(Recasts with full approval with Senate vote)
BRASILIA, Nov 22 (Reuters) - Brazil's Congress on Wednesday passed a bill that would boost royalty rates on iron ore by 75 percent - instead of the doubling of rates that had been proposed - as both houses voted in rapid succession in a win for President Michel Temer's reform agenda.
Under the revised plan, gold mining royalties would rise 50 percent, while potassium mining royalties would be slashed. The vote came a week ahead of a Nov. 28 deadline to pass Temer's planned overhaul of mining regulations. Two related proposals aimed at improving regulatory efficiency for the sector could expire if not approved by then.
Voting in the early hours of Wednesday morning, the lower house amended the bill that had been proposed in committee for iron ore, gold and fertilizer components. The Senate approved the lower house bill without changes Wednesday evening, sending it to Temer for signature.
Iron ore royalties in the bill rise to 3.5 percent from the current 2 percent, instead of jumping to 4 percent.
Congress maintained a provision that the royalties would be based on gross revenue instead of net revenue as is currently done, which will sharply increase collections.
It also preserved an amendment made in committee allowing less-profitable iron mines to apply for a rate as low as 2 percent, which favors smaller miners over the likes of Vale SA and BHP Billiton Ltd.
Gold royalties would increase to 1.5 percent from 1 percent currently, instead of the originally proposed rise to 2 percent.
Royalties on potassium would be slashed to 0.2 percent from 3 percent, below the 1 percent rate proposed in committee.
Previously proposed rate hikes for diamonds, niobium and other materials remain unchanged.
The changes in royalties are part of a wider reform effort launched by Temer to boost mining activity, raise tax revenue and help a nascent economic recovery.
The lower house also approved a proposal to create an autonomous mining oversight agency, called ANM, and is set to consider a third measure streamlining mining rules. Proponents argue that the proposals jointly offset higher taxes with greater regulatory efficiency.
The policies will expire if not approved by Nov. 28, as Temer proposed the reforms via temporary decrees that require congressional approval to become permanent. The regulatory agency bill next goes to the Senate for approval.
"If (the Senate) changes it and it returns to the lower house, there won't be enough time to approve it and the temporary decree will fail," said Israel Araujo, a legislative expert who advises the Senate on mining.
The bill on revised mining rules has yet to go to a vote in the lower house and is at greater risk of missing the deadline, he said.
Brazil collected 1.8 billion reais ($555 million) in mining royalties for 2016. The Mining Ministry said the initially proposed rate hikes would raise collections 80 percent.
($1 = 3.24 reais) (Reporting by Jake Spring; Editing by Cynthia Osterman and Leslie Adler)