Is An Opportunity For Niobium Investors Arising In Brazil?

To replenish the state coffers, Brazil’s Minas Gerais is mulling to sell its stake in multi-business company Codemig to development bank BNDES.

Finance secretary Gustavo Barbosa told financial newspaper Valor Econômico that the sale would bring large benefits to the state which has been in the red since 2015.

BNDES, meanwhile, signaled openness to help states and companies during the coronavirus crisis.

“During this difficult period, we are open to support local administrations and companies. But, if we acquire a stake in any company at this moment, our idea is to sell that in the medium term; we have no interest in carrying equities under our portfolio for a prolonged period,” CEO Gustavo Montezano said Sunday during a conference call with reporters.

BNDES could thus open the door for global investors to enter Brazil’s niobium segment.

Codemig’s mining operations focus on iron ore, niobium and rare earths, and its energy business on thermal and photovoltaic power. The company has also interests in infrastructure.


Brazil has rich niobium resources, so the sale could benefit Minas Gerais and allow the internationalization of niobium mining. Niobium is used in steel and superconductor production.

Brazilian company CBMM, controlled by the Moreira Salles family, which also holds a 33.5% stake in local bank Itaú Unibanco, is a pioneer in niobium exploration and supplies 82% of global demand.

CBMM and Codemig have an agreement under which the former explores the latter’s reserves and pays royalties. In Minas Gerais, CBMM extracts niobium from an open-pit mine in Araxá, which is the world’s largest deposit of pyrochlore.

It also owns a refining plant and metallurgical production facilities in the Araxá area.