On June 16th, a meeting was held at B3 headquarters to discuss the structuring of a strategic investment market for the mining industry in Brazil, following the models adopted by Canada and Australia.
The main objective of this initiative is to enable financing for mineral research projects.
The Invest Mining Network, coordinated by ABPM, was responsible for organizing this meeting, which had the participation of Ígnea Geologia & Meio Ambiente, as well as representatives from B3, BNDES, Ministry of Mines and Energy, National Mining Agency (ANM), Brazilian Directors of Mining Association (ADIMB), Brazilian Mining Institute (IBRAM), investment funds, financial operations platforms, consulting firms, law firms, and companies in the sector.
Strategies discussed involve company listings, regulatory restrictions, and fiscal incentives
During the meeting, the main aspects of structuring this risk market in the country were discussed, including the processes for listing operational mining companies, which could begin with the possibility of Dual Listing, as well as defining a systematics for listing pre-operational companies.
Potential regulatory restrictions were also addressed, in order to assess the need for standardization of new procedures with the Securities and Exchange Commission (CVM).
Strategies for venture capital operators in the market were also discussed, as well as the importance of initiating discussions with the government to adopt fiscal incentives focused on mineral research.
Leonardo Barbosa, representative of B3, emphasized the need for the mining agenda in the capital market in Brazil to evolve, making a comparison with the agricultural sector.
He highlighted that, in an initial public offering (IPO), around 70% of investments are directed to financing the activities of the companies.
Barbosa also provided an overview of the investors involved in share offerings.
“In the pre-operational phase, the risk is higher, which makes the investment less accessible to the general public. The alternative will depend on the investor’s willingness to take the risk of failure or not,” stated Barbosa.
He also stressed the importance of preparing companies through an agreement.
“This process involves creating value, which must be built in the two years preceding the IPO. One viable alternative would be to start with CRs,” evaluated Barbosa.
Luiz Maurício Azevedo, President of ABPM, emphasized during the meeting the relevance of this initiative, highlighting that it can facilitate the listing of pre-operational companies in the country.
Azevedo also mentioned the need to create a Fast Track for Dual Listing on different stock exchanges, and considered it opportune to discuss with the Brazilian government ways to incentivize mineral research.
The President of ABPM mentioned the “flow-through shares” program adopted in Canada as a fiscal incentive aimed at financing the mineral sector, with the goal of capitalizing companies involved in mineral exploration or development, with exemption from income tax payments, similar to what happens in Brazil with Social Security.
“In 2006, approximately 6% of global investments were allocated to mineral research in Canada. With the introduction of the ‘flow-through shares’ program, this percentage jumped to around 18% to 22%,” he warned,
highlighting that historically, Brazil has allocated only 3% of global investments to mineral research.
Example from Canada: flow-through shares program drives investments in mineral research
Pedro Dias, representative of BNDES, talked about the bank’s experience in supporting the sector and emphasized the relevance of the current context, considering the energy transition.
He highlighted that the demand for fertilizers can contribute to the structuring of investment mechanisms in mineral research focused on critical minerals, which, in his opinion, will determine the path of this energy transition.
According to Miguel Nery, Coordinator of the Invest Mining Network, the timing is favorable for an initiative like this, especially because Brazil is about to regain its internationally recognized investment grade.
Additionally, the mineral sector has a potentially attractive and dynamic market, which can become highly competitive compared to other countries that already have venture capital exchanges focused on mining, as highlighted by Nery.
Source: ABPM Communication
