-anual-gsbm-2019-v-final (accessed on 27 November 2020).

[15] Kunamoto, J. (2001), Artisanal and Informal Mining in Peru, World Business Council for Sustainable Development. International Institute for Environment and Development.

[2] MDNP (2020), 2020 Country Fiches: Brazil. EU-Latin America Mineral Development Network Platform, https://www.mineralplatform.eu/tools/country-fiches.

[1] Ministério de Minas e Energia (2020), Boletim do Setor Mineral - Outubro 2020, https://www.gov.br/mme/pt-br/assuntos/secretarias/geologia-mineracao-e-transformacao-mineral/publicacoes-1/boletim-do-setor-mineral/boletim-do-setor-mineral-2013-outubro-2020-dados-atualizados-ate-setembro-de-2020.pdf/view (accessed on 29 March 2021).

[16] OECD (2021), Evaluating Brazil’s progress in implementing Environmental Performance Review recommendations and promoting its alignment with OECD core acquis on the environment, OECD, https://www.oecd.org/environment/country-reviews/Brazils-progress-in-implementing-Environmental-Performance-Review-recommendations-and-alignment-with-OECD-environment-acquis.pdf.

[9] OECD (2020), One-Stop Shops for Citizens and Business, OECD Best Practice Principles for Regulatory Policy:, OECD Publishing, https://doi.org/10.1787/b0b0924e-en.

[7] OECD (2020), Regulatory Impact Assessment, OECD Best Practice Principles for Regulatory Policy, OECD Publishing, https://doi.org/10.1787/7a9638cb-en.

[4] OECD (2020), Reviewing the Stock of Regulation, OECD Best Practice Principles for Regulatory Policy, OECD Publishing, Paris.

[6] OECD (2019), Tools and Ethics for Applied Behavioural Insights: The BASIC Toolkit, OECD Publishing, Paris, https://dx.doi.org/10.1787/9ea76a8f-en.

[13] OECD (2018), OECD Regulatory Enforcement and Inspections Toolkit, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264303959-en.

[3] OECD (2017), OECD Best Practice Principles on Stakeholder Engagement in Regulatory Policy: Draft for public consultation, https://www.oecd.org/gov/regulatory-policy/public-consultation-best-practice-principles-on-stakeholder-engagement.htm.

[8] OECD (2014), OECD Best Practice Principles: The Governance of Regulators, OECD Publishing, https://doi.org/10.1787/9789264209015-en.

[5] OECD (2012), Recommendation of the Council on Regulatory Policy and Governance, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264209022-en.

[14] OECD (2010), Cutting Red Tape: Why Is Administrative Simplification So Complicated: Looking beyond 2010, http://www.sourceoecd.org/governance/9789264089730 (accessed on 2 August 2017).

[12] Sousa, R. et al. (2011), “Policies and regulations for Brazil’s artisanal gold mining sector: Analysis and recommendations”, Journal of Cleaner Production, Vol. 19/6-7, pp. 742-750, http://dx.doi.org/10.1016/j.jclepro.2010.12.001.

Notes

← 1.  This does not preclude the fact that many other legal instruments pertaining to the broad regulatory framework on mining activities have been issued or amended.

← 2.  At the time of preparing this report, ANM informed that its 2020/2021 Regulatory Agenda includes the preparation of draft regulations to tackle issues on reserve/deposit and mining closure. These draft regulations have been submitted to stakeholders for comments, and regulation 68/2021 on mining closure was published on 30 April 2021.

← 3.  This is not an exhaustive description of all the legal instruments related to safety in tailing dams in Brazil. The full draft report to be available soon will encompass a more developed list.

← 4.  This Ordinance revised the standards already issued for dam safety regulations: DNPM Ordinances No. 416/2012 and No. 526/2013.

← 5.  Available at https://www.gov.br/anm/pt-br/assuntos/acesso-a-sistemas/sigbm (accessed 10 April 2020).

← 6.  Available at https://app.anm.gov.br/sigbm/publico (accessed 23 March 2021).

← 7.  See for further details https://www.metalbulletin.com/Article/3858914/Upstream-tailings-dams-banned-in-Brazil-following-Vale-incident.html (accessed 25 February 2020).

← 8.  It is worth noting, however, that these countries have peculiarities related to the incidence of high-intensity seismic shocks, which does not occur in Brazil.

← 9.  Available at https://www.in.gov.br/en/web/dou/-/lei-n-14.066-de-30-de-setembro-de-2020-280529982 (accessed 13 December 2020).

← 10.  This legislation establishes the regulation of safety actions to be adopted in the planning, design, construction, first filling and first pouring phases, operation, deactivation, de-characterisation, and future uses of dams.

← 11.  To support this measure, ANM issued Resolution No. 51/2020 to establish the “Conformity and Operational Assessment of The Emergency Action Plans”. Under this regulation, a mining companies are required to annually execute, for each of its tailing’s dams, a comprehensive evaluation to check whether the dams comply with current safety standards to operate. Available at https://www.in.gov.br/web/dou/-/resolucao-n-51-de-24-de-dezembro-de-2020-296821959 (accessed 22 February 2021).

← 12.  The self-rescue zone (or ZAS for its acronym in Portuguese) stretch of the valley downstream of the dam in which there is not enough time for the competent authority to intervene in an emergency, according to the flood map.

← 13.  Recently, ANM published Resolution N^o 51/2020 that deals with the “conformity assessment and operation declaration” of the PAEBM. Available at https://www.in.gov.br/web/dou/-/resolucao-n-51-de-24-de-dezembro-de-2020-296821959 (accessed 22 February 2021).

← 14.  Recent efforts include expanding temporarily the number of safety technicians focused on inspectors, through the publication of Inter-ministerial Ordinance No. 23.478 / 2020 ME-MME on 27 January 2021.

← 15.  The State of Minas Gerais, the main mining state in Brazil, published Law No. 23.291 on 22 February 2019 establishing the “State Dam Safety Law.” Article 6o of this Law establishes that the construction, installation, operation, expansion and raising of dams in the State depend on prior environmental licensing

← 16.  The system of environmental licensing at state level has challenges of its own that should be addressed. A study concerning the licensing practices in the four south-eastern states (Minas Gerais, São Paulo, Rio de Janeiro, and Espírito Santo) identified that some phases of the environmental licensing procedure are frequently omitted. This is a result of reclassification of potential impacts caused by projects from “intense” to “moderate” or “minimum”, which exempts the project from a full impact assessment study (OECD, 2021[16])

← 17.  At the time of preparing the report, ANM just finished the consultation process and the draft regulation Use of Sterile and Tailings Dams, which is part of ANM´s regulatory agenda for 2020/21. The draft regulation has been submitted for legal analysis before its approval by ANM’s Board of Directors.

← 18.  It is important to highlight that this law has also amended Article 43-A of the Mining Code establishing that the recovery of the degraded environment foreseen in a mining project should include, among others, the closure of the mine and the decommissioning of all installations, including tailings dams, in accordance with the current legislation.

← 19.  Regulations considered in this category include the following critical issues: soil mechanics, rocks mechanics, slope stability (specially in open pits), ground control (e.g., design of rock bolting reinforcement, shotcrete, floor stability, determination of pillar strength in underground mines), geomechanics instrumentation, mine subsidence, sustaining activities for underground mines, safety standards for mining refuge for workers.

← 20.  Available at https://www.oecd.org/gov/regulatory-policy/public-consultation-best-practice-principles-on-stakeholder-engagement.htm.

← 21.  Available at http://www.oecd.org/gov/regulatory-policy/reviewing-the-stock-of-regulation-1a8f33bc-en.htm

← 22.  The term “small-scale mining” denotes a series of small-scale activities such as digging, marking, panning, and shovelling, leading to the extraction of minerals.

← 23.  In this report, informal mining is considered to have the following attributes: 1) it has a reliance on physical labour for all types of operations, making minimal use of technology; 2) it may lack of complete legal mining licences, titles, leases and claims to the mineral areas for exploratory and extractive activities; 3) it exhibits low levels of productivity per mining operation, resulting from relatively small geographical areas; 4) it has low levels of health and environmental safety for miners, workers and local communities; and 5) it exhibits a transient character of employment due to the seasonal dependence of mining. This kind of mining remains in the informality with the express intention of staying on the margin of legality and hence avoid the costs and controls imposed by the State (Kunamoto, 2001[15]).

← 24.  SGM Ordinance No. 108, of 11 July 2019 led to the creation of a working group between the MME which resulted in a report with recommendations to give greater support to the formalisation of gold mining activities. Additionally, ANM established a task force as a pilot program to regularise the gold mining in the region of Tapajós, with plans to extend it to other regions that face the similar situations.

← 25.  Through Decrees No. 108/SGM of 11 July 2019 and 109/SGM of 18 July 2019, a specific working group was created culminating in the elaboration of a broad diagnostic study, whose recommendations include the improvement of the norms related to mining and environmental protection

← 26.  Available at https://www.in.gov.br/en/web/dou/-/decreto-n-10.239-de-11-de-fevereiro-de-2020-242820142 (accessed 24 February 2021).

← 27.  Available at http://www.oecd.org/gov/regulatory-policy/tools-and-ethics-for-applied-behavioural-insights-the-basic-toolkit-9ea76a8f-en.htm.

← 28.  Avaialble in: https://www.gov.br/anm/pt-br/assuntos/regulacao/analise-do-impacto-regulatorio-aira (accessed 11 January 2021)

← 29.  Mining royalties are distributed in the following way: 60% for the municipality where the activity or production takes place, 15% for the state where the production is located, 15% for the municipalities affected and 10% for the federal government.

← 30.  A recent exception include the publication by ANM of Public Notice No. 01/2021 with the opening of a selection process for hiring temporarily professionals to perform technical activities of management and engineering in the dam safety area.

← 31.  The law of Regulatory Agencies encourages collaboration and co-ordination across reg. agencies

← 32.  Available at https://www.oecd.org/regreform/regulatory-policy/34227698.pdf.

← 33.  Available at http://www.oecd.org/gov/regulatory-policy/one-stop-shops-for-citizens-and-business-b0b0924e-en.htm.

← 34.  The MME published Ordinance No. 138/2019 (Annex B – B.2), which established the Technical Committee for the Monitoring of Mining Dam Safety - CTBMin, and published, in jointly with the Ministry of Economy, Interministerial Ordinance No. 23.478 / 2020 (Annex B – B.3), which authorised ANM to hire, for a determined time, 40 (forty) new inspectors by ANM to act in dam safety.

← 35.  Available at http://www.oecd.org/gov/regulatory-policy/oecd-regulatory-enforcement-and-inspections-toolkit-9789264303959-en.htm.

← 36.  Available at http://www.oecd.org/gov/regulatory-policy/tools-and-ethics-for-applied-behavioural-insights-the-basic-toolkit-9ea76a8f-en.htm.

← 37.  For instance, MME Ordinance No. 136 of 26 August 2019, created a Working Group with the participation of MME and ANM, in order to identify the main bottlenecks and propose measures to reduce burdens and decrease the average granting time, part of which are in the implementation phase. In addition, in order to mitigate the effects of the COVID-19 pandemic and promote the improvement of the business environment, ANM created the Lavra Plan, materialised in a series of actions with the objective of reducing the bureaucracy between the Agency and the and whose benefits will extend beyond the pandemic.

← 38.  Decree No. 10.389 / 2020, the Pro-Minerals Decree, aims at greater interaction between government agencies in order to streamline environmental authorisations that make mining grants feasible in some specific situations, such as minerals of strategic interest to the country. Additionally, ANM published on 18 February 2021 Resolution No. 59 that stablishes the parameters for mutual technical co-operation agreement with states and municipalities to assist ANM in mining inspections and monitoring.

← 39.  Law No. 13,874 published on 20 September 2019 which “institutes the Declaration of Economic Freedom Rights; it establishes free-market guarantees, and amends other laws and decrees.

← 40.  Article 1.

← 41.  Article 1, paragraph § 6, and Article 3, section I.

← 42.  Article 3, section IX.

← 43.  Article 3, paragraph § 1, section I.

← 44.  Article 3, section IX.

← 45.  ANM published resolution No. 22/2020, which foresees the tacit approval procedure for certain acts, such as exploration authorisation.

← 46.  It this context, it means those processes that have the greatest cost and are done the most.