Brazil joins forces with UAE to invest in critical minerals

Brazil and the United Arab Emirates (UAE) have joined forces to invest in critical mineral supply chains, marking a significant step in Latin America's largest nation's efforts to diversify its mining activities.

In Abu Dhabi, Brazil's ministry of mines and energy signed an MOU with the UAE's investment ministry. That agreement is aimed at promoting the exploration and development of strategic minerals that are essential for the energy transition.

The partnership between the two countries includes potential investments of up to 15bn reais (US$2.45bn) in Brazil across various sectors, such as mineral research, processing, commercialization, technology transfer and workforce training.

“This type of partnership is significant because it aims to strengthen an entire value chain in the mining industry, paving the way for Brazil to develop a mining sector with higher added value in the future,” Valdir Farias, CEO of mining consultancy Fioito, told BNamericas.

The MOU seeks to unite government agencies, regulatory authorities and companies – including small and medium-sized enterprises and startups – to foster cooperation on mining projects in Brazil, according to a statement from the ministry of mines and energy.

Diversification of mining

The development of critical mineral supply chains is seen by Brazil as a means to reduce its heavy reliance on iron ore, which currently accounts for nearly two-thirds of the country's total mining output.

“It should be noted that this announcement by Brazil and the UAE is not an isolated initiative. There have been several recent announcements of investments in the development of critical minerals in Brazil, which will significantly help diversify the country’s mining activities,” Farias added.

Earlier this month, Brazilian development bank BNDES and state financing agency Finep launched a joint 5bn-real fund to boost the critical minerals sector. This initiative includes credit lines, equity participation assessments and investments in productive capacity as well as research, development and innovation (R&D&I) focused on the energy transition and minerals needed for decarbonization.

Additionally, last year, BNDES and mining giant  Vale launched a 1bn-real fund dedicated to critical minerals exploration. A consortium formed by asset managers Ore Investments and JGP BB Asset was selected to oversee the fund.