How the energy transition is creating a Brazilian mining renaissance

Demand associated with the energy transition has generated a series of initiatives and business opportunities in Brazil’s mining and metals sector.

They include partnerships to reduce greenhouse gas emissions, financing operations, hiring suppliers of goods and services, and asset offerings.

Earlier this month, national oil company Petrobras signed an agreement with local mining giant Vale to support the decarbonization of the miner’s operations.

Under the agreement, the firms will test and evaluate the commercial potential of three strategic products: co-processed diesel with renewable energy content, the use of natural gas in mining operations, and shipping fuels, known as bunker, containing 24% renewable content.

Petrobras sees both miners and steelmakers as future partners for a wide range of initiatives.

"The steel industry can potentially be a great partner for the use of green hydrogen that we will likely produce in the future with our projects. Furthermore, the sector can also collaborate on our initiatives related to carbon capture and the use of natural gas to reduce our greenhouse footprint," Maurício Tolmasquim, Petrobras' energy transition director, told BNamericas on the sidelines of the Brazil Wind Power event.

Critical minerals represent another business opportunity related to the energy transition and BNamericas takes a look at this area’s recent developments.

RARE EARTHS

Brazilian company Mineração Serra Verde, controlled by global investment firm Denham Capital, has seen its rare earth project in Goiás state included in the Minerals Security Partnership (MSP).

The MSP is a collaboration of 14 countries and the European Union aimed at catalyzing public and private investment in responsible production of critical minerals supply chains around the world. Partners include Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, the UK, the US, and the EU represented by the European Commission.

“Today’s announcement is a strong endorsement of the significant role Serra Verde can play in establishing sustainable, secure and diverse rare earth supply chains essential for the global energy transition,” Thras Moraitis, the miner’s CEO, said in a statement. 

“Federal, state and international coordination on the importance of current and future critical minerals operations is key to ensuring that these operations reach the scale necessary to compete successfully and accelerate the development of our industry. We have ambitious plans to invest in and expand our operations, and additional investment from our shareholders will allow us to continue delivering these exciting initiatives," he added.

According to the BNamericas database, the project’s capex is US$149mn. Last year, the firm raised this amount from investment firms Energy and Minerals Group (EMG) and Vision Blue Resources (VBR) to advance the project.

"Having commenced commercial production in early 2024, SVPM [Serra Verde Pesquisa e Mineração] has already begun work to increase phase I capacity through plant optimization and bottleneck elimination and is evaluating the potential for a phase II expansion that could double gross production before 2030," the company said on Monday.

According to Brazilian mining association Ibram, rare earth projects are expected to attract US$1.4bn in investments in 2024-28, compared with only US$150mn in 2023-27.

LITHIUM IONIC

Meanwhile, Canadian firm Lithium Ionic announced the initiation of engineering, procurement and construction management services for its Bandeira lithium project in Minas Gerais state.

"This milestone marks the transition to the construction and development phase of the project and is a key step toward production. Advancing engineering and construction management services will progress the project along the targeted timeline in anticipation of the upcoming approval of site permits," the firm said on Tuesday.

Hatch Ltd was awarded the project’s engineering and design services, while Reta Engenharia, a leading Brazilian construction management company, was selected to provide construction management services.

"The permitting process for the Bandeira project is progressing efficiently at both the state and federal levels, with key approvals approaching. Currently, the review process is underway for the granting of the concomitant environmental and installation license (LAC), which is part of a fast-track permitting process for critical minerals projects designed to expedite the timeline to construction," the company said.

Following LAC approval, the final steps for full-scale production will include obtaining the mining concession and the operating license, which is issued upon inspection of the completed site facilities. Lithium Ionic said it remains on track to begin production in the second half of 2026.

According to the BNamericas database, the project’s capex is US$266mn.

So far, all of Brazil’s lithium projects are concentrated in Minas Gerais, specifically in the Vale do Jequitinhonha region.

Sigma Lithium and Companhia Brasileira de Lítio (CBL) have operations in the area, while Atlas Lithium and Latin Resources are also active.

Lithium projects are expected to generate investments of US$1.2bn in 2024-28, compared to US$433mn in 2023-27, according to Ibram.

EXPLORATION ROUND

Tapping into the growing interest of miners and investors in critical minerals and looking to diversify Brazil’s mining industry, mining regulator ANM announced the final results of the eighth-round auction of mineral exploration areas.

Of the 5,000 areas offered, 3,942 were awarded with the government bringing in 558mn reais.

Iron ore is the country’s star mining product and it represents two thirds of total sector revenue, with gold and copper accounting for a significant proportion of the remainder.