Dear Members
We’re nearly half way through December and 2018 draws towards its end. Soon the holidays here in New York will be upon us and the likelihood of snow will increase significantly. On November 16, some 6.4 inches of snow were recorded in Central Park – the biggest one-day November snowfall in 136 years. I, thank goodness, was in Vienna — sans any snow. But still pretty chilly. All that said, at least the days will start getting longer on December 21!
A wee bit of a warning- in advance. First, this may be a “view from North America,” but my missive this month is more about South American than north. Second, while it may not strike the happiest of notes on which to end the year, I do think it will address an important subject.
Back at the end of July this year, I noticed a Reuters piece describing then-stalled efforts by Brazilian president Michel Temer to create a new mining regulator — The National Mining Agency (ANM). It appeared that, although approved by Congress, since Temer hadn’t secured confirmation from the Senate for the five directors he had appointed, not only could the ANM not start its work, but neither also could a separate effort to modernize Brazil’s mining code kick off.
Roll forward three months and the news was that, on Sunday, October 28, far-right, seven-term congressman, supporter of the country’s military dictatorship from 1964 to 1985 and former paratrooper, Jair Bolsonaro had been elected the next Brazilian President.
Describing them as an obstacle to economic growth, Bolsonaro has voiced his desire both to scale back the country’s environmental laws and open up the Amazon. Indeed, he has gone so far as to say: “Where there is indigenous land, there is wealth underneath it.”
Whilst his pledge to open up more of the Amazon to mining comes as no surprise to me, what did come as a wee bit of a surprise was the message in a near contemporaneous piece published by Canada’s CBC entitled “What a far-right Bolsonaro presidency in Brazil means for Canadian business.”
Having briefly described the case of a Canadian gold mining company that has been in dispute with Brazilian regulators for not having “properly consulted with local Indigenous communities,” the article concluded with the following couple of paragraphs:
“This is the kind of dispute where Bolsonaro has said he favours economic growth over environmental protection.
“With nearly 60 percent of the world’s public mining companies listed on the Toronto Stock Exchange, losses for Amazon rainforest under Bolsonaro could spell big gains for Canadian investors.”
Now, I’ve read the piece more than a couple of times and, hard as I might try, I cannot detect any hint of irony in the conclusion. I have to say that I find this a little depressing. But, of course, I may be quite wrong. Perhaps it is because CBC describes the article as “ANALYSIS” that any ethical dimension of benefiting from the further destruction of the Amazon rainforest is not addressed.
Whatever the reason may be, though, I do not believe such a piece does any favours either to miners, especially publicly-quoted miners, or the mining industry. In fact, I think it does exactly the opposite. Miners are, and often also have to be, some of the most environmentally sensitive companies – just to survive. However, in its tone, in what it omits, and in its conclusion, I deem this piece to be particularly insensitive – on many counts.
All that said, we will have, anyway, to wait until at least the New Year to see just how, on the regulatory front, things play out in Brazil. On 30 November, Bolsonaro appointed his eighth veteran of the armed forces to a senior government post when Bento Costa Lima Leite de Albuquerque Junior, who currently heads up the Brazilian navy’s nuclear and technology development programme, was tapped as the new mining and energy minister.
However, on 5 December, following approval by the Senate, President Temer was actually able to launch the ANM and replace the erstwhile National Department of Mineral Production. In addition to changing the country’s 50-year old mining regulations, new rules have now come into effect covering not only the enforcement of mine closures planning, but also stricter environmental regulations. Amongst other things miners will now be responsible for recovering areas degraded by extraction activities.
Bolsonaro takes over the presidency on 1 January, 2019. With his Admiral soon to be in place at the Ministry of Mining and Energy, and having already fiercely criticized the government’s environmental agencies, who knows what is going to happen.
On that rather sour note, I should like to send my best wishes for the forthcoming holiday season to MMTA members everywhere. And I remain, as always
Yours,
Tom Butcher
December 14th, 2018 ©2018 Tom Butcher Tom Butcher is a Director at Van Eck Associates Corporation (“VanEck”). The views and opinions expressed herein are the personal views of Tom Butcher are not presented by or associated with VanEck or its affiliated entities.
- Reuters: Brazil mining reforms stalled by impasse over new agency, https://www.reuters.com/article/us-brazil-mining-regulation/brazil-mining-reforms-stalled-by-impasse-over-new-agency-idUSKBN1KH29V
- The New York Times: As Brazil’s Far Right Leader Threatens the Amazon, One Tribe Pushes Back, https://www.nytimes.com/2018/11/10/world/americas/brazil-indigenous-mining-bolsonaro.html
- CBC: What a far-right Bolsonaro presidency in Brazil means for Canadian business, https://www.cbc.ca/news/world/brazil-canada-trade-bolsonaro-politics-foreign-policy-1.4878379
- Mining.com: Brazil launches new mining agency days before Temer steps down, http://www.mining.com/brazil-opens-new-mining-agency-days-temers-govt-ends/
