According to Vale’s ceo Fabio Schvartsman, the Brazilian government has created a "… monster" by imposing the new provisional measures on the Brazilian mining sector by increasing mining royalties. The executive made the comment during the presentation of the company`s financial quarterly results to media on 27 July.

“This measure, which is expected to increase government`s revenue by near 80%, brings legal uncertainty. The change from current 2% to 4%, depends on the international iron ore price and production. In addition, the collection will no longer be made on the net revenue of the mining companies, which allows the transport and logistics expenses to be deducted from the amount to be paid, and will be levied on gross revenue,” Schvartsman added.

According to the executive, the new mining royalty formula makes it impossible to calculate the estimated tax to be paid by the industry. "It comes at a bad time and it's just a tax increase with nothing coming from the other side. What struck me most is that, in addition to changing the rates, they have changed the basis of calculation. The worst is not raising tax, but not knowing what you will pay at the end of the day. Obviously, it brings legal uncertainty. The government has created a monster…," Schvartsman said.

On the other hand, the president of Brazil Michel Temer said that the new provisional measures will make the industry more competitive, innovative and sustainable. "We take a decisive in order to modernise laws and institutions of the mineral sector, to bring new investments," Temer commented during a signing ceremony of the new regulatory framework earlier last week.

According to the provisional measures, the government has also created a new regulatory agency, the National Mining Agency (ANM).

"With the new agency, we will have more autonomy and transparency to inspect the mining activities without the intrusion of any other agent or player in the sector,” said the minister of mines and energy, Fernando Coelho Filho.

The Brazilian mining association Instituto Brasileiro de Mineração (IBRAM) declined to comment on the measures when asked to do so by Kallanish.