Shares of mining companies with critical mineral assets in Brazil collapsed after the release of the PL report on critical and strategic minerals, amid the assessment by sector representatives that the text increased regulatory uncertainty over projects in the country.
According to a survey received by CNN, a group of companies listed on international exchanges lost around US$235 million in market value after the initial presentation of the report. In reais, the loss exceeds R$1 billion.
This group includes rare earth, graphite, copper and nickel miners. Companies are listed on exchanges in Canada and Australia.
The assessment of mining company representatives interviewed by the report is that the drop is directly linked to the perception of increased regulatory risk in Brazil, especially due to devices that expand the government’s power over assets considered strategic.
Among the points of greatest concern are the possibility of prior analysis of corporate operations, international contracts and foreign participation in companies holding mining rights over critical and strategic minerals.
In practice, members of the sector assess that the text could pave the way for the government to condition or even bar mergers, acquisitions, entry of foreign capital and supply agreements involving mineral projects in Brazil.
Another sensitive point is that the scope of these powers will still depend on subsequent regulation by decree, issued by the government itself.
For companies in the sector, the absence of objective criteria already in the law increases uncertainty about which operations can be analyzed, which countries or investors would be considered sensitive and in which situations the government could impose restrictions.
The reading is that investors have begun to reprice Brazilian critical mineral assets given the possibility of greater state intervention in projects, exports and corporate operations.
According to a sector source, some companies have started to evaluate the temporary suspension of activities in the capital market until there is greater clarity on the final text and regulations.
The concern also involves devices that allow public authorities to establish parameters, conditions, technical requirements or value-adding commitments linked to the export of critical and strategic minerals.
Although the report does not directly create an export tax, sector representatives say that the wording opens up space for future measures that could restrict or make the sale of minerals abroad more expensive, especially in cases of low processing in Brazil.
The impact observed so far is treated by industry sources as an initial market reaction. The assessment is that the loss could increase if the international press starts to cover more intensely the points considered sensitive in the report.
Among the most relevant cases in absolute value, losses appear in companies such as Aclara Resources, Ero Copper, Brazilian Critical Minerals, Brazilian Rare Earth, Viridis Mining and Minerals, Meridian Mining and Bravo Mining.
The PL report on critical minerals was prepared by deputy Arnaldo Jardim (Cidadania-SP) and attempts to build a middle ground between the government’s demand for greater sovereignty over strategic assets and pressure from the private sector for incentives, predictability and legal certainty.
The text creates the PNMCE (National Policy on Critical and Strategic Minerals), establishes the CMCE (Special Council on Critical and Strategic Minerals), provides tax incentives, a guarantee fund, instruments for adding value in Brazil and an obligation to invest in research, development and innovation.
Despite recognizing advances in the text, representatives of the private sector state that the wording needs to be adjusted to reduce the government’s margin of discretion and establish clearer parameters for the council’s actions.
The vote on the PL on critical and strategic minerals stalled last Tuesday (5) amid pressure from mining companies and parliamentarians against the government’s power of prior consent on corporate operations involving assets considered strategic.
The proposal’s rapporteur, deputy Arnaldo Jardim (Cidadania-SP), had promised to read the report in plenary and move forward with voting on the amendments, but not even this stage was completed.
Behind the scenes, the idea of veto power also divides the government itself. One wing assesses that the mechanism is necessary to protect assets considered strategic amid the global dispute for critical minerals. Another party understands that the measure could alienate investors and compromise the development of projects in the country.
According to sources heard by CNN, members of the MME (Ministry of Mines and Energy) and Finance are mostly against a broad veto power of the Executive over corporate operations in the mineral sector.
The assessment of these ministries is that the most appropriate path would be to reinforce existing structures, such as the ANM (National Mining Agency) and the SGB (Brazilian Geological Survey), instead of creating mechanisms with the potential to alienate private capital.
On the other hand, members of the Civil House and the MDIC (Ministry of Development, Industry, Commerce and Services) are seen as more favorable to instruments of state control over assets considered strategic.
The government’s public position thus far has been supportive of the report. In a publication in X, the minister of SRI (Institutional Relations Secretariat), José Guimarães, stated that the government supports the text presented by Arnaldo Jardim.
The sector is now trying two paths. The first is to remove the requirement for prior consent from the text and replace it with a model of communication or prior knowledge to the government. The second, if the prior analysis is maintained, is to define the parameters already in the law, and not just in a subsequent decree from the Executive itself.
