Although the environment for mining investments in Brazil has remained stable for years, the circumstances that had been favouring investments in strategic minerals aimed at the energy transition, with strong demand exerting upward pressure on prices, has changed in recent months, leading to a marked realignment in the market, reflecting the decline in lithium and nickel prices. Investors' enthusiasm cooled down slightly after they had seized the window of opportunity in which Brazil benefited greatly, mainly with the profusion of lithium companies attracted by the success of Sigma, AMG, and CBL. Now, with the end of the lithium rush, we are witnessing a rush for rare earths, in yet another manifestation of the country's enormous unexplored mineral potential.
This is the view of Luís Maurício Azevedo, the chairman of the Brazilian Association of Mineral Research and Mining Companies (ABPM). Brazil has several positive points, he notes, that give it an edge over the vast majority of countries.
"First of all," he says, "is our innate resources. Brazil possesses a mineral diversity not always found elsewhere. Additionally, we have a network of technology centers that provide technical and technological capacity for analysis, technological characterization of ores, and the development of mining projects."
Prominent among these centers is the National Service for Industrial Training (Senai), whose presence and performance ensure that we have a reliable supply of qualified labour and the ability to train professionals to operate any cutting-edge technology that companies may wish to develop or to bring to Brazil.
Brazil's energy matrix is another favourable point, he says, since more than 70 percent of the country's electric power comes from renewable and non-polluting sources.
"You could certainly say that a number of companies would like to have access to an energy matrix like ours, and several countries would like to have these assets, too."
From an environmental perspective, Azevedo notes that Brazil's legislation in this area ranks among the most advanced anywhere in the world. This can sometimes make compliance burdensome, but that, in turn, brings peace of mind to the investor, because an installation license or operating license issued within such a strict environmental framework gives reassurance to investors.
Azevedo also highlights the fact that Brazil is a socially, politically, and economically stable country.
"We have strong institutions, clear rules, and respect for private capital. We have a Mining Code and subsidiary regulations that, while there is certainly room for improvement, has been in force since 1967, ensuring juridical security for investors. These factors combine to provide institutional stability and competitiveness for Brazilian mining, characteristics that are not seen everywhere."
In comparison with other, more developed, countries in the mineral sector, Azevedo concedes that Brazil still has areas in need of improvement: first and foremost, full geological knowledge of the territory, closely followed by advanced financing mechanisms for the mining industry.
"We have this gigantic territory," he notes, "with a few potentialities already clearly defined, but with many more yet to be identified. We need to advance in geological mapping, so as not to miss opportunities for productive investments."
In the case of financing mechanisms, Azevedo argues that Brazil could follow the lead of Canada and Australia.
"Undeniably, the closeness and the activities of the Toronto Stock Exchange (TSX) and the Australian Stock Exchange (ASX) encourage investment in mineral research and make a positive contribution to the image
of mining. The ABPM has been working with the Brazilian Stock Exchange (B3), the National Economic and Social Development Bank (BNDES) and other partners in the Invest Mining Network, seeking to develop financing mechanisms in Brazil through the intermediary of the capital market and private-sector banks. Our aim is to create in Brazil a capital market targeting venture capital, along the same lines as Canada and Australia.
"Two important pieces of draft legislation are currently before the Chamber of Deputies, in Brasília," Azevedo notes. "One, introduced by Deputy Laura Carneiro and Deputy Zé Silva, aims to encourage investment in mining. I am confident we will soon have new ways of accessing capital for mineral research in Brazil, in addition to possible tax incentives that are outlined in other bills now on their way through Congress."
Asked about the Brazilian government's intention to stimulate the production of critical or strategic minerals, Azevedo replies, "The demand for critical minerals and the manufactured products that use them will increase significantly in the coming years. This is a global trend and several countries have been preparing to meet this challenge. Projections of supply and demand for these minerals indicate future shortages that will necessarily have to be overcome by increasing the supply. Countries with a more highly developed mining industry will have difficulty meeting this demand. It is precisely at this point that Brazil can make an outstanding contribution. With its large territory, still not fully explored, this is one of the new frontiers for success, calling for relatively less investment in mineral research. But for this to bear fruit, it will be essential to open new fronts, to do away with the restrictions on research and mining in border areas, and also to do away with the government monopoly in nuclear fuels."
"The present moment affords 'a generational opportunity for Brazil,' Azevedo says, given its still unexplored mineral potential. "The strategic position we adopt now is likely to define our position as a nation. Will we define ourselves as food suppliers or as suppliers of mineral inputs in high value-added global chains? Why not technology and manufactured goods as well? We face the urgent task of establishing a national strategy that positions Brazil as a country that produces critical minerals and provides inputs, technologies, and manufactured goods