Colossus Minerals Inc COLUF

Gov royalty to increase

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* Mines minister says royalty rates to increase 100 pct

* Authorities have said rates to rise to 4 pct from 2 pct

BRASILIA, Sept 6 (Reuters) - Brazil's overhaul of its mining code will likely double average royalty rates for minerals, Mines and Energy Minister Edison Lobao said on Tuesday.

Previously Lobao had said the government was considering a proposal to increase royalties to an average of 4 percent from 2 percent, but that the issue was still being studied.

That increase is part of a broad set of changes to mining regulations that are aimed at increasing state control over the industry and boosting the state's revenue from a mining boom.

Government leaders are also seeking to speed output of strategic minerals such as potash, a fertilizer.

The government of President Dilma Rousseff is expected in the coming weeks to present bills to Congress that would hike royalties, change the system of licensing for mine development, and create a new mining regulatory body.

The bills are likely to contain a "flexible" system of mining royalties in which the executive branch will be able to change the amount charged without going through Congress, as is currently required, government sources told Reuters in August.

The changes are likely to have the biggest impact on Rio de Janeiro-based mining giant Vale , the world's largest producer of iron ore and a leading producer of nickel and copper. Industry leaders say higher royalty rates will make the industry uncompetitive unless the government lowers the country's overall tax burden