federalization of strategic minerals brings new rules for companies

Planalto made official a presidential decree, released through a supplementary publication of the official government vehicle on the 4th, Wednesday, which divides the so-called critical and strategic minerals into three distinct levels of priority, according to InfoMoney. The measure carries the approval of the head of the national executive and minister Alexandre Silveira.

According to Estadão, the initial list of 27 substances was released by the holder of the government coordination portfolio on May 5th. The revelation occurred during the inaugural meeting of the collegiate focused on the strategic mining sector, which was attended by the country's highest representative on Thursday (5).

The government standard separates resources into three categories. Class I, of high priority, covers Uranium and the rare earth elements graphite lithium nickel cobalt copper manganese silicon. Class II, of medium priority, includes Sulfur and the items tungsten chromium vanadium tantalum titanium phosphate potassium, as found by Estadão.

The central point of regulation concerns state interference in the sector's business. According to Estadão, companies included in Class I and Class II are subject to a rigorous screening of share control and also of sales contracts, while Class III was assigned low priority.

What changes for the investor

The imposition of barriers and screenings in sales contracts and the shareholding structure of companies linked to Class I and II minerals raises concerns about the advancement of state interventionism in the economy. For investors exposed to the mining and steel sector, the increase in government bureaucracy and scrutiny over share capital can affect the attractiveness of projects and the liquidity of companies focused on these strategic resources.

Automatically translated from Portuguese.