Harvest Minerals Limited (LON:HMI) has welcomed news that the Upper House of the National Congress of Brazil has approved a bill to reduce the royalty rates of fertiliser projects from 3.0% to 0.2% which it sees significantly benefitting the group.
The AIM-listed fertiliser development company noted that the bill was approved by the Chamber of Deputies, the Brazilian parliament’s lower house on 22 November 2017 and is part of wider reforms to boost the mining sector and the economy in general.
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The group said the change – which will take effect from January 2018 - will allow it to benefit significantly due to its low cost of production and forecast high production margin.
Harvest Minerals said it anticipates significant cost savings of around US$1.46 per tonne at its Arapua Fertiliser Project.
The company’s August 2016 scoping study for Arapua assumed a cost of US$1.58 per tonne in royalties on sales at US$60 per tonne, and under the new regime this reduces to US$0.12 per tonne in royalties therefore a saving of around US$1.46 per tonne
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Harvest's executive chairman, Brian McMaster, said: " Whilst we were expecting a cut in royalties from 3% to 1%, the fact that it was reduced further to 0.2% shows the Brazilian Government's continued commitment to developing fertiliser and remineraliser projects to reduce the country's dependence on imports.”