Ativa considers rise in Brazil mining royalties negative for sector players.

(ADPnews) - Jun 27, 2011 - The increase in the rate of mining royalties to 4% from up-to-date 2%, contemplated by Brazil's federal government, will be negative for the local sector players, Ativa brokerage said.

According to Ativa, the aggravating of the tax burden may damage the market's perception of the local mining sector in general, negatively affecting mainly Vale (SAO:VALE3), MMX Mineracao e Metalicos (SAO:MMXM3) and Companhia Siderurgica Nacional (SAO:CSNA3), or CSN.

Last week, Brazilian daily O Estado de S. Paulo reported that after several months of deadlock, the new regulation code for the mining sector is being finalised and is expected to be sent for approval to Brazil's Congress in the second half of the year, raising the average rate of the royalties charged and possibly introducing an additional tax for major mineral exploration projects.

Moreover, according to Ativa's report, a bill presented to the Congress last Thursday proposes a 3% increase in the rate of iron ore royalties.