(Rewrites with outcome of committee meetings, adds legislator comment)
By Jake Spring
BRASILIA, Oct 24 (Reuters) - Brazilian congressional committees approved one plank of sweeping mining reforms on Tuesday, amending President Michel Temer's proposals to favor smaller miners, with votes on the two other measures delayed to Wednesday.
Temer proposed the policies raising royalties, overhauling regulations and creating a new government agency in three separate decrees in July as part of a market-friendly agenda aimed at attracting foreign investment. The decrees require the approval of Congress to become law.
The committee considering the creation of the new mining agency passed that proposal, which could go to a vote in the lower house of Congress as soon as next week.
The committees that postponed votes now face the challenge of reaching quorum as Congress turns to a vote scheduled for Wednesday on corruption charges leveled against Temer, which could dominate the legislative agenda for the rest of the week.
The reforms could miss a November deadline for full approval before Temer's decrees lapse if not passed by committees by the end of next week, said Israel Lacerda de Araujo, a legislative expert who advises the Senate on mining.
Among the policies still being debated, the committee has amended Temer's proposal on mining royalties so that companies would face an automatic 4 percent royalty for iron ore, although miners could apply for a rate as low as 2 percent if they show a lack of profitability because of small operations, poor quality ore or certain other factors.
The rates proposed by Temer had varied between 2 percent and 4 percent for all miners based on the market prices for iron ore prior to the amendment, added to the committee report last week.
The move would result in miners such as Vale SA that operate on a larger scale with higher quality ore paying more than smaller miners, Araujo said.
"The majors have the capacity to pay (the 4 percent) but the smaller ones would need to close their mines. This lets them keep their mines," he said.
A Vale representative did not respond to a request for comment.
Also helping smaller miners, the committee on newly proposed mining regulator ANM adjusted agency fees to factor in the size of the company and the area affected by a mine, with larger enterprises and projects paying more.
Deputy Leonardo Quintao, who oversaw amendments for the agency committee, said that while an estimated 61 larger miners will pay more, about 30,000 smaller miners seen as larger job creators will pay less.
"We found an equation where we're socializing the tax," Quintao said.
Companies will also pay more for holding on to mining titles, encouraging them to put areas into production or give up the title, he said.
To fund expansion, more small Brazilian miners are preparing to list themselves on capital markets.
Ero Copper Corp, which runs the Vale do Curaçá mine in Brazil, raised $110 million in its initial public offering earlier this month, while Nexa Resources SA, which mines zinc and other metals, filed for a $651 million IPO. (Reporting by Jake Spring; editing by Grant McCool)