RIO DE JANEIRO, Sept 10 (Reuters) - Brazil would be "shooting itself in the foot" if it went ahead with a proposed hike on iron royalties, the head of a local division of Anglo American said on Thursday.
Brazil's government is studying a possible unspecified increase in iron royalties, currently 2 percent, to boost government income from the mining sector.
Stephan Weber, President of Anglo Ferrous Brazil, said the country's mining business is becoming less competitive because of the heavy burden created by a range of taxes.
"We have to remember that we're competing with the rest of the world," he said. "Royalties are lower in Australia, yes, but there they don't have as many taxes. Brazil is not as competitive these days."
The government of President Luiz Inacio Lula da Silva has said little in recent months about the mining royalties proposal as it focuses on passing proposed oil sector legislation that would hike state control over the industry.
Weber nonetheless said Anglo was interested in expanding operations in Brazil and could boost iron ore output to 80 million tonnes per year by 2015, compared with 26.5 million tonnes estimated for 2012.
Anglo's exports from Brazil are currently focused on the Middle East and Europe, but it could begin to sell to the booming Chinese market as its production grows in the coming years, Weber said.
Brazil's Vale, the world's largest iron producer, in 2008 produced 302 million tonnes of iron ore.
(Reporting by Denise Luna, Writing by Brian Ellsworth; Editing by David Gregorio)