BRAZIL Law and Practice Contributed by: Carlos Vilhena, Roberta Bilotti Demange and Marina Bertucci Ferreira, Pinheiro Neto Advogados
2.7 Environmental, Social and Governance (ESG) Guidelines and Regulations The ESG issue has gained an undeniable impor - tance in the Brazilian corporate sector in recent years. There has been an increasingly clear and urgent call from society and the market for com - panies to adapt to ESG principles. However, no major ESG guidelines or regulations have been introduced in Brazil specifically for the mineral sector. From a legislative and regula - tory perspective, the tendency perceived since the recent major tailings dam accidents, which took place in 2015 and 2019, is an increase in inspection activities, and an enactment of laws and regulations that provide for stricter rules and more severe penalties in the case of ESG-related defaults. Corporate governance (the “G” pillar) has become the main element for mining compa - nies to bring their activities in line with several aspects related to the environment and society, implementing the “E” and “S” pillars. Companies’ increasing concern with image and reputation, associated with a greater corporate awareness of the systemic and financial con - sequences of non-compliance with the best practices in ESG, has carried a considerable weight in the development and implementation of social, environmental and corporate policies. 2.8 Illegal Mining Illegal mining, particularly for gold, is an issue in certain areas of Brazil and poses significant challenges to mining companies and Brazilian authorities, as it not only leads to environmental damages and social conflicts, but also disrupts legal mineral production.
In early 2023, a humanitarian crisis in the Yanomami indigenous land drew attention to the impacts of illegal mining and led to several meas - ures from Brazilian authorities, in the executive, legislative and judicial branches. Among these measures are the strengthening of inspections by the competent environmental authorities, the suspension of the presumption of legality for gold acquired in good faith, and the resolution issued by the ANM aimed at preventing money laundering and/or terrorist financing in transac - tions involving precious metals and gemstones, which establishes additional obligations for the purchase and sale of these minerals. There are also a number of bills in Congress aimed at reg - ulating transactions with gold, so as to ensure traceability and sustainability. Additionally, the Brazilian Mining Association has entered into an agreement with the Ministry of Justice and Public Safety to establish technical co-operation for the development of studies that will support the formulation of policies aimed at combating organised crime linked to illegal min - ing activities. 2.9 Good and Bad Examples of Community Relations/Consultation Impacting Mining Projects Generally, good examples are set when mining companies believe in aggregating the local com - munities as part of the project itself. This can be by creating jobs, developing local infrastructure with compliance and, in short, engaging com - munities to a certain extent in the project or operations. However, companies that do not involve local communities in their projects from the outset usually face conflicts and popular rejection, which may result in the decrease of political will
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