Brazil launches US$820mn fund to boost critical minerals chain

Brazil's federal development bank BNDES and state financing agency Finep launched a joint 5bn-real (US$820mn) fund to boost the critical minerals chain.

"This initiative is very important because it provides funding for projects that involve high development risks and require long-term financing. Traditional capital market investors hardly have any appetite for such high risk, which makes such financing unfeasible," Pedro Galdi, a mining consultant, told BNamericas.

As part of the move, the entities will offer credit lines, equity participation assessments, and investments in productive capacity and R&D+I aimed at the energy transition and decarbonization minerals.

"Among the objectives are the development of lithium, rare earths, nickel, graphite and silicon chains, among others, as well as the mobilization of investments for the manufacture of components: battery cells, photovoltaic cells, and permanent magnets," BNDES said in a statement.

"The support will cover industrial-scale plants, as well as pilot or demonstration plants, research and studies necessary for the viability of new industrial capacities, depending on the stage of the projects and technologies involved. With this, the present call could leverage investments in the coming years by a volume of five to ten times the available budget," it added.

Companies in the sector have faced difficulties in raising funds via local capital markets.

"With the Selic's current high level, it is very difficult for companies to finance themselves in the local capital markets," said Galdi. The policy rate is on an upward trajectory and could reach 15% this year.

Details on how to gain access to the fund can be seen here.

Individual companies and consortiums are eligible to apply. Chances improve if consortiums include input and technology suppliers or even end-users of the final product.

Each proposal must involve only one business plan for a project requiring at least 20mn reais.

Proposals may be submitted between January 13 and April 30. They must relate to aluminum, cobalt, copper, tin, graphite, lithium, manganese, platinum group metals, molybdenum, niobium, nickel, silicon, tantalum, rare earths, titanium, tungsten, uranium, vanadium or zinc.

Last year, BNDES and mining giant Vale launched a 1bn-real fund aimed at critical minerals exploration.

A consortium formed by asset managers Ore Investments and JGP BB Asset was selected to oversee the fund.