Brazil President Spending Billions in Amendments and Decrees to Hang Onto the Presidency

What does it cost to hang onto the office of President? In Brazil, President Michel Temer paid for that privilege with R$ 13.2 billion (US $4.2 billion) worth of measures — decrees and amendments aimed at securing sufficient votes in the Lower House of Congress to avoid a criminal investigation by the Supreme Court into the president’s alleged corruption. The August 2nd House of Deputies vote allowed Temer to keep his position, for now.

The president’s costly promises and payouts, made one after another in the weeks before the crucial vote, and unveiled in the weeks since, came in the form of a rapid flurry of budget amendments, the refinancing of agribusiness debt, a decree opening a vast Amazonian region larger than Denmark to mining, and a decree announcing a new national mining code.

On August 23rd, Temer issued a new presidential decree abolishing a gigantic national reserve that had been established in 1984, opening up 4.6 million hectares (17,800 square miles) between the Amazonian states of Pará and Amapá to mining.

His decree abolished protection of the National Copper and Associated Reserve (Renca), an area originally created during the Brazilian dictatorship to provide mineral wealth for the nation, plans that were never executed.

The region is reportedly rich in gold, iron, nickel, manganese and other minerals, but also includes nine conservation and indigenous areas.

While the decree says those preserves will continue to be protected, critics worry that adjacent mines, roads, transmission lines and other infrastructure will greatly compromise the region’s forests and impact its indigenous people.

Senator Randolfe Rodrigues denounced Temer’s move as “the biggest attack on the Amazon of the last 50 years,” reported the O Globo newspaper.

World Wildlife Fund Brazil Executive Director Maurício Voivodic said that opening the region to mining would result in a “demographic explosion, deforestation, the destruction of water resources, the loss of biodiversity and the creation of land conflict,” repercussions seen in other parts of Brazil opened to rapid mining and infrastructure expansion.

The new mining code decreed by the president will also likely have sweeping social and environmental impacts, not just on the Amazon, but across Brazil, a nation rich in minerals.

While the revised code includes higher royalty rates that will benefit the government and cost the private sector more, the new mining “revitalization plan” also guts existing industry environmental monitoring, say critics. The plan, issued by Temer as a temporary decree, takes effect immediately, but will ultimately require congressional approval to become law.

Who Benefits

Brazil has been considering changes to its mining code for a few years now, and the industry has backed legislators to help assure those changes would benefit them. The Brazilian NGO, IBASE analyzed industry influence when the mining code came up for review in 2014.

The study found that the bulk of the congressional committee members responsible for drafting the new code had received substantial campaign donations from mining-related companies.

One representative, Leonardo Quintão, a member of President Temer’s PMDB party, hails from Minas Gerais, a state with major mining interests, and received 42 percent of his 2014 campaign funds from the mining sector.

The Intercept Brasil published an interactive graphic showing how each member of Brazil’s lower house voted on the August 2nd Supreme Court criminal investigation, along with the funds the president approved potentially benefiting representatives and their interests. Slightly more than half the members of the mining-code commission, 29 in total, voted against investigating President Temer.

While some of these votes were arguably bought with the new mining code and large budget amendments awarded by Temer, there were also deputies who received largesse but voted instead to proceed with the criminal investigation.

Gabriel Guimarães, the mining code commission chair, is an example. He represents Minas Gerais, and his father, Virgílio, received R$ 8 million (approx. US$ 2.5 millions) from Brazilian investors to extract gold from tailings near Pará’s Serra Pelada region.

Guimarães is, however, a member of former President Dilma Rousseff’s Workers’ Party, so likely no friend to Temer. Even though his political interests received 2.4 million reais (roughly US$ 765,000) in amendments from Temer between June and July, Guimarães still voted for a Supreme Court investigation of the president.

The two Brazilian states best known for their mining industries are Minas Gerais and Pará, the latter located in the Amazon. But Deputy Mauro Lopes of Minas Gerais said that the new mining code decree had no influence on the way his state’s delegation voted on the investigation.

The Temer vote largely followed party lines, with 33 out of 53 total Minas Gerais deputies, and 11 out of 17 members of the Pará delegation, voting against proceeding with the presidential investigation.

The Intercept Brasil’s analysis of the Temer vote shows that deputies considered part of the bancada ruralista — the powerful ruralist lobby representing wealthy elite agribusiness and mining interests — voted largely against Temer’s investigation.

Temer lunched with members of the rural caucus, including 52 deputies, the day prior to the vote. At the lunch, he announced two financially beneficial measures for the agricultural sector.

Environmental Harm

The new mining royalty rates imposed by the just-decreed mining code are expected to bring in 80 percent more mining revenue for the Brazilian government at the federal, state and city level.

Last year, the government earned roughly R$ 1.6 billion (just over US$ 510 million). The increase occurs in part because the government will now begin taxing companies’ gross income instead of net revenue.

Importantly, Temer’s temporary decree shifts all of the responsibility for monitoring environmental standards away from government and to the mining companies themselves. Critics point to disasters such as the collapse of the Fundão dam in Minas Gerais to highlight the perils of the industry policing itself.

Another change: the creation of a new regulatory agency, the National Mining Agency, which will take over from the National Department of Mineral Production. The new agency, however, lacks the teeth and personnel to effectively do the job, say critics. Deputy Lopes boasted that the Minas Gerais delegation would play a major role in selecting the new mining agency’s leadership.

“Just changing the name isn’t going to resolve the problems we have in mining,” Dr. Mario de Lima Filho said of the new regulatory agency. Dr. Lima Filho teaches geology at the Federal University of Pernambuco and is a former head of the state’s mining agency.

Lima Filho contends that the new mining regulations “definitely privilege a certain class,” and will benefit large companies most. “You need to have the capital to undertake the [bidding, permitting and mining] process, and you have [to possess the capacity] to be detailed.

“So, it seems like this was done to please one of the big companies because our small companies
are going to be left out because they don’t have the means to participate in a bidding process, for example.”

The new mining code represents a serious blow to the protections offered to indigenous and traditional communities, as well as nature reserves, according to the Committee to Defend Territories Against Mining (CDTAM). In a statement, CDTAM wrote that “the government seems unwilling to make investments in inspections” since it created the new mining agency without going through the civil service hiring process required to bring on qualified staff.

Currently, for example, “the entire state of Minas Gerais has only four staff to inspect more than 700 [mining related] dams,” the statement said. “The creation of an agency without a significant increase in the workforce does not guarantee greater state control upon the mining sector.”

The relevance and critical importance of dam inspectors is best understood in light of events in 2015. That year, Minas Gerais experienced Brazil’s largest-ever environmental disaster when the Fundão iron-ore tailings dam collapsed and emptied approximately 50 million tons of toxic waste into the Doce River. The catastrophe killed nineteen and dumped heavy metals into the drinking water supply of approximately 1.6 million people.

Others share CDTAM’s concerns. Prof. Lima Filho said that the true cost of the new mining law will only become clear once it has been implemented. “We’re going to see some problems related to identifying the boundaries for indigenous areas, for [environmentally preserved] areas,”

Lima Filho added: “You buy an area that has a good reserve of some essential mineral, but later you can’t mine because the mining plan wasn’t approved in the environmental permit.”

This, he speculated, could lead to large mining companies applying “pressure to break some [protections for] riverside areas, indigenous areas, forest areas, etc. Unfortunately, all kinds of things happen in this country.”

Days before the new mining code was released, the Temer government approved a recommendation limiting indigenous land claims to ancestral lands occupied as of 1988, a legal maneuver supported by agribusiness and mining companies known as the “marco temporal,” heralding a significant weakening of indigenous territory rights that could strengthen new mining claims.

But in mid-August, Brazil’s Supreme Court indirectly ruled against Temer’s arbitrary 1988 cut-off date. Further governmental actions on the marco temporal are expected.

For the moment, it remains illegal for private companies to mine on indigenous land, though a 1996 bill to undo that law (PL 160/1996) is said to be back on the congressional agenda.

Eduardo Costa, a member of the Pará state assembly said he welcomes the increased income for states and municipalities the new mining code will bring. Costa also praised how the new code decreased the bureaucracy mining companies would have to face to obtain permits.

Nonetheless, he also agreed with one of CDTAM’s critiques. Both Costa and CDTAM have called on the government to draft regulations for the Kandir Law, which would allow states to significantly tax unfinished goods, especially ore and electricity for export — a tax that would likely impact large transnational mining companies.

Costa didn’t comment on the social or environmental impacts that may result from the new mining code, but he pointed to Pará’s efforts to tax mining companies, efforts that have been challenged in court.

This article appeared originally in Mongabay –


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