Coming into force on March 2, 2022, the National Mining Agency (ANM) Resolution 90/21 regulates Articles 43 and 44 of the Mining Code Regulation (Regulamento do Código de Mineração), providing the cases in which mining concessions (concessões minerárias) and mine manifests (manifestos de mina) can be offered as collateral for transactions aiming at financing mineral enterprises.

The new resolution is a result of contributions made by industry specialists, companies and other stakeholders under the public consultation (consulta pública) held on the second semester of 2020, and provides the requirements and conditions for the transfer of such mining rights in case of foreclosure.

The issue has long been the subject of debate. The possibility of granting mineral rights as collateral for financial transaction is a long-lasting request by players of the industry. Until the publication of the new resolution, the granting of mining assets as collaterals was regulated by Opinion JT-05 (Parecer JT-05), binding to the federal administration in light of its presidential approval.

In summary, such Opinion addressed exclusively the constitution of pledge over mineral rights and concluded that the encumbrance would be applied only to mining concessions (concessões de lavra). Furthermore, it provided that a prior approval by the National Defense Council (Conselho de Defesa Nacional) would be required for the registration of the encumbrances before ANM in relation to mining concessions located on border areas (área de faixa de fronteira). Given the precarious nature of the binding Opinion - the only instrument that regulated the subject -, the absence of sectoral regulation resulted in legal uncertainty for financiers, companies and the ANM itself.

The matter was  originally given prominence with the attempt to reform the Mining Code (Código Minerário) by the government of former President Michel Temer in 2017, by means of the Provisional Measure (Medida Provisória) 790/17, which expired after it ran its 120 days course without approval by the National Congress. The subject was later included in the reform of the Mining Code Regulation (Regulamento do Código de Mineração), concluded in 2018 with the enactment of Decree 9.406/18, which provided the possibility of granting mining concession as collateral for financing purposes, but stipulated that the regulation of its requirements and conditions would be provided by ANM resolutions.

Main innovations

ANM Resolution 90/21 (Resolução ANM 90/21) introduced important advances and clarifications, such as:

  • The possibility of burdening mine manifests as a mining collateral, provided that it is constituted by means of a public instrument;
  • The definition of the finance transactions that can be secured by mineral rights as fundraising transactions, under any legal modality, for the financing of mining enterprises, their installation, expansion or regularization, including finance within the national financial system, as well as other structured project financing transactions;
  • The definition that the collateralization of mineral rights is materialized by means of the registration before ANM of the respective public or private instruments, as applicable, by and between the mineral right’s titleholder (concessionária) and the financier. These contractual instruments shall be deemed confidential and should not have their access released to the public in the Electronic Information System (SEI – Sistema Eletrônico de Informações). Any third party, however, may request a certificate of the encumbrance, which must inform the value of the credit, its term, interest rate, the purpose of the transaction, the names of the financing institution, the debtor and the holder of the collateral, the date of registration and its write-off;
  • the obligation for ANM to maintain a public consultation platform by means of which interested parties may consult the existence of mining collaterals;
  • Clarification that, during the period of validity of the collateral over mineral rights:
  • titleholders of mineral rights may not waive the mining title or surrender it in whole or in part without the express consent of the creditor;
  • titleholders of the mineral rights shall remain responsible for the fulfilment of the obligations inherent to the mineral right and for the exercise of all acts necessary for their regularity and maintenance, including the possibility of expiry of the mining right;
  • the impossibility of practice of any act or measure, whether or not provided for in the security agreement, which may compromise or hinder the operationalization and continuity of the mining right. The financial institution may, nevertheless, perform acts in an exceptional basis in order to avoid the perishing of the mineral right granted as collateral, including during the period between the judicial or amicable foreclosure of the mining collateral and the registration, before the ANM, of the transfer of such mining right to the new titleholder.
  • The effective transfer of the mineral right foreclosed may only be perfected with the prior consent by the ANM. The transferee pursuant to a foreclosing auction shall be an entity legally able to hold mineral rights, satisfying the criteria provided by the Brazilian Federal Constitution and the Mining Code.

The new regulation provides, in addition to the above, that the request to collateralize a mineral right must inform the amount of the debt secured, its payment term, interest rate, the information of the collateralized mineral right and the purpose of the financing transaction, observing the requirements for the effectiveness of pledges provided for in Article 1,424 of Law 10.406/02 (the Brazilian Civil Code).

The ANM Resolution 90/21 provided that the secured financier has the right to access, upon prior request to ANM, the information of the collateralized mineral right submitted to ANM by the titleholder regarding:

  • its safety and integrity;
  • its collection of taxes and royalties;
  • the results of its mineral exploration; and
  • its exploitation and mineral production information.

By preventing the practice of any act or measure that compromise or hinder the operationalization and continuity of the activities for the use of mineral resources authorized by the granting power in the mining title, the new ANM Resolution 90/21 embraces similar rules applicable to the oil and gas industry, provided by ANP Resolution 785/19, which prohibits the influence of the financier on the management or execution of the assets object of a public concession.

Although ANM Resolution 90/21 has set out that the resources must be allocated to mining ventures, there is no restriction for the resources obtained from finances to be reverted to the collateralized mineral right itself, bringing legal certainty and paving the way for new capital flows to be directed to the mineral industry overall.

Market expectations

ANM Resolution 90/21 did not address the possibility of constituting fiduciary collaterals over mineral rights. Although collaterals of this nature are part of the set of security for project finance transactions, the constitution of collaterals of such nature over mineral rights continues to be a controversy between experts and players in the sector.

ANM Resolution 90/21 also refrained from addressing the possibility of constituting collaterals on mineral exploration permits. The measure would be especially relevant for the promotion of smaller companies involved in greenfield projects (the so-called "junior companies") and who typically face greater restrictions to access traditional forms of credit.