Agreement with Brazil for critical minerals is not in the plans now, says USA – 01/30/2024 – Market

Critical minerals, such as nickel and cobalt, are strategic for the energy transition. Used in batteries for electric cars, for example, access to these sources has become a geopolitical priority for the powers – and yet another field of dispute between the USA and China.

Brazil has been trying to take advantage of the fight. During a visit to New York last year, Finance Minister Fernando Haddad raised the possibility of the country benefiting in some way from the IRA (Inflation Reduct Act, in English), the Joe Biden government’s US$369 billion plan. for clean energy.

But, according to José Fernandez, Undersecretary for Economic Growth, Energy and Environment at the US State Department, an agreement with Brazil for strategic minerals under the IRA umbrella, along the lines of what has been negotiated with the European Union and the United Kingdom. “That doesn’t mean it can’t be considered [um acordo] in the future”, he says.

“If the IRA is able to support technological advances, it will benefit everyone, regardless of whether it is possible to take direct advantage of its 7,500 tax incentives,” says Fernandez in an interview with Sheetresponding to criticism that the IRA was a form of “green protectionism”.

“We are not going to focus so much on critical minerals, we are going to focus on how it will benefit everyone through technology and the expansion of the electric vehicle market”, he adds.

The diplomat highlights that the US sent a business mission to Brazil in October, made up of 40 businesses and seven government agencies, to discuss cooperation in clean energy, and that the country has been investing directly in strategic projects in Brazil.

One of them is the Piauí Nickel Project, developed by Brazilian Nickel, a British company that is part of the umbrella of investment manager TechMet. The objective of the project is to produce nickel and cobalt, used in lithium batteries, with a low carbon footprint, following ESG precepts, for electric vehicles.

In December, the DFC (international investment arm of the US government) announced a contribution of US$50 million to TechMet, which is in addition to a previous transfer in 2020, totaling US$105 million. Today, the company is valued at more than US$1 billion.

DFC’s investment in the company is explained by “the US strategy of encouraging and building supply chains of critical minerals in alignment with American interests and that are independent of China”, said TechMet CEO Brian Menell to the Axios portal soon after the announcement of the contribution.

Fernandez states that the US is also discussing with Brazil some form of participation in the Mineral Security Partnership (MSP), a group made up of 13 countries and the European Union to encourage public and private investment in global mineral chains critics.

“We are working with Brazil to find ways for the Mineral Security Partnership to receive presentations of critical minerals projects where Brazil wants investment,” he says. “We are working to increase investment from MSP countries not just in extraction, but also in value addition in processing and smelting. Brazil wants to be more than simply a mining country.”

Experts, however, argue that the MSP needs to go further and include Latin American countries, including Brazil, as partners – which has become even more pressing given the possibility of these countries joining together within the scope of Brics, they warn. researchers Christopher Hernandez-Roy, Nate Laske and Henry Ziemer in an article published by the Center for Strategic and International Studies, based in Washington.

“Given the vital role that Latin America and the Caribbean will play in any net-zero emissions scenario, Washington needs to ensure that these countries are treated as equal partners. By imposing more rigorous standards to facilitate international cooperation, joining the Security Partnership Mineral could help mitigate negative environmental and social externalities resulting from the expansion of mining operations in the region”, they write.

In addition to mining, the US has been using the green agenda to get closer to countries in the region and compete with Chinese influence. One of these instruments is the Partnership of the Americas for Economic Prosperity (Apep), launched in June 2022. At a meeting at the White House in November, Biden announced a series of sustainable and climate-focused investments.

The group brings together, in addition to Washington, Canada, Barbados, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Mexico, Panama, Peru and Uruguay. Brazil is not part of it.

“When we were creating Apep, Brazil was going through elections. So obviously we didn’t want to be seen interfering in these elections or involved in them”, responds Fernandez when asked about the country’s absence.

“But we contemplate the incorporation of additional countries. We hope that additional countries will join Apep”, he reinforces. “One of the initiatives we work on at Apep is clean energy and Brazil is a leader. It is a country that many seek to emulate.”