Are Chinese investments in Brazilian mining the start of a new wave?

Chinese players are displaying renewed interest in the Brazilian mining industry, as evidenced by two significant recent deals.

China's Baiyin Nonferrous Group agreed to acquire Mineração Vale Verde from Appian Capital Advisory in a deal valued at US$420mn. This acquisition, announced in late November, is pending approval from Brazil's antitrust regulator CADE and the Chinese government, with completion anticipated in early 2025. Mineração Vale Verde owns the Serrote copper and gold mine in Alagoas state.

Also in November, Peruvian polymetallic miner Minsur, through its subsidiary Minera Latinoamericana, reached an agreement to sell Brazilian firm Mineração Taboca to China’s CNMC Trade Company Limited for US$340mn. 

Taboca operates the Pitinga tin, niobium and tantalum mine in Amazonas state and manages the Pirapora smelter in São Paulo, where its corporate headquarters are located.

These transactions highlight China's continued focus on Brazil and the strengthening of ties between the countries' leaders. Last month, during the G20 summit in Rio de Janeiro, Chinese President Xi Jinping met his Brazilian counterpart Luiz Inácio Lula da Silva to discuss bilateral relations and agreements.

"While the political affinity between the two presidents facilitates negotiations, I don't see the two recent operations as the beginning of a wave of Chinese investments in the Brazilian mining sector. At the moment, it's more accurate to view them as isolated transactions, particularly because there are no indications of other advanced talks underway between Chinese investors and companies in the [Brazilian] mining sector," José Carlos Martins, managing partner at Neelix Consulting Mining & Metals and a former executive at Vale, told BNamericas.

Martins also noted that before these deals, China Molybdenum Co. (CMOC) and Sul Americana de Metais (SAM), a subsidiary of Honbridge Holdings, were among the primary Chinese stakeholders in Brazilian mining. CMOC owns a niobium mine in Catalão, Goiás state, previously acquired from Anglo American, and SAM controls the Block 8 iron ore project in Minas Gerais state.

"Although I consider these operations isolated, that doesn’t mean we won’t see other deals in the future. The lithium segment, where China dominates the entire supply chain – from lithium production to battery manufacturing – is a segment with a strong chance of seeing a Chinese investment materialize in Brazil in the future," added Martins.

Historically, China has been deeply connected to the Brazilian mining sector. It purchases 70% of iron ore production, Brazil’s primary mineral commodity, and is also the leading buyer of niobium, copper and manganese output.

US-China dynamics

The global geopolitical rivalry between China and the US is also influencing the Brazilian mining landscape. 

Demonstrating interest in the sector, the US recently supported an initiative in lithium mining. Canadian-listed firm Lithium Ionic Corp announced in late November that it received a non-binding letter of interest from the Export-Import Bank of the United States (EXIM) for up to US$266mn in debt financing. 

"This funding represents 100% of the ... capex outlined in the May 2024 feasibility study, marking a pivotal milestone as the company accelerates toward construction and production within the next two years," Lithium Ionic said in a statement.