The Normative Ordinance MME No. 120/2025 represents a regulatory milestone that establishes the technical criteria and conditions for the qualification of investment projects in the mineral processing chain of strategic minerals in Brazil. This administrative ruling holds relevance for creating the direct link between mineral production and the capital market, allowing qualified projects to access the incentivized financing mechanism, such as the infrastructure debentures provided for in Law No. 12.431/2011 and Law No. 14.801/2024.
The purpose of the Ordinance is to direct private capital towards investments that promote value aggregation and the development of the productive chain for critical inputs essential for the energy transition. For the miner, project qualification is an indispensable condition to obtain tax benefits and reduce the cost of raising the necessary resources for implementing high-complexity ventures.
I. Strategic Minerals and the Condition of Processing (Value Aggregation)
The first eligibility criterion is the identification of the mineral substances that the MME considers strategic for the energy transition. The Ordinance is explicit, listing the following minerals: cobalt, copper, lithium, nickel, and rare-earth elements.
However, the project must not be limited to mere extraction; it must focus on mineral processing. Article 3 defines that eligibility is linked to projects that result in the production of substances with a high grade of purity, according to the clean energy industry’s demand:
- Battery Grade: The project must produce substances such as lithium carbonate, lithium hydroxide, cobalt sulfate, nickel sulfate, and copper foil, all with the required grade for lithium-ion batteries.
- Magnet Grade: For rare-earth projects, the processing must result in oxides, chlorides, metals, or alloys with the appropriate purity grade for the production of magnets for electric motors.
The requirement to achieve this level of purity (battery grade or magnet grade) ensures that the investment benefits the Brazilian industrial chain, rather than just the export of raw ore.
II. Financing the Development Cycle: The 49% Rule
A highly relevant aspect of engineering and cost management is the permission contained in Article 4. The MME allows the expenses related to the extraction and mine development phase to be considered an integral part of the eligible processing project. This rule is crucial, as incentivized infrastructure projects usually finance only the final industrial unit.
However, this inclusion is strictly regulated by two vectors:
- Capital Limit: The expenses for extraction and mine development cannot exceed 49% of the total value raised through the issuance of securities with tax benefits.
- Schedule: The expenses must be executed within the timeframe established in the investment schedule for the mineral processing plant.
This rule demands precise cost segregation and rigorous budgetary control by the entrepreneur, attesting to the ineluctable connection between the mineral source (mine) and the industrial plant (processing).
III. Obligations and Procedural Monitoring
Access to tax benefits imposes a series of obligations for accountability and monitoring on the issuer (Special Purpose Entity, concessionaire, or lessee), as detailed in Article 7.
The applicant must protocol detailed documentation with the MME prior to the presentation of the registration of the public offering of the securities. This documentation must include, at a minimum:
- Individualized description of the project, object and objective, and the priority sector.
- Estimated dates for the start and end of the project, and a schedule for the implementation of the stages.
- Estimated total financial resources required and the volume that is estimated to be raised through the issuance.
- Technical details of the substance to be produced and a summary description of the productive process.
- Percentage corresponding to the expenses for the extraction and mine development phase, if applicable (Art. 7º, I, m).
- Estimate of direct and indirect jobs generated and the tax benefit to be obtained.
In addition to the initial protocol, the issuer is obliged to keep the information updated with the SNGM/MME and to submit an annual report on the project’s implementation until its conclusion. The MME’s oversight and monitoring are continuous (Art. 8º), and the non-implementation or deviation of the project may lead to the loss of the tax benefit.
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