The BNDES argues that the Union should release the R$ 2 billion contribution to the mining guarantee fund to enable financing of critical minerals slated for 2027.
The National Bank for Economic and Social Development (BNDES) has requested that the federal government release up to R$ 2 billion in advance for the Mineral Activity Guarantee Fund (FGAM) in its first year of operation.
The initiative aims to address a timing mismatch in the sector. Several critical mineral projects require financial structuring between 2027 and 2028, while the tax incentives outlined in Law 15,506 will only take effect in 2030.
The position was defended during debates held in the House of Representatives to discuss the regulations of the new legislation and accelerate investment in the national extraction chain.
Guarantees to boost junior mining companies
The proposal detailed by Pedro Paulo Dias Mesquita, BNDES manager, emphasizes that the early release of public funds is essential to guide companies’ decision-making before final financing is secured.
Pedro Paulo Dias Mesquita stated:
“A large portion of investment decisions that need to have financing negotiated will occur in 2027 and 2028.”
The primary target of the measure is junior mining firms. These companies often face obstacles in obtaining bank credit due to a lack of revenue history and real asset guarantees.
Under the established rules, the private sector will remit 0.2% of gross revenue to the FGAM for six years, generating an estimated annual contribution of R$ 545 million to the fund.
Competitive credit model and sector concerns
The tax benefit mechanics will mirror the competition model used in the clean energy sector, according to Rafael Dubeux, special advisor to the Ministry of Finance under Minister Dario Durigan.
The mechanism allows credits of up to 20% for spending on processing and urban mining, respecting an annual cap of R$ 1 billion between 2030 and 2034 for the most efficient projects.
On the other hand, the Brazilian Association of Mineral Research and Mining Companies (ABPM) expressed concern about the narrow time window set by law.
ABPM representative Luiz Maurício Azevedo noted that mining projects require about 17 years to mature, making the concession limit up to 2034 a challenge for attracting new players.
Other financing options on the horizon
In addition to the guarantee mechanism, the government is working to integrate various financial support instruments for the energy transition and the mineral industry.
The supply chain can seek complementary resources from the Climate Fund and the Eco Invest program, which includes lines managed by banks such as Santander.
Another component of this structure is the mineral exploration participation fund jointly developed by BNDES and Vale.
Next steps and expectations
For the Union to provide the contribution to the FGAM, formal guidelines from the Ministry of Finance, a budget allocation, and approval of the fund’s statute are still required.
Rapidly defining these rules and coordinating between Banco do Brasil, BNDES, and regulatory bodies will be decisive in ensuring Brazil’s competitiveness in the global strategic minerals market.