NEWSLETTER – NOVEMBER 2025
MURRAY ADVOGADOS
11/04/2025
BRAZIL’S CENTRAL BANK TIGHTENS CAPITAL RULES FOR FINTECHS
Regulator targets 500 firms and cracks down on shadow accounts used by criminals
Brazil’s Central Bank announced a new round of tighter regulations for fintechs on Monday (3), raising capital requirements and cracking down on so-called “shadow accounts” amid rapid growth that has exposed vulnerabilities in the country’s financial and payments systems. The changes are expected to affect up to 500 institutions.
The regulator introduced two key measures. The first increases minimum capital and net worth requirements for regulated institutions, now based on the type of financial activity performed rather than on the institutional classification, whether payment or financial institution. The second targets the termination of irregular “shadow accounts” (known in Portuguese as contas-bolsão).
The move comes after a wave of cyberattacks on Pix, Brazil’s instant payment system, and after police investigations revealed that some fintechs had been used by organized crime groups, including in the so-called Hidden Carbon operation.
Bank and fintech representatives largely welcomed the measures.
Ailton de Aquino, the Central Bank’s head of supervision, said the change “levels the playing field in the national financial system.” He called the move a “clear” signal that innovation and security must go hand in hand. He acknowledged that non-banking institutions would be the most affected.
Capital requirements for payment institutions will increase from the current range of R$1 million to R$9 million to between R$9.2 million and R$32.8 million. For banks, the range will rise from R$7 million–R$77 million to R$56 million–R$96 million, depending on the activities performed. Each additional activity requires additional capital.
The Central Bank estimates that about 500 institutions will need to bolster their capital. Mr. Aquino said these institutions currently face R$5.2 billion in capital requirements, a figure that could rise to R$9.1 billion by January 1, 2028, when the transition period ends.
“I don’t believe a payment institution with an initial capital of R$1 million can meet the demands of technology, auditing, and sound structure,” Mr. Aquino said. He attributed the changes both to the natural evolution of regulation and to recent events. “In recent months, we’ve witnessed unpleasant situations in the national financial system. This is part of an evolutionary process, but also a response.”
He also recalled a recent need to ban institutions from using coworking spaces as their official contact points with the Central Bank. “We had to pass a very curious rule recently: an institution can’t have a coworking space as its contact point with the Central Bank. We reached the absurd point of trying to supervise a payment institution headquartered in a coworking space.”
Mr. Aquino gave the press briefing alongside Gilneu Vivan, the Central Bank’s director of regulation, and Izabela Correa, director of consumer affairs and conduct supervision.
New methodology
The new methodology for calculating minimum capital includes an amount for initial operating costs and, for companies heavily reliant on technology infrastructure, an additional amount to reflect that. Requirements will vary depending on whether the institution performs operational, investment, or funding activities, including issuing credit, receiving deposits, or offering custody services.
An extra R$30 million in capital will be required for institutions that use the word “bank” or similar terms in their branding, in any language, including companies such as Nubank.
Mr. Vivan said the new rules increase investors’ “skin in the game,” encouraging stronger compliance with regulations and internal controls. Institutions will be able to either increase their capital or scale back their activities to reduce their capital requirements.
Those unable to comply, Mr. Aquino said, will need to undergo an “orderly exit,” corporate restructuring, or be absorbed by other firms. He stressed, however, that the rule’s goal is not to shrink the number of institutions under Central Bank supervision but to create fairer competition.
A transition period is in place for current operators and those with pending applications to launch or expand services. Until June 30, 2026, capital and net worth requirements will remain unchanged. After that, the minimums will rise gradually every six months, with full implementation by December 31, 2027.
Crackdown on shadow accounts
The Central Bank also introduced new rules targeting “shadow accounts” that mask financial transactions. Starting December 1, institutions must terminate these accounts if they are used to process payments, receipts, or offsets on behalf of third parties with the intent to obscure or substitute financial obligations. Institutions will be responsible for identifying such irregular use.
Shadow accounts consolidate operations from multiple clients into a single account, commonly used in marketplaces and currency exchange. But the model has been exploited by criminal organizations. In this setup, a fintech holds an account at a bank and creates sub-accounts for end users, making it difficult to trace the money’s origin and destination. This practice has appeared repeatedly in police investigations.
“Obviously lawful services, such as eFX [electronic foreign exchange transfers], are not being targeted,” Ms. Correa said.
In recent months, the Central Bank has rolled out several measures to close security loopholes. It limited TED and Pix transfers by unauthorized payment institutions and shortened the window for unregulated fintechs to operate without a license, from 2029 to May 2026. It is also drafting new rules for banking-as-a-service platforms.
Mr. Aquino said that while higher capital requirements alone may not prevent criminal groups from operating, the bar is now significantly higher for peer-to-peer lending companies (SEPs), direct credit companies (SCPs), and payment institutions, all of which are common structures for fintechs.
Source: Valor International
https://valorinternational.globo.com/
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11/05/2025
TELEFÓNICA LISTS BRAZIL AS ONE OF ITS PRIORITY MARKETS IN FIVE-YEAR PLAN
Spanish group pledges to expand fiber network and boost B2B revenue
Telefónica’s Brazilian operations are set to play a key role in the Spanish multinational’s new strategic plan, which targets €3 billion in efficiency gains by 2030. The savings goal includes both capital expenditures and operating costs.
As part of its five-year roadmap, Telefónica named Brazil, Spain, the United Kingdom, and Germany as priority markets and outlined specific targets for each country.
“We will grow faster than expected,” Telefónica CEO Marc Murtra said at a meeting with market analysts. In Brazil, the company expects key financial metrics to grow above inflation, said Chief Operating Officer Emilio Gayo.
Mr. Gayo highlighted several efficiency opportunities in Brazil, including the sale of legacy copper networks from the country’s former fixed-line telephone concession, digitalization of services, and the use of new technologies such as artificial intelligence to build and manage networks. Telefônica Brasil, which operates under the Vivo brand, expects to raise R$3 billion from the copper network sale by 2028, as announced in May.
The plan also calls for expanding the convergence rate of its fixed broadband customer base in Brazil, targeting 74% penetration by 2028, six percentage points above the current 68%. In telecom, convergence refers not only to bundling mobile and fixed-line services, but also to offering non-telecom digital services.
Telefónica also aims to grow its business-to-business (B2B) operations in Brazil, increasing the share of digital services in B2B revenue from 38% to 42% by 2028.
The company committed to expanding its fiber-optic network in Brazil, which reached 30.5 million households as of September. It also plans to reduce annual customer churn by 2.5 percentage points, though the current churn rate was not disclosed.
Minority stake sale not on the table
In June, a Spanish news outlet reported that Telefónica was considering selling a 20% stake in Vivo to reduce its debt, which stood at €28.2 billion at the end of September. The report triggered widespread speculation in Brazil.
Asked about the potential sale, Mr. Murtra said the company has other capital allocation options beyond those included in the strategic plan, which focuses on operational simplification to improve efficiency.
“The organic capital allocation strategy is what we’ve outlined,” he said. “It’s true there are other instruments beyond what we mentioned, but in our ‘business as usual’ scenario, we are sticking to the plan.”
Sources told Valor there are no plans to sell a stake in Vivo just to raise cash for the parent company. However, Telefônica Brasil might use its shares as currency in a future merger or acquisition, though no such deal is currently being negotiated.
Brazil stands out
Telefónica’s outlook for Brazil contrasts with its plans elsewhere in Latin America. The company confirmed on Tuesday (4) that it intends to exit all Spanish-speaking markets in the region, including Mexico, Chile, and Venezuela, though no timeline was given. The sale of its Colombian operation is already well underway, Mr. Murtra said.
While the strategic plan does not rely on mergers and acquisitions, Mr. Murtra said consolidation remains an option, especially in Europe, where 38 mobile operators are active.
“There should be European operators with scale comparable to their U.S. and Chinese counterparts,” he said.
Profit rises, dividend cut hits stock
In the third quarter, Telefónica reported net income of €276 million, up from just €3 million a year earlier. Adjusted EBITDA rose 1.2% organically to €3.07 billion, while revenue fell 1.5% to €8.96 billion.
Analysts estimate that consolidation in Telefónica’s core markets—Brazil, Spain, the UK, and Germany—could generate €18 billion to €22 billion in synergies. Those gains could be shared among buyers, sellers, consumers, investors, and innovation projects.
Despite the upbeat projections, Telefónica shares fell 13% on the Madrid stock exchange, following the announcement that dividends would be cut in half in 2026. The company plans to pay €0.15 per share next year, down from €0.30 in 2025.
“We believe in the company’s fundamentals, and that’s what we focused on in the plan,” Mr. Murtra said, adding that the board of directors and core shareholders backed the strategy, including the dividend adjustment.
Source: Valor International
https://valorinternational.globo.com
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11/05/2025
CENTRAL BANK SHUTS DREX PLATFORM, CLEARING PATH FOR STABLECOINS
Cost, privacy concerns lead to pivot as banks explore their own digital currencies
Drex’s second phase, launched in October 2024, is expected to conclude with a final report in early 2026
Drex’s second phase, launched in October 2024, is expected to conclude with a final report in early 2026 — Photo: Divulgação/Banco Central
Brazil’s Central Bank has decided to shut down the blockchain-inspired platform used in the first two phases of Drex, its central bank digital currency (CBDC) project. The move signals a major shift in direction, prompted by high maintenance costs and unresolved privacy issues in transaction processing, people familiar with the matter told Valor.
The decision followed a meeting on Tuesday (4) between the Central Bank and private-sector consortia involved in the project. Valor had already reported in August that the Drex platform based on distributed ledger technology (DLT) would not be used in the next stage of development. Discussions for phase three are expected to begin in early 2026.
Experts say the weakening of Drex opens the door to privately issued tokenized assets and stablecoins, which may replace a state-backed CBDC.
Shift to private alternatives
Stablecoins are cryptocurrencies pegged 1:1 to traditional currencies, offering the programmability of digital assets without the need for intermediaries to settle transactions.
Henrique Teixeira, Latin America head of tokenization platform Hamsa, said shutting down Drex is a “cold shower” for those involved in its development but does not mean the end of tokenization in Brazil. “Banks are likely to develop their own stablecoins now,” he said.
In April, Itaú Unibanco said it was exploring the possibility of launching its own stablecoin, pending regulation from the Central Bank, which is expected this month.
Mr. Teixeira pointed to Safra Bank as a model: in September, it issued a dollar-pegged stablecoin to provide clients with exchange rate exposure at lower cost, avoiding Brazil’s financial transactions tax (IOF) and traditional foreign exchange market fees.
Banks could also launch real-pegged stablecoins to settle transactions involving tokenized assets that are currently outside the crypto world, such as debentures, receivables, and investment funds. “Initially, the winners will be those who can move fastest. Larger banks, in the S1 and S2 categories—which include financial institutions with the largest volume of assets and most systemic importance in Brazil—have more resources and expertise, giving them an edge,” he said.
Banking groups back decision
The Brazilian Federation of Banks (FEBRABAN) said in a statement that shutting down the platform reflects the Central Bank’s commitment to “security and stability in the future infrastructure.” The federation added that it remains part of the Drex support group.
The Brazilian Association of Banks (ABBC), which represents smaller institutions, said that even with the current platform shut down, its member banks have the technology to connect their Drex use cases to other networks. ABBC had been testing the tokenization of Bank Credit Notes (CCBs) in the project.
Blockchain provider BBChain, part of ABBC’s Drex consortium, said phase two “fulfilled its purpose” and that the Central Bank recognized the need for further technological evolution. “New market-driven business models may meet requirements without the regulatory constraints of the pilot,” the company said.
Stablecoin trend mirrors global shift
The growing preference for stablecoins over CBDCs aligns with global trends. Shortly after taking office, President Donald Trump signed an executive order banning the creation of a U.S. CBDC and encouraging the use of private stablecoins.
Drex was launched in 2023 with a pilot focused on tokenizing deposits and transactions in federal government bonds. The second phase, launched in October 2024, is expected to conclude with a final report in early 2026. Both phases used a DLT network as the testing platform.
Phase three will continue with business case studies for Drex but on a technology-neutral basis. Privacy solutions tested earlier failed to strike the balance between ensuring transaction confidentiality and maintaining Central Bank oversight. Looking ahead, one of Drex’s goals is to resume tokenization studies to create a settlement environment where the currency is issued by the Central Bank.
The Central Bank did not respond to a request for comment by press time.
Source: Valor International
https://valorinternational.globo.com
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11/07/2025
CHINA LIFTS BAN ON BRAZILIAN POULTRY IMPORTS AFTER AVIAN FLU CASE
Decision takes immediate effect and crowns months of negotiations led by Brazil’s Agriculture Ministry
China announced on Friday (7) that it would lift its ban on poultry imports from Brazil, a measure put in place after an avian flu outbreak was detected in May this year. China’s General Administration of Customs made the announcement.
The ban was implemented after confirming a case of avian flu on May 15 at a commercial farm in the municipality of Montenegro, Rio Grande do Sul. Even after Brazil declared itself free of the disease in early June, Chinese restrictions remained in place.
According to the official statement, the decision to lift the ban takes effect immediately and was made “based on the results of the risk analysis” conducted by China’s sanitary authorities. In September, a Chinese technical mission visited Brazil to audit the federal inspection system and verify the country’s sanitary control measures.
Brazil is the world’s largest exporter of chicken meat, shipping to 151 countries, with China as its leading destination. In 2024, the Asian country imported 353,400 tonnes of the product, generating $786.9 million in revenue. From January to May, before the outbreak, exports to China had already reached 228,000 tonnes, worth $547 million.
“Brazil has become a reliable food supplier in terms of quality, delivery safety, competitive pricing, and sanitary standards. This is evidenced by the full reopening of markets after the avian flu case,” said Agriculture Minister Carlos Fávaro.
Industry celebrates
The Brazilian Association of Animal Protein (ABPA) said the reopening of China’s market to Brazilian chicken was the result of “a broad and professional negotiation effort,” emphasizing the roles of the Ministry of Agriculture, the Vice Presidency, the Foreign Affairs Ministry (Itamaraty), and the private sector.
“There was an extensive and highly professional negotiation process, which included the renegotiation of sanitary certificates to prevent total suspensions in case of new outbreaks. Alongside that, there was an intense diplomatic effort led by the Brazilian government and private entities under ABPA’s leadership to resume exports to suspended markets. The reopening of China crowns the success of this major coordinated effort under Minister Fávaro and his team,” said ABPA president Ricardo Santin in a statement.
The association also mentioned that the process involved control and eradication measures against avian influenza, the restoration of Brazil’s sanitary status with the World Organization for Animal Health (WOAH), and diplomatic negotiations led by the Agriculture Ministry.
Following China’s decision, all major importers of Brazilian chicken meat have now resumed purchases. Recently, the European Union also announced the reopening of its market.
Source: Valor International
https://valorinternational.globo.com
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11/07/2025
COMPANIES SEEK STRATEGIES TO DISTRIBUTE TAX-FREE PROFITS
Brazilian firms consider issuing debt or using cash to pay dividends in 2025 before new tax takes effect
A growing number of companies are looking for ways to distribute dividends tax-free before a new levy on profits takes effect. On Wednesday (6), Brazil’s Senate approved a bill that increases the income tax exemption threshold to R$5,000 per month and, in exchange, introduces a 10% tax on dividends starting in 2026.
Publicly-traded and private companies have begun consulting tax experts to explore alternatives. Some are even considering issuing debt to cover the payment of untaxed profit reserves. Others are weighing the use of available cash to pay part of their dividends in 2025 while capitalizing the remaining amount into profit reserves.
This rush to fall under the current tax regime is rippling through markets. Brazil’s stock exchange has seen a wave of inflows from investors seeking to benefit from untaxed earnings still accrued in 2025. In the foreign exchange market, an increase in dividend remittances from Brazilian subsidiaries to parent companies abroad is expected by year-end.
Some companies have already announced billion-real dividend payments. This week, Axia (formerly Eletrobras) disclosed an extraordinary dividend distribution of R$4.3 billion, drawing from its statutory reserve, with payment scheduled for this year. More companies are expected to make similar announcements in the coming weeks to secure tax-free status for their distributions.
The strategy is tied to Bill 1,087/2025, which fulfills President Luiz Inácio Lula da Silva’s campaign promise to expand the income tax exemption. To offset the revenue loss, the bill introduces a 10% withholding tax on dividends. However, it exempts profits already incorporated into shareholders’ equity, a provision companies are relying on.
Dividend approval
To qualify for the exemption, companies must approve the dividend distribution by the end of 2025, with the actual payment allowed to take place over the course of 2026, 2027, and 2028. There is an ongoing effort to extend the deadline for approval to April 30, 2026, under discussions tied to a separate bill on betting taxation.
Despite the three-year window to complete the payments, there is a legal contradiction when it comes to publicly traded corporations governed by the Corporations Law. Under that law, if a company announces a dividend, it must pay it within the same fiscal year. This means companies announcing dividends in 2025 would need to disburse them before December 31.
To avoid legal risks, more conservative firms are looking for ways to distribute accumulated profits before the year ends. Some have advocated for changes to the bill to grant full exemption for all retained earnings, which would resolve the issue.
Strategies under consideration include issuing debt securities such as debentures or using available cash to pay dividends now, then raising debt from controlling shareholders to restore the cash position.
Some companies that would typically carry out extraordinary debenture amortizations have decided to conserve cash to fund dividend payments this year. Another option is to capitalize profit reserves now and reduce capital later.
High leverage
Bank executives told Valor that the issue is causing concern, as some companies seeking financing to pay dividends are already highly leveraged.
Other companies are expected to announce dividend payments this year, in line with the bill, but postpone actual disbursement to the following three years. Some legal interpretations argue that the bill allows this, even for public companies.
Retained earnings amount to billions of reais and may have accumulated over the past 30 years, since the enactment of Law 9,249 in 1995, which established the current exemption for dividends.
Erickson Oliveira, partner at the law firm Levy & Salomão, said he has been fielding client queries. He noted that while the bill has been revised, the conflict with listed company rules remains unresolved, and that solutions must be evaluated case by case.
Debt issuance
Daniel Loria, former director at the Special Secretariat for Tax Reform and currently a partner at Loria Advogados, said his firm is also seeing increased demand. Private companies, which are not subject to the same scrutiny as listed firms and lack minority shareholders, are more inclined to take on debt. Others are expected to follow the bill’s guidelines and distribute dividends by 2028.
Among listed companies, Mr. Loria said, there is concern that announcing dividends this year while deferring payment could prompt pushback from investors demanding compliance with the Corporations Law. Many are expected to use available cash for 2025 distributions and then capitalize the remaining balance.
As dividend taxation increases, companies are also revisiting how to return value to shareholders. One alternative under review is expanding share buyback programs, common among U.S. companies, as a way to avoid tax exposure. However, firms are weighing the potential impact on stock liquidity.
Source: Valor International
https://valorinternational.globo.com
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11/10/2025
DELINQUENCY RISES AMONG SMALL FIRMS, BUT BANKS REMAIN UNCONCERNED
Higher-risk debt among SMEs climbs to 8.9%, partly due to new accounting rules
The share of loans classified as “higher risk” for micro, small, and medium-sized enterprises (SMEs) has been rising since the beginning of the year. Data from Brazil’s Central Bank shows the rate climbed from 8.2% in January to 8.9% in September.
Part of the increase reflects the impact of new accounting rules under Resolution 4,966. Still, banks acknowledge that SME delinquency is growing and requires attention, though it has not yet reached alarming levels. The expected cut in the benchmark Selic rate early next year also offers some relief.
The higher-risk assets indicator includes financial instruments and credit operations classified as “stage 3” under Resolution 4,966, which covers loans with serious recovery issues. The resolution took effect at the beginning of this year. Meanwhile, SME delinquency rose from 4.5% in January to 5.4% in September, after peaking at 5.5% in August, the highest since May 2018.
The Central Bank’s most recent Monetary Policy Report estimated that about 70% of the increase in overall delinquency in the first half of the year is linked to the effects of Resolution 4,966.
Ricardo Jacomassi, partner and chief economist at TCP Partners, noted that the credit market has grown rapidly despite high interest rates. The Selic stands at 15%, and the Central Bank’s Monetary Policy Committee (COPOM) has signaled that it will remain high “for quite a prolonged period,” as stated in the latest minutes.
Financial tools
Mr. Jacomassi said part of the difference in behavior between SMEs and large companies lies in the financing tools available. Large companies have access to structured operations, bond issuance, and more collateral. “Small and mid-sized firms don’t have the same options and are heavily reliant on working capital loans and receivables-backed credit,” he said.
In the third-quarter earnings call, Santander’s CFO Gustavo Alejo said short-term delinquency has improved, especially among individual borrowers. “All ‘vintages’ are performing well, but we see some concern in the small business segment,” he noted.
At Itaú Unibanco, SME delinquency rose 0.1 percentage point from the second to the third quarter, “due to normalization following the end of grace periods under government programs.” At Bradesco, the rate declined, and CEO Marcelo Noronha said he sees room for further drops, even though the bank’s overall delinquency rate is expected to remain relatively stable in the coming quarters.
A Central Bank study in its latest Financial Stability Report found that during interest rate hikes, smaller companies are the first to be affected, hurting their repayment capacity. “They’re hit faster because their debt rollovers are shorter, which directly increases their interest expenses,” the report said.
Ricardo Moura, head of investor relations, M&A, and strategy at Banco ABC Brasil, agreed. He noted that smaller firms did not benefit as much from capital markets expansion in recent years and are now forced to borrow at higher rates from banks during this tightening cycle. “They don’t have longer-term liabilities and end up suffering more.”
At ABC Brasil, a conservative credit approach led to a drop in mid-sized company delinquency between June and September. Still, Mr. Moura said he does not expect further declines ahead.
In a statement, Décio Lima, president of Brazil’s small business agency Sebrae, said the rise in SME delinquency is “moderate and compatible” with the current economic cycle. “This is not a sign of uncontrolled deterioration, but a natural adjustment in a more selective credit environment with higher financial costs,” he said.
He added that expectations for the coming months are for stability or gradual improvement, driven by a more predictable economy and stronger support and debt renegotiation measures. “There are challenges, but also tools and ways to address them responsibly.”
New accounting standard
Resolution 4,966 adopts an expected-loss model, replacing the previous incurred-loss approach. Under the new rule,financial institutions must use economic analysis to estimate potential defaults. It also delays the write-off of problematic assets, which raises the numerator over time and ends up increasing measured delinquency.
“Banks must provision based on the probability of future defaults, using macroeconomic and sectoral forecasts,” explained Gisele Assis, a partner specializing in payments and regulation at the law firm /asbz.
The Brazilian Association of Banks (ABBC) said economic conditions are contributing to the rise in SME defaults. However, much of the increase in high-risk loan balances is due to the new accounting standard.
“The changes in how financial institutions recognize expected losses and write-offs have affected how credit operations are allocated to stage 3. This will take time to adjust as lenders recalibrate their internal recovery metrics,” the ABBC said in a note.
The Brazilian Federation of Banks (FEBRABAN) also said the uptick in SME delinquency is partially due to the new rule but also reflects real increases driven by high interest rates. It cited government-backed programs like Pronampe, which offers credit to small businesses at Selic-linked rates. “With the likely scenario of no further Selic hikes, we could see improvement starting early next year,” the federation said.
FEBRABAN added that large companies continue to benefit from ample liquidity in capital markets. “Still, there are some isolated signs of risk, such as bankruptcy filings, which deserve attention.”
7.6 million SMEs behind on payments
The challenges facing SMEs are also reflected in other indicators. Data from credit bureau Serasa Experian showed that by July, 7.6 million small and medium-sized companies in Brazil were behind on at least one financial obligation—ranging from bank loans to utility bills or supplier payments—totaling 54 million overdue debts.
Camila Abdelmalack, chief economist at Serasa Experian, said the slowdown in credit availability has made it harder for SMEs to refinance or roll over debt. “We came from a period of greater credit availability and easier renegotiation. With tighter credit, these difficulties are now showing up in rising delinquency,” she said.
Source: Valor International
https://valorinternational.globo.com
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11/11/2025
MBRF POSTS NET PROFIT OF R$94M IN FIRST EARNINGS REPORT
Company formed by merger of Marfrig and BRF sees 62% drop in Q3 net income versus 2024
MBRF, the company created from the merger between Marfrig and BRF, reported a net profit of R$94 million in the third quarter of 2025, a 62% decline compared with the R$248 million earned in the same period of 2024. This is the first earnings report released since the merger was announced in May.
The company’s net revenue reached R$41.8 billion, up 9.2% year over year, driven by a 3.7% increase in total sales volume to 2.1 million tonnes, a record for the group.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at R$3.5 billion, down 8.6% from a year earlier, while the adjusted EBITDA margin fell to 8.4%, from 10% in the third quarter of 2024. Gross profit totaled R$5.1 billion, a 3% decrease, with a gross margin of 12.3%, compared to 13.9% a year earlier.
According to the company, the figures were compared to Marfrig’s consolidated results, which have included BRF’s data since 2022, when Marfrig became the controlling shareholder. Previously, Marfrig recorded net income attributable to the controlling interest based on its ownership stake in BRF. Following the merger on September 22, Marfrig began to consolidate 100% of BRF’s net profit.
Since the merger occurred near the end of the third quarter, that effect was only partially reflected in the results. If the combination had been in effect for the entire quarter, MBRF’s net income between July and September would have been close to R$200 million, according to sources familiar with the matter.
The report also showed that financial leverage, measured by the ratio of net debt to adjusted EBITDA, stood at 3.09x, essentially flat compared with 3.07x in the same period of 2024.
The consolidated results reflect the performance of the company’s three main business segments. BRF accounted for 39% of total revenue, with a 5.4% increase in net sales but a 14.9% drop in EBITDA. The South American division represented 14% of revenue, with a 31.8% increase in EBITDA, while the North American division accounted for 47% of revenue, up 12.2% year on year.
According to José Ignácio, MBRF’s vice president of finance and investor relations, the lower profit reflects a temporary fluctuation. “The main driver of the decline in net income was BRF’s operational performance, which, although still at very strong and healthy levels, saw a slight year-over-year contraction,” he said in an interview.
Among the factors weighing on BRF’s performance, Mr. Ignácio cited the closure of key export markets for Brazilian poultry, including China, following confirmation of an avian influenza case at a commercial farm in Montenegro, Rio Grande do Sul, in May. With China’s market reopening last Friday, MBRF expects an improvement in BRF’s results in the coming months.
MBRF CEO Miguel Gularte said the quarter was marked by strong commercial performance, with record sales volume and revenue, up 3.7% and 9.2%, respectively. “The quarterly results reinforce MBRF’s potential,” he added.
In Brazil, growth was driven by processed products, with sales volume up 7%. In South America, sales grew nearly 18% year over year, while in the United States, performance remained solid despite a challenging environment. “We maintained strong results in North America, with efficient management of the cattle cycle and stable margins, even amid tighter cattle supply,” said Mr. Ignácio.
The company also reported that of the R$1 billion in synergies identified at the start of the merger process, 60% should be captured within the first year of operations. Of that total, R$231 million are expected from corporate structure optimization, R$470 million from supply chain efficiencies, R$230 million from commercial and logistics improvements, and R$73 million from other initiatives.
Source: Valor International
https://valorinternational.globo.com
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11/12/2025
SYSTEM INCREASES GLOBAL METHANE DETECTION TENFOLD
Using AI and real-time satellite data, the tool has identified 14,500 methane plumes since 2024
To reduce methane emissions, it is necessary to know where they come from. The Methane Alert and Response System (MARS) combines near-real-time data from nearly a dozen satellites to continuously monitor the Earth and detect large methane plumes. “These satellites detect only the largest emissions, a small fraction of the total, but they are a powerful tool for identifying and acting on the largest leaks,” explains Giulia Ferrini, head of the International Methane Emissions Observatory (IMEO) of the United Nations Environment Program (UNEP).
Since the system’s operations started in January 2024, 14,500 methane plumes have been detected, and 4,000 alerts have been issued. MARS processed around 200,000 satellite images in just the first eight months of 2025. “By combining AI with deep scientific knowledge, IMEO has increased its ability to monitor the globe for methane emissions tenfold. These efforts are expanding to better monitor methane from the coal and waste sectors,” Ms. Ferrini emphasizes.
While satellites provide a global view, detecting large leaks and critical points from space, aircraft locate specific regions, and drones equipped with sensors fly over facilities to identify the exact source of emissions. Ms. Ferrini says that oil and gas companies use portable sensors, such as optical gas imaging cameras, to detect leaks in specific equipment and correct them.
In Brazil, a system combining the Internet of Things (IoT) and photonic sensing to identify fleeting methane emissions, created by the company Alfa Sense and Brazil’s Center for Research and Development in Telecommunications Foundation (CPQD), received an award from Petrobras and generated a patent application at the Brazilian Institute of Industrial Property (INPI).
“We developed a purely optical, passive sensor that interacts with methane molecules at the leak site. When you have light at the same wavelength, at the same frequency, the methane molecule absorbs that light. We monitor the amount of light absorbed and can detect if methane is present,” explains Marcos Sanches, innovation coordinator at Alfa Sense.
However, the prototype did not become a product. Now, Alfa Sense is engaged in another project. It was selected through NAVE, an entrepreneurship program launched by Brazil’s National Petroleum Agency, to meet Challenge 56, related to advanced technologies for monitoring and controlling greenhouse gas emissions.
The São Carlos campus of the University of São Paulo (USP) is developing a drone project that uses sensors and artificial intelligence systems to measure the concentration of greenhouse gases, in order to monitor environmental conditions in forested areas and identify fire outbreaks.
“With drones, we can obtain a profile of gas concentration to detect if there are bubbles, if the gases are concentrating more in the soil, or if they are dissipating into the atmosphere,” explains Antonio Carlos Daud Filho, a postdoctoral researcher at the University of São Paulo. According to him, one of the challenges lies in the fact that low-cost sensors—which are lighter, smaller, and easier to mount on smaller drones—do not have as much precision as more expensive ones.
At Embrapa, the Brazilian Agricultural Research Corporation, the main focus, with regard to methane, is to reduce the time cattle spend in the pasture and improve pasture quality and management. “Cattle produce 500 liters of methane per head per day, so extensive agriculture, the kind that leaves cattle in the pasture, typical of Brazil, plays a big role in this,” says Luiz Eduardo Vicente, a researcher on remote sensing and natural resources at Embrapa.
Mr. Vicente points out that the agricultural sector accounts for 76% of Brazil’s methane emissions, of which 5.7% are associated with animal waste management. To address this challenge, the Ministry of Agriculture, Embrapa, and the NGO Instituto 17 launched a tool in August that calculates methane (CH4) and nitrous oxide (N2O) emissions from waste management in livestock farming. ABC+Calc generates systematized data to help achieve the goals of the Adaptation and Low Carbon Emission Plan for Agriculture (ABC+ Plan).
Many Brazilian initiatives, however, make indirect measurements. Created by the Climate Observatory, the Greenhouse Gas Emissions and Removals Estimation System (SEEG) uses methods and guidelines established by the Intergovernmental Panel on Climate Change (IPCC) to analyze public and open data to monitor greenhouse gas emissions in all sectors of the economy.
Linked to the SEEG, Ingrid Graces, a researcher at the Institute of Energy and Environment (IEMA), and Iris Coluna, an advisor at ICLEI, a global network focused on sustainable urban development, acknowledge that it is necessary to have more precise emission figures for the various types of activities and regions, with the combination of satellites, drones, and remote sensors. “It’s all still very embryonic, so much so that it’s very difficult to have historical series,” Ms. Graces emphasizes.
Jean Ometto, senior researcher at Brazil’s National Institute for Space Research (INPE), adds that methane has been monitored especially using industrial sources, satellites, and cameras that measure wavelengths. There is also equipment placed on meteorological towers to measure gas flows and equipment that detects methane in the air. “With the evolution of nanosatellites, which fly at lower altitudes, potentially, you can conduct experiments more frequently,” predicts Mr. Ometto.
Source: Valor International
https://valorinternational.globo.com
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11/12/2025
LATIN AMERICAN STEELMAKERS RETHINK PLANS AMID SURGE OF CHINESE IMPORTS
China accounted for 61% of Brazil’s steel imports from January to September 2025
The surge of steel exports from China continues to challenge the Latin American steel industry, according to experts gathered at the Latin American Steel Association (Alacero) congress in Cartagena, Colombia. Jorge Oliveira, president of Alacero and of ArcelorMittal Brazil, warned on Tuesday (11) that the situation is more concerning than in previous years, with few answers to the growing influx of Chinese steel in the region. “The reality shows that, despite our efforts, Latin America’s steel market is deteriorating due to global overcapacity from Asia,” he said.
Mr. Oliveira noted that Latin American producers have been forced to scale back investments and reduce production. “Chile’s largest steel producer, Huachipato, has shut down operations. Geopolitical tensions are affecting the entire supply chain, as well as commodity and logistics prices. We must find effective responses to face this challenging environment,” he said.
Data confirms the concern. Between January and September 2025, Brazil imported 5.075 million tonnes of steel products from all sources, up 9.7% year over year, according to the Instituto Aço Brasil. Imports from China alone jumped 25.9% over the same period, reaching 3.1 million tonnes. Chinese steel accounted for 61.1% of Brazil’s total steel imports, 7.9 percentage points higher than a year earlier.
Over the same period, Brazilian steel output fell 1.7% to 24.982 million tonnes, down from 25.419 million in 2024. According to Alacero, China produces in 20 days what the entire Latin American steel industry produces in a year. In Brazil’s case, Chinese mills generate the country’s annual output in just 12 days.
“Latin America is losing its development potential. Our trade defense barriers are too weak,” said Ezequiel Tavernelli, Alacero’s executive director. He added, “Latin American economies are becoming more dependent on raw materials than manufactured goods. The region is deindustrializing.”
Mr. Tavernelli warned that China’s influence could become a social problem for Latin America, as a slowdown in the steel sector affects a wide industrial chain: “The steel industry creates jobs, drives logistics, and supplies many other industries. Several sectors are hit at once.”
He argued for greater regional integration and stronger trade-defense policies, including higher import tariffs. Brazil’s quota-tariff system shows that import taxes must be higher, he said.
In May, Brazil’s Foreign Trade Chamber (Gecex/Camex), under the Ministry of Development, Industry, Trade, and Services, renewed the country’s steel import quota system through May 2026. The policy imposes a 25% tariff on Chinese steel exceeding the quota, covering 23 product categories.
“Latin America could win if competition were fair,” Mr. Tavernelli said. “Chinese steel is subsidized, from energy costs to transport. Our region has a strong steel industry with real potential, but we can’t compete on such unequal terms.”
At the same event, Oliver Stuenkel, an international relations professor at Fundação Getulio Vargas (FGV), argued that political fragmentation among Latin American governments weakens their collective position. “The lack of unity among Latin American leaders leaves the region more vulnerable. The private sector may have to step in to fill that gap. Acting in isolation, countries are unlikely to find a solution,” he said.
Source: Valor International
https://valorinternational.globo.com
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11/24/2025
WAR HALTS FIOL AND COMPLETION OF SECTION DELAYED UNTIL 2031
The railway line crossing Bahia faces three stages of structural work; progress slowed by the impact of Russia’s invasion of Ukraine
Even from 18,000 kilometers away, the war between Russia and Ukraine has stalled construction of the West-East Integration Railway (FIOL) in Bahia. In April, Bahia Mineração (Bamin)—the company responsible for building the line—suspended work on Section 1, which connects Caetité to Ilhéus. The company, controlled by the Eurasian Resources Group (ERG) and headquartered in Kazakhstan, has been heavily affected by the war’s economic fallout.
“Unfortunately, Bamin faced a serious problem due to the war and ran out of resources to carry out [FIOL 1]. The government is treating this matter as a priority, and I believe it will be resolved,” said Jorge Bastos, president of Infra S.A., at a Valor event in late October.
Bamin declined to comment. However, at the end of October, company president Eduardo Ledsham addressed the issue during the opening of Exposibram, a mining congress held in Salvador. He confirmed that the company had been hit by the economic repercussions of the conflict and has since been seeking ways to raise the R$5.7 billion required to resume construction.
“We are working with three concrete proposals [from potential investors], all interested in an integrated project—the mine, railway, and port,” said Mr. Ledsham, noting that about R$4.8 billion is already secured through federal government credit lines. The remaining funds are expected to come from a new partner in the venture.
The linchpin of the plan is the completion of FIOL 1, which, although currently suspended, is 62% complete, according to Mr. Ledsham. The new investor should be confirmed by early next year. However, the partnership’s restructuring will require renegotiating the concession contract, as the company has requested an extension of the completion deadline from 2027 to 2031. “It’s a natural process. A project of this scale demands adjustments to timelines and responsibilities, always in dialogue with the Ministry of Transport and ANTT [National Land Transport Agency],” said the executive.
Both Bamin and the federal government view the integration of rail logistics, agribusiness, and mining as key to the Northeast’s economic transformation, linking the railway to other logistics corridors. Alongside FIOL, the Porto Sul project in Ilhéus, still on the drawing board, is seen as a strategic hub that could reduce freight costs by up to 40%, according to Mr. Ledsham’s estimates.
Bamin owns the Pedra de Ferro mine in Caetité, which has an annual production capacity of up to 2 million tonnes of high-grade iron ore (65% concentration)—a level that draws intense interest from international buyers. However, the company’s ability to export depends on the completion of the FIOL railway, the essential link between the mine and export terminals.
According to Infra S.A. president Jorge Bastos, completing FIOL is strategically important because it connects mineral and agricultural production to the port system. “FIOL 2 [Guanambi-Caetité] is now in full swing. We’ve resolved most of the bottlenecks and are putting nearly all sections out to tender to complete construction as quickly as possible,” Mr. Bastos said.
Despite this optimism, an audit by the Federal Accounting Court (TCU) has identified “significant delays” in project execution. “After nine months of work—out of a total contract term of 26 months—only 3% has been completed, with no executive project approved and no construction stages initiated. This represents delays of nine months for design and four months for construction,” the court reported in October.
The TCU cautioned Infra S.A. that failing to take action against contractors who are not meeting deadlines or contractual obligations could constitute an oversight by the agency itself. However, it also recommended that each case be assessed individually. Currently, half of the 485 kilometers that make up FIOL 2 already have tracks installed.
Meanwhile, FIOL 3, covering 840 kilometers between Mara Rosa (Goiás) and Correntina (Bahia), remains in the planning phase. All FIOL sections are part of the East-West Railway Corridor, a project deemed strategic by the Ministry of Transport. The plan is to link FIOL with the Midwest Integration Railway (FICO) to create a logistics corridor for grain and ethanol transport from the Midwest to the Northeast and to international markets.
The Ministry of Transport expects to launch the bidding process for the corridor’s concession in the first half of 2026.
Source: Valor International
https://valorinternational.globo.com
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11/24/2025
CRITICAL MINERALS INDUSTRY AT ODDS OVER INCENTIVES
Government, private sector, and experts discuss whether such promising market really requires any incentives
As Brazil faces a historic opportunity to transform its reserves of critical minerals, strategic minerals, and rare earths into a high-value industry, the government, the productive sector, and specialists are still debating how to unlock this chain. Some defend the implementation of specific incentives to offset the high costs and long investment-return cycles, while others argue that global scarcity and strong demand already give the country sufficient leverage to negotiate local production without necessarily relying on broad subsidies. The consensus, however, is that Brazil now holds “bargaining power” to carve out space in this market.
This diagnosis comes amid growing recognition that the energy transition and geopolitical shifts have, for the first time, created an environment in which countries possessing these minerals can exercise real leverage over global supply chains. The combination of structurally rising demand and efforts by the U.S. and Europe to reduce dependence on China has opened an unprecedented window for Brazil to use its geological advantages as a platform for industrialization rather than merely supplying raw materials.
Behind the scenes, government officials say that in the case of critical minerals and rare earths, U.S. interest is focused on securing raw materials with no commitment to local value-added stage, something Brazil does not intend to accept. Some insiders also estimate that a more robust national proposal for the sector will only advance after the 2026 electoral cycle. The creation of an incentive policy remains a point of contention.
The interim president of the Brazilian Geological Survey (SGB), Valdir Silveira, says Brazil produces more than 90 mineral goods demanded worldwide but must recognize this window of opportunity and decide what type of mineral industry it wants to develop: extract and export raw materials as is done today; export only what exceeds domestic industry needs; or fully verticalize production.
According to him, the current trend is to sell raw materials to other countries, but he believes the intermediate option is the most suitable for now, as it fosters supply-chain development while generating trade surpluses, jobs, and income.
Starting from this approach, he says, it would later be possible to develop the entire chain and offer finished products. However, he stresses that beyond the materials themselves, Brazil will also need, and is in a position, to negotiate alongside other nations, since most technologies are dominated by foreign countries. “We must use mineral goods as bargaining chips. I supply them, but in return, technology must be brought in for developing the chain. That would be the most appropriate path.”
Echoing this view, Jorge Arbache, a economics professor at the University of Brasília (UnB), also highlights the unprecedented bargaining power of countries that hold these resources. He says Brazil, with strong potential and only 27% of its territory prospected, can condition access to deposits on the gradual addition of value within its borders, reducing reliance on raw-material exports.
“This bargaining power is increasingly visible and will become even more so in the coming years and decades. There is no reason for the government, Congress, and other leaders not to discuss an agenda that is entirely reasonable and far from new,” he told Valor.
According to Arbache, subsidies may accelerate certain processes in some chains but are not always essential, especially for highly attractive minerals. For this reason, such incentives should not be treated generically, he says. The greater the strategic value of the input and the fewer the alternative suppliers, the lower the need for government incentives.
He notes that projects involving critical minerals and rare earths tend to be profitable despite exploration risks, since expectations of strong price appreciation increase potential returns and justify long-term investments. In such cases, investors, and even governments like that of the U.S., are more willing to assume risks and pay premiums to secure access to reserves.
Brazil’s main gap today, according to Arbache, is the lack of a national strategy for mineral policy, one capable of distinguishing critical from strategic minerals and guiding decisions according to national interests. Each supply chain has its own dynamics and requires specific policies. “For example, demand for lithium is projected to grow significantly over the coming years and decades. We need to understand today’s nuances. What we need now is an intelligent, well-informed, medium- and long-term strategy,” he explains.
The debate is also gaining traction in Congress. In the Chamber of Deputies, congressman Arnaldo Jardim (Citizenship of São Paulo) is the rapporteur for a bill authored by deputy Zé Silva (Solidarity of Minas Gerais) that defines criteria for prioritizing minerals. The proposal foresees tax and regulatory incentives to attract investments and creates the Committee on Critical and Strategic Minerals (CMCE). The most sensitive point, which still is under negotiation, involves the chapter on tax incentives, which depends on discussions with the Ministry of Finance.
“We will set clear guidance in the legislation so that Brazil is not merely an exporter of commodities, but develops beneficiation and even transformation—higher stages in the mineral value-added process,” Jardim told Valor.
He says the bill will establish processing levels that scale up support as companies expand their activities domestically. In other words, the greater the value added domestically, the greater the incentive.
Source: Valor International
https://valorinternational.globo.com
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11/24/2025
THE NIGHT COP30 NEARLY COLLAPSED
Belém summit could not deliver a roadmap to end fossil-fuel dependence, but its outcomes may shape climate politics for years
Like the historic United Nations Conference on Environment and Development in Rio de Janeiro in 1992, which led to the adoption of three environmental conventions addressing climate change, biodiversity loss, and desertification, COP30 will have a lasting impact. The first UN climate conference ever held in the Amazon rainforest—and the first at a moment when major ecosystems are nearing irreversible tipping points—was also the first to confront the fossil-fuel problem head-on and attempt to propose a way out: a global roadmap to phase out oil, gas, and coal. That effort ultimately failed, but after COP30 it will be hard for governments to speak only about the symptoms of climate breakdown.
COP30 nearly fell apart because of the ambition behind the proposal. On Wednesday night, in the final stretch of negotiations, shortly after President Lula and Environment Minister Marina Silva argued that the conference needed to create a mandate—a task force or any mechanism capable of planting the seeds for two roadmaps, one for ending fossil fuels and another for ending deforestation—the talks hit their most dramatic moment. Lula had met with representatives from key countries such as Saudi Arabia, China, and Egypt to discuss the possibility of mentioning fossil fuels directly in the negotiating text.
That move triggered a forceful reaction from a coalition of 82 countries. China, Egypt, and Saudi Arabia were joined by dozens of others—including India, Indonesia, Russia, Uganda, the United Arab Emirates, and Venezuela—in demanding an emergency meeting with COP30 President André Corrêa do Lago. They threatened to bring down the entire “mutirão” process if the next draft text mentioned fossil fuels at all. The Arab group, representing 22 countries including Saudi Arabia, went further: if any COP30 decision referenced fossil fuels, they warned, the entire conference would collapse.
On Thursday, Brazilian diplomats began drafting a new text to bring the process back on track. Then a fire broke out in the Blue Zone facilities. Once safety was restored, negotiators resumed work, producing pre-dawn drafts stripped of any reference to fossil fuels or roadmaps. It became clear that it was impossible to face the monster with only a few warriors on board.
Instead, the strategy shifted to securing outcomes that could resonate in the future. The “mutirão” text includes a strong affirmation of multilateralism and states unequivocally that the energy transition is irreversible—a unified message from 194 countries to U.S. President Donald Trump. In the fragmented geopolitical landscape of 2025, such consensus is far from trivial. Another important step: for the first time, there is a formal decision to move the climate regime from negotiation to implementation, acknowledging the urgency of the crisis and the need to accelerate action and cooperation.
The conference’s main deliverable is a global implementation accelerator, modeled on the existing action agenda. It is expected to serve as a platform to channel solutions and speed up the transition, buying time in the climate fight by cutting methane emissions and boosting carbon-removal initiatives such as forest restoration. The accelerator is also meant to trigger what negotiators call “positive tipping points,” cascading effects in which climate solutions reinforce each other. The presidents of COP30 and COP31 will guide how the mechanism will operate.
Another outcome was the decision to triple adaptation finance. Brazil’s presidency had to negotiate with the EU, which resisted making new commitments on its own. The compromise shifted the target year from 2030 to 2035 and stated that the $120 billion pledged by developed countries for developing nations would come from all sources.
COP30 also established a just-transition mechanism, a gender action plan, and global adaptation goals, although these will continue to be refined. Here, Brazil’s presidency faced an unexpected challenge: countries such as Colombia and Panama objected to the indicators for measuring adaptation progress, creating tension in the plenary. The dispute was resolved on the spot, but it set a troubling precedent. Colombia, insisting on referencing fossil fuels, threatened to block the texts. At a critical moment, Colombia and Panama demanded that no delegation ever be ignored again. The Saudi delegation immediately backed the idea of giving any country the power to veto decisions, a precedent that many fear could undermine the entire climate regime.
Source: Valor International
https://valorinternational.globo.com
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11/25/2025
BRAZIL’S RARE EARTHS ATTRACT WESTERN INTEREST
Five companies announce financing, planned funding, or strategic deals amid global race for critical minerals
Western countries have deepened their engagement with companies developing Brazilian rare earth mining projects, a group of elements now central to tensions between the U.S. and China. At least five companies with projects in Goiás, Minas Gerais, and Bahia have recently announced financing, intended financing, or strategic agreements with development lenders and firms from the U.S. and other countries, including Canada and France. At the same time, sources consulted by Valor describe efforts to attract investment and strengthen Brazil’s domestic supply chain.
The movement comes as Brazil’s rare earth reserves draw attention from the U.S. following the tariff war launched by Washington, which turned the group of 17 mineral elements into part of Brazil’s commercial bargaining strategy to reduce tariffs.
Rare earths are a group of chemical elements strategic for the energy transition and defense. They are used in high-tech industries, from wind turbine production to batteries, including those for hybrid and electric vehicles.
In negotiations between China and the U.S. after the tariff war launched earlier this year by President Donald Trump, rare earths are a central point because China holds the world’s largest reserves. The country also dominates nearly the entire supply chain, accounting for 69% of global production and 91% of refining.
China restricted U.S. access to its rare earths in retaliation for tariffs imposed by the Trump administration. More recently, U.S. Treasury Secretary Scott Bessent said he expects an agreement with China on the elements to be concluded soon.
U.S. interest in Brazil’s rare earth reserves stems from the fact that they are the largest outside China and could help reduce U.S. dependence. But Brazil currently has only one commercially operating mine, Serra Verde Pesquisa e Mineração (SVPM), in Goiás. And last year the country accounted for less than 1% of global production.
Seeking international partners in the mining sector is natural, said Ana Paula Repezza, business director at the Brazilian Trade and Investment Promotion Agency (ApexBrasil). She participated this month in an event organized by the European Commission in Brussels, where the agency sought European investment for rare earths and other critical minerals.
“The mineral chain is naturally globalized and, China aside, I don’t think any country in the world can be self-sufficient in capital and technology for exploration and processing along the entire chain,” she said.
Repezza added that foreign investment becomes a viable alternative for projects in pre-operational stages to accelerate development and help reduce risk. “Mining is a very high-risk activity, and the more partners and investors you have, the better,” she said.
Interest has increased due to growing awareness of the importance of critical minerals for the energy transition and recent geopolitical tensions between the U.S. and China over American access to Chinese rare earths.
SVPM secured up to $465 million in financing in August from the U.S. International Development Finance Corporation (DFC) to help expand production of heavy rare earth metals, according to the Financial Times.
Canada’s Aclara Resources, which has a pre-operational project in Goiás, announced in September that it received a commitment of up to $5 million from the DFC for a feasibility study.
Australia’s Viridis Mining and Minerals, with a pre-operational project in Minas Gerais, said on Tuesday (18) that it received a letter of interest from Export Development Canada (EDC) for early support of up to $100 million in debt financing. According to the company, it also received a nonbinding support letter on December 10 from France’s export credit agency confirming eligibility for financing.
In the realm of agreements, goals vary from offtake contracts to future processing and refining. Australia’s St. George Mining, which has a pre-operational niobium and rare earths project in Minas Gerais, announced in September a memorandum of understanding with REAlloys, a major supplier of magnets to the U.S. defense and technology industry, for a potential long-term offtake of up to 40% of its rare earth output.
Australia’s Brazilian Rare Earths (BRE), with a pre-operational project in Bahia, announced last month an agreement with France’s Carester, a specialist in rare earth separation and refining, for a 10-year initial offtake of heavy metals. The French company will also provide services for the development of BRE’s separation refinery planned for the Camaçari Petrochemical Complex near Salvador.
For Elaine Santos, a researcher at Portugal’s National Laboratory of Energy and Geology (LNEG), the relationships Western countries are forging with these Brazilian projects signal an attempt to reorganize the geopolitics of the rare earth supply chain. “It indicates that the U.S. and its allies are trying to reduce dependence on China, which dominates the critical stages of separation, refining and permanent magnet production,” she said.
A specialist in the sociology of energy and strategic mineral resources with postdoctoral research at the University of São Paulo’s Institute of Advanced Studies, she said the dynamic also highlights Brazil’s vulnerability. Despite holding strategic resources—most of which are still only resources, not reserves—Brazil does not control strategic stages of the supply chain.
“It is natural that external actors move early to secure positions from the outset,” she said. “There is clearly a push to secure access to rare earths from the pre-operational phase. Given Brazil’s significant resources, the country has the geological potential to be a strategic player in a market that will only grow,” she added.
The risk, she warned, is that Brazil repeats its “historical trajectory” and stays limited to exporting critical raw materials while other countries consolidate technology, metallization and component production.
But ApexBrasil is working to prevent that, according to Repezza. At the Brussels conference, attracting investment for stages beyond extraction, such as processing and downstream manufacturing, was one of the agency’s main goals. To promote interaction with investors, the agenda included presenting Brazil-based projects to development institutions and public and private banks. Projects by Meteoric, Aclara and St. George, along with others focused on minerals such as silica and graphite, were among them.
“Apex’s strategy for attracting investment in critical minerals is directly linked to the New Industry Brazil program, whose pillars include strengthening the mineral chain,” Repezza said. “The aim is to have as many links in the chain as possible operating within Brazilian territory.”
The proposed National Policy for Critical and Strategic Minerals, now moving through Congress and intended to define the policy’s principles, was also presented by the Ministry of Mines and Energy during ApexBrasil’s meetings in Europe.
“We are revising our regulatory framework for critical minerals mining to make the exploration licensing process even more investor-friendly, which is important news for foreign investors,” she said.
Bryan Harris, managing partner at Sabio, a consultancy focused on Latin America, said the West has recognized Brazil as an “excellent” potential partner. “Western nations have finally realized that they must diversify their supply of critical minerals, and quickly.”
He said the growing engagement with Brazilian projects shows how seriously these countries are treating the issue. Developing rare earth supply chains outside China will take years, require deep reforms and involve complex coordination among countries, he added. “But the fact that money is already beginning to flow shows that this has become a geopolitical and industrial priority for Western nations.”
Goiás recently signed memorandums of understanding with Japan’s Organization for Metals and Energy Security (Jogmec) and with the U.S. State Department’s Bureau of Economic, Energy and Business Affairs to advance rare earth development in the state, according to Adriano da Rocha Lima, Goiás’s secretary-general of Government.
With Japan, the state hopes to attract investment to move projects further along the processing chain. With the U.S., the goal is technological cooperation and potential knowledge exchange.
“It is still an initial outline, meant to establish a basis for more detailed discussions, which is what is happening now in both cases. We are moving into the phase of defining objectives, targets and financial matters. Discussions with Japan are more advanced, and yes, there is a prospect of financial investment, but no amount has been set,” Rocha Lima said.
The state also enacted a law in August creating the Goiás Authority for Critical Minerals (Amic-GO) and defining strategic minerals, including rare earths, niobium, nickel, copper and titanium. The authority will coordinate development of a state policy for critical minerals and establish a state fund to support the sector.
“A bill is being discussed in Congress, but we moved ahead and passed a state law,” he said. “It sets out measures to give the state sovereignty to use its resources in the way most advantageous to Goiás, so we do not simply export raw ore without adding value.”
Source: Valor International
https://valorinternational.globo.com
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11/27/2025
BRAZILIAN FIRMS HIT BY 27% PROFIT DROP IN Q3 AMID COST PRESSURES
Companies show resilience, but high interest rates, weak demand and stronger real took a toll
Publicly traded companies in Brazil showed operational resilience in the third quarter, posting results that exceeded analysts’ expectations despite headwinds such as slowing domestic consumption, persistently high interest rates, a stronger real, and lower international commodity prices.
A survey by Valor Data of 386 non-financial companies found that net revenue rose 6.2% in the quarter to R$1.04 trillion, while net income dropped 26.9% to R$46.5 billion, dragged down by a sharp increase in financial expenses.
The figures confirmed a continued deterioration in margins, mainly due to rising operating costs and expenses. Profit was also hurt by a 27.2% jump in financial expenses, as companies faced higher debt service costs with Brazil’s base interest rate Selic at 15%.
For analysts interviewed by Valor, the season turned out to be “better than feared.” “In the weeks leading up to earnings season, expectations were for weak results, but the numbers came in surprisingly strong,” said Fernando Ferreira, chief strategist at XP. Of the companies covered by the brokerage, 55% beat profit estimates and 39% exceeded revenue forecasts.
Daniel Gewehr, chief strategist at Itaú BBA, agreed, highlighting the companies’ operational health. “It wasn’t an excellent season, but it was better than expected given a tough comparison base,” he said. Still, he noted that operational gains were not enough to offset higher interest expenses.
“Companies were very resilient this quarter. There isn’t a widespread revenue slowdown, just some isolated cases,” said Aline Cardoso, head of equity research and strategy at Santander. “This was the quarter with the steepest year-on-year profit decline, but the trend should improve from now on as the interest rate differential narrows.”
Analysts pointed out that the average Selic rate in the third quarter was 15%, up from 10.75% a year earlier, which significantly increased borrowing costs, especially for more highly leveraged companies. “The market rewarded those companies that delivered stronger cash flow generation to absorb these impacts,” Gewehr said.
Sector highlights
Construction, telecommunications, and utilities were the top-performing sectors in the quarter, while commodity exporters, especially mining companies like Vale, also stood out. On the negative side, retailers (particularly in apparel and food) and healthcare companies disappointed, with Hapvida being a notable laggard.
Among companies focused on Brazil’s domestic market, the impact of slowing consumption was already visible. But analysts noted that operational adjustments made after the pandemic and more proactive management have helped companies remain operationally resilient with mostly solid cash generation.
Commodity exporters managed to maintain strong results despite macroeconomic pressures such as a stronger real—the average dollar exchange rate fell from R$5.55 to R$5.45 during the year—and declining prices for Brent crude and pulp. Iron ore, however, rose from $99.68 to $102.03 per tonne, explaining the good performance of producers in that segment.
Companies like Petrobras and Vale increased production volumes to offset negative indicators, such as lower investments in the case of the oil company and higher operating costs in the case of the miner. Analysts also noted that the real’s appreciation reduced the value of dollar-denominated debt, which helped ease pressure on balance sheets.
Post-earnings volatility
A striking feature of the quarter was the market’s strong reaction to earnings disappointments. Post-earnings volatility exceeded historical averages and heavily punished names like Hapvida and Natura.
“This is related to the growth of quant funds, which trade on trends and already account for 50% of daily trading volume on the stock exchange,” explained Ferreira of XP.
Cardoso of Santander added that the growing presence of foreign capital throughout the year—net inflows into B3 reached R$25.3 billion through October—often driven by algorithms and less familiar with local company fundamentals, tends to trigger rapid sell-offs in the face of negative events, amplifying post-result declines.
Looking ahead, analysts remain cautiously optimistic, with expected interest rate cuts seen as the main catalyst for profit recovery. They noted that the average interest rate in the fourth quarter of last year was already higher, which should reduce the year-over-year comparison of financial expenses.
Gewehr of Itaú BBA forecasts that earnings among domestically focused companies could rise by more than 20% next year, boosted by monetary easing, even if the economy slows and grows less than 2% in 2026. XP sees a trend of upward earnings revisions for 2025 and projects a 12% gain for the Ibovespa stock index next year.
Source: Valor Internatonal
https://valorinternational.globo.com
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11/27/2025
POLITICAL RIFT LAID BARE AS TOP LAWMAKERS SKIP TAX EXEMPTION CEREMONY
Lula, ministers seek to ease tensions after Lower House Speaker Hugo Motta and Senate President Davi Alcolumbre boycott event
The absence of Lower House Speaker Hugo Motta and Senate President Davi Alcolumbre from the ceremony enacting a personal income tax exemption bill exposed a widening political rift between the executive branch and Brazil’s Congress.
Despite the clear message behind the boycott, President Luiz Inácio Lula da Silva and his cabinet used the event at the presidential palace to downplay tensions, offering praise and conciliatory gestures to both congressional leaders.
In his speech, Lula avoided direct references but alluded to the situation, saying leaders must “learn how to talk” and “find the middle ground.” “No one has to be like the other. We just need to respect each other, learn to talk, and always find a middle ground that doesn’t serve one or the other, but serves everyone,” he said.
Institutional Relations Minister Gleisi Hoffmann, tasked with managing congressional relations, delivered the most direct message. She downplayed the absence, saying it “in no way overshadowed” their contributions.
“Political disputes and the defense of ideas are part of the process of winning over the majority of society,” Hoffmann said.
Finance Minister Fernando Haddad also weighed in, acknowledging the strain but stressing the importance of Congress in the tax reform. “Without the efforts of Motta and Alcolumbre, it would not have been possible to implement the income tax exemption for those earning up to R$5,000 starting next year,” he said.
The coordinated absence of both leaders reflects a renewed alliance between Motta and Alcolumbre, who had been at odds since the House passed a constitutional amendment limiting judicial action against lawmakers in September, a proposal unanimously rejected by the Senate a week later, angering Motta and other Lower House leaders.
Behind the snub
While their decision was aligned, Motta and Alcolumbre had separate reasons for skipping the event. Alcolumbre is at odds with Lula over his decision to nominate Jorge Messias, head of the Office of the Attorney General (AGU), to a seat on the Supreme Federal Court (STF). Alcolumbre made his dissatisfaction public and gave Messias only two weeks to lobby senators before his confirmation hearing scheduled for December 10.
Motta, on the other hand, is feuding with the Workers’ Party (PT), not Lula himself. He voiced discomfort over criticism from PT leader Lindbergh Farias after appointing lawmaker Guilherme Derrite to report on the controversial anti-gang bill. Motta felt the attacks on social media and in public statements were excessive.
Another reason Motta avoided the event, sources said, was a recent embarrassment when he was booed and heckled during a government ceremony on Teacher’s Day in Rio de Janeiro.
Spotlight shifts to political rivals
In the absence of the two congressional presidents, the spotlight fell on two political adversaries: Congressman Arthur Lira and Senator Renan Calheiros, the official rapporteurs of the income tax exemption bill.
Lira, Motta’s predecessor as speaker and now a key power broker, seized the moment. He offered praise for Lula, even hinting at a possible fourth term.
“It’s been an honor to work with Lula over these two years in an institutional, close, and correct relationship, always focused on ensuring balance in key votes for the country,” he said.
Lira also acknowledged Hoffmann and Haddad: “A special embrace to Minister Gleisi Hoffmann, my colleague in the Lower House, who has been doing a tough and thankless job coordinating this.”
Despite being longtime political rivals in the state of Alagoas, Lira and Renan’s presence on the same stage did not generate friction. To avoid tension, the presidential staff seated them on opposite ends of the stage—Renan at one end, Lira at the other.
In his speech, Renan criticized the country’s elite for resisting the tax cut. “It was pure terrorism from the privileged,” he said.
Source: Valor International
https://valorinternational.globo.com
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