Ministry of Mines and Energy opens public consultation to regulate the framework of projects involving strategic minerals for issuing securities with tax benefits

On January 23, 2025, the Ministry of Mines and Energy (“MME”) published MME Ordinance No. 825, which opens for public consultation the draft ordinance (“Ordinance”) aimed at defining the complementary criteria and conditions to Decree No. 11,964, of March 26, 2024 for classifying and monitoring investment projects in the transformation of critical minerals for energy transition as priorities, for purposes of issuing securities with tax benefits under Article 2 of Law No. 12,431, of June 24, 2011 and Law No. 14,801, of January 09, 2024, that is, infrastructure debentures and incentivized debentures.

Contributions can be submitted to www.gov.br/mme, the Public Consultation Portal, and the Participa + Brasil Electronic Portal by March 09, 2025.

The Ordinance considers cobalt, copper, lithium, nickel, and rare earth elements as critical minerals for energy transition. The issuance of securities with tax benefits will be restricted to the amount equivalent to the capital expenses of the investment projects – which may include those associated with the mine’s extraction and development phases, subject to the limits on the amounts to be raised with the issuance under the terms proposed in the Ordinance.

In addition, as proposed in the Ordinance, the eligible mineral transformation projects will be those intended for the production of substances aimed at:

• battery production:
  • lithium carbonate;
  • lithium hydroxide;
  • cobalt sulphate;
  • nickel sulphate; and
  • copper foil at the thickness required for lithium-ion batteries;
• production of magnets for electric motors:
  • rare earth oxides;
  • rare earth chlorides; and
  • rare earth metals or alloys.

The Ordinance also establishes procedures and obligations for the issuer to monitor and supervise the investment project and the respective incentivized issuance. It is worth noting that the requirement of prior ministerial approval for the projects covered by the Ordinance has been waived.

Demarest’s Mining, Infrastructure and Project Finance, and Capital Markets teams are available to provide any necessary additional clarifications and advice on submitting contributions to the public consultation.

Access MME Ordinance No. 825 here.