Justice recommends that the government of Minas Gerais suspend sales

The Public Ministry of Accounts (MPC) of Minas Gerais and the Federal Public Ministry (MPF) recommended that the government of Minas Gerais, led by Romeu Zema (Novo), suspend the privatization of the Minas Gerais Development Company (Codemge) and the Minas Gerais Economic Development Company (Codemig), which controls the largest niobium deposit in the world, located in the state.

The decision was taken after a series of investigations conducted by attorneys Maria Cecília Borges and Sara Meinberg Duarte, who point out that the policy of privatizing companies is already being carried out, even without complying with legal rites.

The guidance of the control bodies is supported by the Constitution of Minas Gerais, which provides that the privatization of companies controlled by the State of Minas Gerais requires the approval of the Legislative Assembly, with the vote of three-fifths of the deputies in favor.

In October 2019, Zema sent to the Legislative Assembly two Bills (1,205 and 1,203/19) on the Minas Gerais Development Company (Codemig). The first proposes the early receipt of resources from the exploration of niobium, with the assignment of credits until 2032. PL 1203/19, on the other hand, deals with the privatization of Codemig. However, the projects did not even enter the legislative house.

The sale of state-owned companies is one of the main conditions for the State’s adhesion to the Fiscal Recovery Regime, which proposes a “truce” in the collection of debts of states with the Union for a period of up to nine years.

Privatization policy is being executed

During the investigations, MPC prosecutors found evidence that demonstrates that the policy of privatizing companies is already being implemented. In response, the presidency of the companies stated that “divestments, demobilization of assets and delegations can be made directly by the state-owned company, which has the legal autonomy to manage its own assets and rights.”

Sale of Codemig could cause an even bigger hole in public coffers

In a note, the prosecutors stated that “the presidency of the companies presented information that demonstrates that their conduct is aimed at privatizing or extinguishing Codemge/Codemig without the necessary legal authorization, under the appearance of divestments”.

“To sell Codemig is to sell the goose that lays the golden eggs of MG”

Experts believe that, instead of solving the state’s budget problem, the sale of Codemig could cause an even greater breach in public coffers. This is because Codemig owns the exploration of the largest niobium deposit in the world. The mine is in the municipality of Araxá, in the Alto Paranaíba region.

Niobium is a mineral used to make high-strength steel alloys – with applications in offshore platforms, bridges and jet aircraft turbines. The Araxá reserve has an exploration capacity for over 400 years. Currently, the State receives 25% of the value of what is extracted in the mine.

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The geology professor and specialist in mineral policy, Cláudio Scliar, told Brasil de Fato that “to solve the State’s problem, the governor is killing the goose that lays the golden eggs. The governor’s concern should be the addition of value to these inputs, and not the sale of Codemig”.

Source: BoF Minas Gerais

Editing: Sarah Fernandes and Wallace Oliveira

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