Can foreign individuals own mining companies in Brazil?
Below, an interesting exchange with a reader (all personal details have been deleted).
Dear Professor Adler Martins
I like your blog very much, for I love International Law, negotiation and the art of drafting contracts.
I would like you to help me with a doubt.
May a foreign investor acquire a concession for mining exploration (gold) in Brazil?
Is it necessary that Brazilian individuals also have equity in the company?
What are the legal procedures and ways to accomplish that?
Thanks in advance
Thank you for following the blog.
Regarding your question: The Brazilian Constitution, in its Article 176, says that the exploration and exploitation of mining deposits can only be pursued by a Brazilian individual or by a Company established in Brazil.
Thus, if a foreigner wishes to acquire any kind of mineral rights in Brazil, it shall first set up a company in Brazil. This company may either have 100% foreign capital or be a joint venture with Brazilian companies or individuals.
To set up a company in Brazil, one must register the Articles of Association before the Commercial Registry and register the capital before the Brazilian Central Bank.
I must say that this kind of operation, i.e., opening a company in Brazil in order to acquire mining rights, happens quite often.
Restrictions exist, however. The three main ones are:
1. Brazilian companies with more than 49% of foreign capital cannot exploit mining deposits locates within the legal border area, understood as anywhere 150km (about 81 miles) far from the borders;
2. Foreign companies are not allowed to explore uranium and most of other radioactive materials, and
3. Oil is still a Federal monopoly.
Please feel free to contact me, so that we can discuss this matter in more detail.