243 participations. In the mining sector, the primary source is CFEM 15 (Constitution of 1988), allocated to states, the Federal District, municipalities, and Union bodies. Royalties apply to oil, minerals, and natural gas (e.g., 5% of gross revenue, plus additional portions), and special participations are proportional to production and profitability of large fields. Legislation allows funds to be used for infrastructure, education, and health, but heavy reliance on current expenditures compromises sustainability. Examples include the Rio de Janeiro Sovereign Fund16, covering 50% of TAC revenues17 and decisions on oil and gas, and Espírito Santo Sovereign Fund18, supporting businesses, receiving R$400–500 million/year, and allocating at least 20% of CFEM to economic diversification. b.1.2.) Municipal Sovereign Funds: Several Brazilian cities with natural resources have implemented municipal sovereign funds, marking advances in local financial management. Ilhabela (SP) created the Municipal Sovereign Fund (2018) allocating 15% of royalties, aiming to accumulate R$2 billion in ten years. Maricá (RJ) established a fund19 in 2017 to attract investors to PPPs in health, education, and infrastructure, initially funded with 5% of gross royalty revenue, later expanded to 15%. Niterói (RJ) instituted the Revenue Equalization Fund in 2019, using 10% of special oil participation. Canaã dos Carajás20 (PA) created the Municipal Sustainable Development Fund in 2016 with 5% of CFEM. Presidente Kennedy (ES) maintains Fundesul21 since 2000, financed by municipal and oil royalties, managed by Bandes. Itabira (MG) had Fundesi, linked to the Itabira 2025 project, structured to address Vale’s mine closures, later deactivated. These funds allow more effective planning and preservation beyond a mayor’s term, preventing municipalities from becoming “ghost towns,” though intergenerational transfer and economic diversification remain limited. c. Structures Created to Manage Mandatory Mining Royalties c.1.) Mandatory Royalties: International examples include the Alberta Heritage Savings Trust Fund (Canada, 1976), Alaska Permanent Fund (USA, 1976), Norway’s Government Pension Fund Global (1990), and Chile’s Copper Stabilization Fund (1990), integrated into the Economic and Social Stabilization 15https://www.gov.br/anm/pt-br/acesso-a-informacao/perguntas-frequentes/contribuicao-financeira-pelaexploracao-mineral-2013-cfem 16 See Brasil - Lei Complementar nº 200, de 02 de março de 2022, oriunda do Projeto de Lei Complementar nº 42, de 2021e DECRETO Nº 49.023 DE 01 DE ABRIL DE 2024, RJ 17 Lei Complementar no 133, de 6 de novembro de 2020 18 Vide - https://fundosoberano.es.gov.br/ 19 https://fundosoberano.marica.rj.gov.br/lei-de-criacao-do-fundo-soberano-marica/ 2020 https://www.canaadoscarajas.pa.gov.br/ 21 https://www.bandes.com.br/Site/Dinamico/Show/867/FundesulPK
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