What is stopping any company from buying rare earth mines in Brazil?

 Purchasing mining rights, and even an operating mine, is usually a matter as simple as purchasing shares of Limited Liability Company.

 

Investments made by foreign companies in the Brazilian mining sector are largely unregulated. Except for radioactive minerals and some specific national security restriction, any company in the world can purchase mining rights here.

 

In Minas Gerais state, where I live and that happens to be the largest mineral province in Brazil and the source of most of the rare earths minerals in South America, foreign investment is unfettered.

The procedure is quite simple.

A) If the mining rights are already held under a Brazilian company, the investor will purchase quotas or shares of the company.

B) If the mining rights are held by an individual, those rights will be contributed to a company first and then the foreign investor will buy equity in the company.

 The regulations are those applicable to any foreign investment in Brazil:

 

The regulations are those applicable to any foreign investment in Brazil:

 

1.      No need of government authorization;

2.      The investor is registered at the Revenue Service and will obtain a tax registry code (CNPJ);

3.      The articles of association of the company will be registered at the local Commercial Board;

4.      Once capital is sent to Brazil, either as equity contribution or as loans, this operation will be registered with the Brazilian Central Bank (no previous approval is needed, the registration is for record keeping only).

  

The regulations currently being discussed in congress regarding rare earth and critical minerals do not aim at changing this system. The purpose of the project is to restrict the export of unprocessed minerals, not to restrict ownership of mines.

On the contrary, the new rules are projected to make it easier to obtain financing for the development of new mines, regardless of the nationality of the shareholder.

What is stopping you?

 

About Adler Martins

Adler Martins is a Brazilian lawyer focused on:

• foreign investment in Brazil;
• international business structures;
• cross-border transactions;
• mining investments;
• offshore and trust structures;
• market entry for foreign companies.

Based in Minas Gerais, Brazil’s principal mining state, he advises international clients investing in Brazilian assets and companies.