Brazil is making significant strides in developing its critical minerals sector, aiming to diversify its mining industry while attracting global interest. The federal development bank BNDES and mining giant Vale have announced the selection of asset managers for a 1 billion real (approximately US$185 million) fund dedicated to exploring critical minerals.
“This fund is part of a comprehensive strategy to establish a more sophisticated financing structure for early-stage projects, particularly those involving junior companies,” stated Miguel Nery, director of mineral exploration at the Brazilian Mining Association (ABPM). He also mentioned ongoing discussions with Brazil’s B3 stock exchange to create a listing mechanism for junior companies, akin to models in Canada and Australia.
BNDES revealed that Ore Investments and JGP BB Asset will manage the fund, which focuses on financing projects tied to strategic mineral assets essential for the energy transition, decarbonization and fertilizers. “The strategic minerals fund represents BNDES’s continued commitment to supporting the mining sector. Over the past decade, we have invested 8.3 billion reais in approximately 1,800 companies. Sustainable exploration of critical minerals is vital for positioning Brazil as a leader in the global energy transition, a key goal of President Lula’s administration,” said BNDES president Aloizio Mercadante.
Both BNDES and Vale plan to contribute up to 250 million reais each to the fund, with an additional 500 million reais open for third-party investors. Vale’s CEO, Gustavo Pimenta, expressed pride in participating in this initiative, highlighting the importance of critical metals in fostering national production chains.
When asked about potential investments in other minerals, Pimenta reaffirmed Vale’s focus on its core business of iron ore while also developing copper and nickel projects. However, he acknowledged that the company might consider diversifying based on the fund’s exploration success.
BNDES estimates that the 1 billion reais fund could support up to 20 junior and mid-sized companies involved in mineral exploration and the development of strategic mineral projects in Brazil. Priority will be given to minerals such as cobalt, copper, tin, graphite, lithium, manganese, rare earths and others crucial for modern technologies and agriculture.
The fund’s establishment addresses challenges faced by junior companies in raising capital within Brazil, leading many to seek funding on Canadian and Australian exchanges instead. Despite being the ninth-largest country for non-ferrous metal exploration investments, Brazil’s mineral exploration reached US$384.7 million in 2023, according to EY.
In South America, Brazil lags behind Peru and Chile, which attract significantly higher investments for exploration activities. EY attributed this disparity to Brazil’s lack of national investment attraction policies and risk compensatory mechanisms found in other countries, like Canada.
