REVEALED: Loopholes in legislation allow mineral extraction on the seabed without environmental licences

Story by Lucio Lambranho

Translated by Gabriela Sarmet

Editing: Maurício Angelo

Brazilian companies are benefiting from authorisations to extract marine substances without environmental licensing.

And they are managing to get their requests approved, even before they get the mining rights, by using a loophole in the Mining Code approved in 1996 through an authorisation classified by the National Mining Agency (ANM) as being of an ‘exceptional nature’.

The mechanism, ratified by presidential decrees in recent years, is the utilization guide .

The data is part of an unprecedented cross-referencing of information from the ANM between the processes that have their extraction areas with total or partial incidence in the Territorial Sea, Continental Shelf and Exclusive Economic Zone with those of environmental licensing for this type of exploitation at sea from the Brazilian Institute for the Environment and Renewable Natural Resources (Ibama), both obtained through the Access to Information Act (LAI) by the Mining Observatory and confirmed by verification and checking with the agencies.

The cases in which extraction without Ibama’s approval is being legitimised by ANM collegiate opinions and decisions took place before and after the publication of a decision by the Federal Court of Auditors (1368/2024) that analysed the use of user guides in July 2024, which was considered illegal.

Among the TCU’s six orders is to “make the issuing of use permits conditional on the prior provision of environmental licensing”. The 180-day deadline for compliance expired in January of this year and during this period, a request for extraction at sea received a favorable opinion even though the licensing had not been completed by the federal environmental agency and there was no impact study on the requested area.

The cases at sea are not the only ones, according to the TCU, and reveal the ANM’s lack of control over the use of permits, which are granted in cases that are not exceptional, as expected, and even over the quantities of substances requested by companies and mining companies that are above those permitted.

“In the audited period from 2017 to 2021, the 4,777 user guides issued by the ANM are equivalent, on average, to 205.4% in relation to the 2,326 mining concession ordinances granted, according to a survey carried out on the ANM’s website,” the audit reveals. 

Featured photo: Ilha da Trindade / Agência Marinha de Notícias

ANM board deleted text requiring prior presentation of environmental license

The TCU investigation also shows that ANM’s Board of Directors deleted item III of article 107 of DNPM Ordinance 155/2016, by means of Resolution-ANM 37/2020, in June 2020, making it possible for user guides to be issued and published without the prior presentation of the environmental license.

With the change, only the effectiveness of the guide was made conditional on environmental licensing and not its issuance itself. The new text says that the license must be presented by the company within 10 days of the guide being issued. If not, its effectiveness is lost.

This space created a loophole used by companies that, with the permit in hand, don’t submit the license, betting on illegality and the ANM’s low inspection capacity.

The TCU auditors identified user guides in which the ten-day deadline for submitting the environmental license to the ANM was not met “and there is evidence of illegal mining using ineffective user guides, characterized by the declaration of production in the annual mining report and the collection of the Financial Compensation for the Exploration of Mineral Resources (Cfem),” they say.

One of the results of this action by the agency, according to the audit report, was almost 90 cases of uncontrolled exploitation in a sample that only goes up to October 2023: “88 cases of irregular extraction of mineral substances were found in relation to utilization guides issued in the period from 8/6/2020 to 31/10/2023, by cross-checking data extracted from the Mining Register with data from Cfem collection.”

Subsequent suggestions to revoke the 10-day deadline and return to the prior licensing requirement for issuing the guide, as suggested by Ronaldo Lima, director of the ANM, in January 2022, reinforced by a technical note and opinion, ended up not being accepted immediately and were lost in requests for views that took years, with no resolution until the publication of the TCU ruling in 2024.

On the contrary, in retrospect, the 2020 resolution that changed something so relevant was approved unanimously in just 21 days, the Court of Auditors recalled.

At the ANM, the guide is used to authorize the extraction of certain substances before a mining concession is granted. The list of substances allowed by this mechanism is long and includes everything from limestone shells to iron ore, copper, diamonds, nickel and gold, with the quantities allowed varying.

The survey reveals that the exploitation of mineral substances through maritime mining is already taking place in Brazil, but still without any fanfare or publicly available detailed and clear information.

ANM and Ibama, the federal agencies that should control and supervise the market, responsible for authorizations, checks and environmental licensing, are scrapped, with an insufficient budget, lack of staff and are still trying to get back on their feet after the dismantling carried out during Jair Bolsonaro’s government.

Exploration carried out with the use of a guide and without proper licensing increases the risk of environmental damage, according to experts on the subject, and could also be considered an environmental crime.

The possibility of exceptional mining without definitive mining was opened up in November 1996, in a law signed by President Fernando Henrique Cardoso and the then Minister of Mines and Energy, Raimundo de Brito.

Limestone and phosphate lead the way in offshore exploration. Maranhão, Bahia and Espírito Santo are the main states

Current exploration in the sea is concentrated on the extraction of limestone and phosphate, mostly from seaweed and products used in the fertilizer and animal nutrition industries.

This market is experiencing a boom following the war in Ukraine, since it is from the region that much of the fertilizer imported by Brazil comes and the federal government has encouraged the expansion of fertilizer production on national soil.

Phosphate, potash and limestone top the list of applications for offshore exploration, as we showed in the first article in the series .

The Observatório da Mineração investigation found that lithothamnium, a calcified seaweed known as red algae, found in deep waters off the Brazilian coast, is the substance most often mentioned in environmental license applications.

The companies that claim to exploit or have exploited it since at least 2007, according to the survey, are particularly concentrated on the coasts of Maranhão, Bahia and Espírito Santo.

Utilization guides, an open precedent in mining law, have been ratified in recent years

The use of these guides without environmental licensing or without the conclusion of Ibama processes violates even the two most recent decrees that ratified this possibility, the first issued in 2018 under the Temer government (9.406/2018) and the second under the Bolsonaro administration (10.965/2022), simplifying ANM analysis criteria.

Both the two most recent decrees and the 2020 ANM resolution, which regulates the use of the guides and an extensive 2016 ordinance, state that it is necessary to “respect current environmental legislation” and submit an annual mining report.

In the case of the resolution, however, as pointed out by the TCU, the removal of the obligation to submit prior environmental licensing allows for this grey area that ends up favoring companies.

For Suely Araújo, public policy coordinator at the Climate Observatory and former president of Ibama, the use guide should be used in situations provided for in the regulation, such as feasibility analyses or tests, not to bypass environmental licensing.

“It generates a temporary exemption from the granting of the mining concession, not from environmental licensing. If the activity is on an insignificant or small scale, environmental licensing can be waived or a simplified process applied,” she says.

Experimental licenses are used by mining companies in Bahia and Espírito Santo

Analyzing Ibama’s data on the environmental licensing of companies that explore or intend to explore in the Brazilian sea, Luigi Jovane, associate professor in the Department of Physical, Chemical and Geological Oceanography at the Oceanographic Institute of the University of São Paulo (USP), warns of other gaps in the processes, in addition to the lack of scientific studies.

The first of these is that many licenses classified as operational are actually “experimental mining operations”. The researcher says that mining companies have been extracting “in this way for many years”, especially in Bahia and Espírito Santo. And he points out possible violations in the processes regarding declarations about the mined material.

According to the expert, this biological material can help reduce the effects of climate change. “As well as being very important for biodiversity, live red algae and rhodoliths are among the biggest actors on CO2 sequestration in the sea. And they play a role in regulating the temperature and pH of the sea as a whole. Therefore, the removal of these materials could influence the marine balance and climate change. But this needs a lot more study,” states Jovane.

Ibama, on the other hand, says that there is no authorization for the extraction of red algae. If companies use this expedient, they would be going beyond what is allowed, causing impacts.

“Most of the related processes refer to the extraction of Lithothamnium, and there is no authorization for the extraction of red algae, rhodoliths or substances associated with corals. In order to understand the dynamics of the area subject to the extraction activity, a diagnosis is requested, so as to avoid impacts or damage to the biota,” Ibama replied to the Mining Observatory.

Lack of specific legislation and studies could compromise biodiversity, say experts

The cross-checking of information and responses by the LAI reveals that there are no specific rules or laws for the sector in the environmental area and licensing is based only on Conama Resolution 237/1997.

The regulation does not specifically deal with mineral extraction at sea, but in its article 4, Ibama is responsible for releasing undertakings and activities with “significant environmental impact at national or regional level, located or developed”, also “in the territorial sea; continental shelf and exclusive economic zone”.

As far as the ANM is concerned, there is no different rule for granting mining concessions on land and the references are to the “Mining Code, its regulations and legislation ancillary to the code”, which includes the use of guides, the agency said.

“The legislation is not strong. Because mining legislation is based on what happens on the continent. At sea, there really isn’t any ready-made legislation that can respond to certain characteristics. Conama itself is designed for continental areas, it’s not designed for marine areas,” says Jovane, from USP.

According to the researcher, companies don’t want the information to be made public. “There is a huge knowledge vacuum that needs to be resolved. The reefs in the South Atlantic are fundamentally made up of red algae, rhodoliths and sometimes sponges,” he warns.

For Suely Araújo, Ibama doesn’t need specific rules “and analyzes process by process”. In response to the Mining Observatory, Ibama stressed that “there are no specific regulations on the subject”. According to Ibama, “the environmental licensing of maritime mining activities complies with environmental legislation, including that relating to continental mining” and said it was “continuously improving all procedures based on the experience accumulated in previous licensing processes”.

Luigi Jovane recalls that the protection of marine areas is still fragile in Brazil and no mitigation is required of companies that want to explore the seabed.

“We need to do more studies on the impact that removing this material from the seabed and replacing it with other materials in other areas could have,” he says. For the researcher, if Brazil starts to have a lot of mining activity in the ocean, “cumulative agents could be formed and the impacts could be gigantic”.  “The risk also increases exponentially. And all of this has to be studied. There aren’t many scientific studies, there are very few,” he adds.

Alex Bastos, a professor in the Department of Oceanography and Ecology at the Federal University of Espírito Santo (UFES), makes a similar analysis. “When it comes to the marine environment, one of the main risks is not having a good study using the latest technology to minimize risks and evaluate mitigating actions, since the ocean floor is still little known,” says Bastos.

The UFES researcher says that there is still little knowledge about ecosystem processes and biodiversity in the deep sea (>200m) and that “we need to have all the data on the table so that we can make decisions based on science”.

According to Bastos, who has a PhD in Geology and Marine Geophysics from the University of Southampton in England, another issue that aggravates the Brazilian scenario is the political attacks that bodies like Ibama suffer, which affects their ability to properly fulfill their role, as in the case of environmental licensing.

“With the dismantling that was done and the harassment that occurred under the previous government (Bolsonaro), you can have the best legislation, but if the agency is weakened politically, it’s no use. Today it is improving, there are training actions, but this needs to be constant,” he recalls.

For Bastos, the definition of exploration areas and protected areas is the role of marine spatial planning, which has only recently begun in Brazil. “Creating a responsible and balanced zoning of the ocean floor is the only way to achieve sustainability,” he believes.

The Mining Observatory requested additional information and clarifications from Ibama and ANM, but the agencies did not respond after weeks of attempts. The space remains open for comments.