Spotlight: Brazil's US$4bn nickel potential

Brazil has huge potential to develop nickel projects and benefit from the energy transition, but it also must solve significant problems.

National nickel reserves are estimated at 16Mt, putting Brazil in third place globally, after Indonesia (55Mt) and Australia (24Mt). 

Output, however, is still modest, totaling 89,000t in 2023, for a global market share of 2.47%, which makes Brazil the ninth producer, according to US Geological Survey data.

But Brazil is the only Latin American country which is a top 10 global nickel player.

Nickel projects have struggled as prices remain depressed, largely due to Indonesia's booming production, underwritten by massive Chinese investments.

As China accounts for two-thirds of global demand, major Asian players seek to invest in the segment.

In the wake of falling prices, London-listed exploration company Horizonte Minerals, owner of the US$1bn Araguaia nickel project in Brazil, requested bankruptcy protection last year as it failed to raise fresh funds for Araguaia, spooking other investors.

The suspension of the Araguaia project was the main reason behind the reduction in sector investment estimates. Nickel projects in the country are now expected to generate investments of US$3.8bn in 2025-29, down from US$4.4bn projected for 2024-28, according to mining association Ibram.

Fitch Ratings forecasts nickel prices will end this year at US$16,000/t, reach US$15,000/t at the end of 2026 and remain steady in 2027.

"In my view, the price of nickel at current levels isn't the main risk to advancing projects in the nickel sector. At these price levels, nickel projects can still yield a profit margin of 20% to 30%, which isn't bad," Tito Martins, a former Vale base metals executive, told BNamericas. 

"The two main problems for the development of nickel projects are financing because the investment is high due to the involvement of more complex chemical and metallurgical processes, and the environmental licensing aspect because nickel production generates chemical waste that requires measures to mitigate environmental risk," Martins, who was also CEO of Nexa Resources, said.

He also highlighted the advancement of Indonesian projects with the massive support of Chinese banks.

BNamericas explores recent developments in Brazil.

Licenses

Australia-listed Centaurus Metals obtained the installation license (LI) for its Jaguar nickel project from Pará state environmental agency Semas. The license is valid through March 2029.

Centaurus acquired the project from Vale in 2020, and a feasibility study outlines pre-production development capital of US$371mn.

"The grant of the installation license puts us firmly on the path to make a final investment decision later in the year, once a suitable financing package is secured, and enables the company to start construction of one of the world's most significant new nickel sulfide mines," managing director Darren Gordon said in a statement.

Jaguar's 3.5Mt/y nickel flotation plant is expected to produce 18,700t/y of recovered nickel for at least 18 years.

Bravo

Vancouver-based Bravo Mining, an exploration company focused on its Luanga project in Pará state, earlier this month announced that Semas has granted the preliminary license.

Luanga is a palladium, platinum, rhodium, gold and nickel project in the Carajás mineral province.

The mine permitting process includes three key licenses: the preliminary license (LP), the installation license (LI) and the license to operate (LO).

The LP is the most critical and time-consuming to secure, as it defines the project's fundamental parameters and requires both environmental feasibility and social acceptance.

"This LP provides for the extraction and processing of metallic minerals, including platinum group metals as well as nickel, copper, and gold. The subsequent LI is applied for as a prerequisite for the commencement of construction activities, while the final license (LO) is granted upon completion of construction and the start of operations," Bravo Mining said in a statement.

Operating units

In February, Anglo American sold its Brazilian nickel operations to MMG Singapore Resources, a unit of China's MMG, for US$500mn.

The transaction includes the Barro Alto and Codemin ferronickel operations, along with the Jacaré and Morro Sem Boné greenfield projects.

MMG Singapore will pay US$350mn upfront, up to US$100mn in a price-linked earnout and an additional US$50mn contingent on the final investment decision on the projects.

Meanwhile, Brazilian Nickel (BRN), the owner of the Piauí nickel project, announced earlier this month that it has signed a non-binding offtake agreement with Königswarter & Ebell Chemische Fabrik, a subsidiary of Australia's Pure Battery Technologies (PBT), to strengthen the European battery supply chain and advance cleaner material sourcing.

"Under the agreement, BRN would sell up to 5,000t of nickel and about 120 to 200t of cobalt in mixed hydroxide precipitate (MHP) per year to PBT. The material would then be refined using PBT's low-emission hydrometallurgical processes at its Germany-based refinery, Königswarter & Ebell Chemische Fabrik, supporting the goal of establishing a cost-effective European supply chain for battery materials," the firm said in a statement.

At the end of last year, Brazilian Nickel received a letter of interest involving a US$550mn loan facility from the US International Development Finance Corporation.

The amount represents 40% of the project's overall financing package. The project is under development in Piauí state, and, during the first 10 years of operations, is due to  produce 27,000t/y of nickel and 900t/y of cobalt.

In addition, Brazilian mining titan Vale is installing the second furnace at the Onça Puma nickel mine in Pará state to increase capacity by up to 15,000t/y, with operations planned to start in the second half.