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Brazil lets government block foreign mining takeovers
The new law creates a guarantee fund of 2 billion reais and offers about 5 billion reais in tax credits over five years for in-country mineral processing.
Brazil's Congress passed a bill that expands government oversight of mining deals, giving officials the power to block foreign takeovers of mining companies and scrutinize access to the country's mineral reserves, OilPrice reports. The Senate approved the legislation by voice vote and sent it to President Luiz Inácio Lula da Silva for signature. The measure establishes a national policy for critical and strategic minerals and sets up a guarantee fund starting at 2 billion reais, about $393 million, to back mining loans, the outlet said. The bill also includes roughly 5 billion reais, about $980 million, in tax credits over five years for companies that process minerals inside Brazil rather than shipping raw ore abroad. A council linked to the presidency can review, and potentially block, changes in ownership for firms with mineral rights, along with long-term supply contracts that help finance new mines, according to OilPrice.
OilPrice also notes that Bloomberg reported the rules could deter the foreign capital Brazil wants to attract. Pablo Cesario, chief executive of the Brazilian Mining Institute, said the sector could get locked up if investors are scared off, while also arguing the council gives the executive branch more discretion than in purely commercial decisions.