Speaking to Reuters last week, a Senior Brazilian government official reiterated that the Rouseff administration has no immediate plans to limit FDI in the mining sector. According to Reuters, the official further said the government may also delay its plans to increase royalties. Reports had earlier emerged with a major Brazilian Newspaper, indicating the Rouseff administration was likely to put a cap on FDI in mining, with a particular focus on iron ore assets.

The move had generated concern amongst potential investors in the industry. However, the official told Reuters the reports were fallacious, adding that no such discussion had been undertaken. There has been an increasing interest in the Brazilian mining industry by foreign players in the last one year, a move that has some business and government functionaries concerned. However, the industry remains largely controlled by Brazil’s Vale SA, the world’s largest producer of iron ore.

The government is detailing a legislative proposal that would boost government control over mineral projects to ensure concession holders invest rather than speculate, though this would apply to both foreign and private capital, reported Reuters.

President Dilma Rousseff’s administration wants the mining industry to create more jobs and technical expertise at home rather than just exporting raw materials, but government leaders insist they welcome foreign investment and want Brazil to remain internationally competitive. Plans to possibly hike royalties that mining companies must pay may be delayed due to difficulty in reducing taxes that would offset the higher operating costs, the source told Reuters.

A proposal put forward by the country’s mining ministry, seeking to offer miners processing raw materials domestically a discount on royalties they owe, was turned down by the Finance ministry. The Mining ministry had earlier said the Rouseff administration wanted to present the bill and a separate proposal on royalties in the first half of the year. Lofty metal prices have stoked investor interest in Brazil’s vast mineral deposits. Last year companies requested nearly 21,000 mineral prospecting licenses, up from 16,000 the year earlier.

Brazil’s mining sector is expected to draw investments of roughly $62 billion between 2010 and 2014, according to private sector estimates. The minerals sector employs about 4% of the total workforce (approximately 650 000) of Brazil. This excludes the estimated 1 million artisinal miners active in Brazil. Job losses continue to occur as a result of privatization and joint venture activities.