Cabo Verde Mineração finds new rare earths area in Minas Gerais

Company seeks international partners to fund processing complex

 

 

 

02/05/2026

Cabo Verde Mineração, a Brazilian company based in Belo Horizonte, has identified a new target area for rare earth extraction. The site, known as Alvo Botelhos, lies on the edge of the Poços de Caldas Alkaline Complex in southern Minas Gerais and has potential resources exceeding 500 million tonnes of ionic clays.

The company is in talks with international groups to finance the construction of an industrial complex to process the rare earth elements.

“The scale of the project, with more than 91,000 hectares across 57 mining rights, along with the results we have so far, point to the potential for a world-class project,” said Túlio Rivadávia Amaral, CEO of Cabo Verde Mineração.

Ionic clay is a type of clay that contains rare earth ions and is used in energy transition technologies, wind power generation, high-efficiency motors, electric vehicle batteries, advanced electronics, and other applications. In the Alvo Botelhos area, tests indicated the presence of high-value magnetic elements such as neodymium, praseodymium, dysprosium, and terbium, according to Rivadávia.

Exploration at Alvo Botelhos is being conducted alongside drilling at Alvo Caconde 1, located in the same Poços de Caldas complex, where the company initially pursued an iron ore project.

The targets lie within a block of approximately 91,000 hectares covering four municipalities in Minas Gerais—Muzambinho, Cabo Verde, Campestre, and Botelhos—as well as Caconde in São Paulo state. Rivadávia said the mining company holds 57 mineral rights for exploration in the region.

Among the technical results from priority targets are intervals of 16 meters with average grades of 2,245 parts per million of total rare earth oxides (TREO), including readings of 4,302 ppm TREO and 854 ppm magnetic rare earth oxides (MREO).

“Anomalies are distributed across all four quadrants of the surveyed areas, with results reaching as high as 14,000 ppm and significant recurrence in the 3,000-ppm range,” said Oscar Yokoi, a geologist and technical consultant and a member of the Australian Institute of Geoscientists.

SGS Geosol conducted metallurgical leaching tests, which showed TREO recoveries of up to 81.7% and MREO recoveries above 60%, indicating technical and economic feasibility for mining. Samples were analyzed and certified by ALS Brasil and SGS Geosol laboratories.

Rivadávia told Valor that the project began as an iron mining venture in 2020, but during studies a hydrothermal alteration—a volcanic fissure—was identified, suggesting the presence of rare earths. The company then decided to focus on further exploration.

Research began in 2022. The first discovery was at the Caconde target, in the municipality of the same name, and the second was made now. “At Alvo Caconde, we identified a potential of 100 million tonnes of rare earths at 3,200 ppm. That alone could supply a plant for 20 years with output of 5 million tonnes per year. With Botelhos, the expectation is at least 500 million tonnes,” Rivadávia said.

An initial economic assessment at Alvo Botelhos indicated extraction potential of at least 500 million tonnes of rare earths. Drilling began last week.

Rivadávia said he is in talks with groups from the European Union, Canada, the United States and China to raise funding for the project, though the names of the groups remain confidential at this stage.

For the first phase, covering exploration and certification of the areas, Cabo Verde Mineração is investing about $10 million of its own funds.

The company is seeking financing to build the industrial complex, which is expected to require $370 million for a plant with capacity to process 5 million tonnes per year.

The initial plan is to install the plant in Cabo Verde, Minas Gerais, where the company already holds licenses to extract and process iron ore.

In parallel with the rare earth project, Cabo Verde Mineração resumed in December 2025 its iron ore mining project at the Catumbi Mine, located in Cabo Verde and Muzambinho, southern Minas Gerais. The project had been halted for two years while the company focused on rare earth exploration.

“The iron ore reserve is small, close to one million tonnes. We have a license to extract 600,000 tonnes per year. I estimate it will be a project lasting about two and a half years,” Rivadávia said. The company plans to produce lump ore and sinter feed with an average iron content of 66%, aimed at the domestic market.

The rare earth project, however, is expected to take six to seven years to complete the industrial complex and obtain all licenses and certifications needed for production, according to the executive.

Rare earth mining differs from other types of extraction. The company uses ammonium sulfate, which exchanges ions with the clay to separate the rare earth elements. The clay is then returned to the environment enriched with ammonia, a type of fertilizer.

Much of the land involved is currently used for large-scale coffee plantations. “Our intention is to partner with producers. We pay compensation for coffee trees removed during mining. Farmers also receive an exploration royalty equal to 0.5% of CFEM [Brazil’s financial compensation for mineral resource exploitation],” Rivadávia said.

*By Cibelle Bouças — Belo Horizonte

Source: Valor International

https://valorinternational.globo.com/

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Minas Gerais city halts Vale mining permits after water overflows

Suspension targets Fábrica and Viga units after heavy rains in Congonhas raise safety concerns

 

 

01/29/2026 

The city government of Congonhas, in the state of Minas Gerais, has suspended the operating permits for Vale’s Fábrica and Viga units following recent rainwater overflows. The municipality also demanded that the mining company implement emergency environmental control, monitoring, and mitigation measures.

Vale said on Monday evening (26) that it had halted operations at both sites and would “respond promptly to the actions required, fully cooperating with the relevant authorities and providing all necessary clarifications.”

After the two incidents, Mines and Energy Minister Alexandre Silveira pressed for an effective resolution, warning that the government could shut down the operations if needed to ensure the safety of local communities and the environment.

In a statement, the Ministry of Mines and Energy (MME) said it had ordered federal, state, and municipal authorities to inspect the facilities, consider possible penalties, and take appropriate steps to repair any material, environmental, or personal damages.

The ministry also called for a formal investigation to determine responsibility “with rigor and urgency” and requested ongoing updates from the National Mining Agency (ANM) on its oversight and related actions.

The MME had already sent a letter to the regulatory agency on Sunday (25), after a rainwater overflow carrying sediments was reported at Vale’s Fábrica mine in Ouro Preto.

Heavy rainfall in Minas Gerais caused overflows at both the Fábrica and Viga mines. The incident at the Viga site in Congonhas flooded areas belonging to neighboring CSN Mineração.

Sources told Valor that rainwater at the mines is typically drained from the pits into special drainage systems. However, the recent volume of rain was so intense that it overwhelmed the system, leading to the overflow.

Vale said on Monday afternoon that the overflows were contained without injuries or impact on nearby communities. The company emphasized that neither incident involved any of its tailings dams in the region, all of which remain stable and safe.

“Vale regularly carries out preventive inspection and maintenance of its structures, which are safe. These procedures are reinforced during the rainy season. The causes of the two overflows are being investigated, and the lessons learned will be immediately incorporated into the company’s rain response plans,” it said.

Also on Monday, ANM said its technical teams are monitoring the condition of the sites and the company’s response. The agency noted that responsibility investigations are part of its regulatory process, which may include sanctions if violations are found.

The regulator added that there was no rupture, collapse, or structural damage to dams or waste piles in either incident. “Both situations are being monitored by technical teams, with inspections of the functioning conditions of the involved structures and the measures adopted by the company. The investigation of responsibilities is part of the regulatory process, which includes sanctions where appropriate, under current legislation,” it said.

The incidents come just ahead of Vale’s scheduled release of its fourth-quarter and full-year 2025 production report on Tuesday (27). In a note to clients, brokerage firm Ativa Corretora said the events “rekindle concerns” about the company’s operational safety. Vale shares ended Monday down 2.29%, at R$83.07.

* By Victor Menezes, Marlla Sabino, Rafael Rosas and Kariny Leal — São Paulo, Brasília, Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Sun Pharma, EMS ready binding bids for Medley

Sale process of Brazilian pharma enters decisive phase as final offers are expected between late February and early March

01/29/2026 

India’s Sun Pharma and Brazil’s EMS are seen as the leading contenders to acquire Medley, the generic-drug maker owned by France’s Sanofi. Other domestic companies are also in the running, including Aché, Biolab and Hypera, as well as private equity firm Vinci Partners, according to sources heard by Valor.

The sale process is entering a new phase, in which the French multinational is set to receive binding bids for the business between late February and early March, said one person familiar with the matter.

Medley, once the leader in Brazil’s generics segment and now ranked third among the largest players, was put up for sale by Sanofi last year.

The multinational’s initial expectation was to raise about $1 billion (around R$5.4 billion) from the asset, according to sources. Bids from Brazilian groups point to figures of around R$2 billion. The expectation is that Sun Pharma may be willing to make a larger outlay to enter the market as one of the sector’s biggest players.

In addition to strategic investors, Vinci Partners is the only financial investor eyeing the deal. Valor has learned that the fund could team up with one of the domestic groups to move forward in negotiations.

Sources say Sun Pharma is interested in Brazil’s generics market and, if the acquisition goes through, could reshape the segment in the country. Valued at $44 billion on the stock market and with a vast drug portfolio, Sun Pharma is known for its low-cost policy, which could put pressure on competing pharmaceutical companies.

The Indian drugmaker already operates in Brazil through imports of medicines produced in other countries, with a presence in the government and hospital markets. According to industry sources, so far no Indian laboratory has manufacturing facilities in the country.

“The advantage of the Indians is their control over raw materials. Medley would give them a brand with a good reputation and an important portfolio, but I don’t see a potential acquisition of factories in Brazil [by Indian players] as a driver of change in the industry,” said an industry executive, speaking on condition of anonymity.

According to this executive, drug production costs in India are “certainly” lower than in Brazil and, even with import costs, Indian products can reach the Brazilian market at lower prices. “Having a local industrial asset will not necessarily mean being even more competitive,” he said.

Companies interested in the asset are currently in the performance presentation and due diligence phase.

The French multinational bought Medley in 2009 for about R$1.5 billion, taking the lead in Brazil’s local generics market. The drugmaker previously belonged to the Negrão family. At the time, the acquired company had annual sales of around R$500 million. Sources interviewed for the report say the company’s EBITDA is around R$200 million.

When contacted, EMS confirmed its interest. Biolab, Hypera and Vinci Partners declined to comment. Sun Pharma did not immediately respond to requests for comment.

Sanofi told Valor that, as the company advances in its global transformation to become an R&D- and AI-driven biopharmaceutical leader focused on vaccines and innovative medicines, it “is evaluating strategic options for the Medley generics business to ensure its continued growth and success.”

The multinational also said that, following the announcement of Medley’s divestment process in August 2025, the drugmaker is exploring opportunities with potential partners whose vision aligns with its strategy. “We remain fully committed to Medley’s mission to democratize access to healthcare in Brazil, maintaining its leadership position in the generics market achieved through excellence and innovation.”

*By Mônica Scaramuzzo and Stella Fontes, Valor — São Paulo
Source: Valor International
https://valorinternational.globo.com/
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Debt, high interest rates undermine consumer confidence

FGV index shows biggest drop in a year

01/27/2026

The Consumer Confidence Index (ICC) fell 1.8 points to 87.3 points in January 2026, according to Fundação Getulio Vargas (FGV). This was the sharpest drop since January 2025 (-4.4 points) and brought the indicator to its lowest level since October 2025 (87 points), said Anna Carolina Gouveia, an economist at FGV. According to Gouveia, consumer concerns about high levels of debt and interest rates led to the drop in the index.

The decline in confidence was caused by unfavorable perceptions of both the present and the future. This is clear in the evolution of the two ICC components: the Current Situation Index (ISA) fell 0.8 points to 82.6 points, and the Expectations Index (IE) fell 2.5 points to 91.3 points in January.

Responses of lower-income consumers to the FGV survey were noteworthy, she added. According to her, for respondents with a monthly income of up to R$2,100, the figure fell by 3.6 points in January. And, among consumers with a monthly income between R$2,100 and R$4,800, confidence dropped by 4.6 points.

“Throughout 2025, we had employment, income, and [lower] inflation stimulating consumption,” Gouveia said. “And credit interest rates were on the more negative side [of consumption intentions]. But, at the turn of the year, these factors [high interest rates, more expensive credit] began to weigh a little more,” she added. “And when we look at it from an income perspective, it was mainly lower-income [consumers] who pushed the result down.”

Gouveia pointed out that lower-income consumers are also the ones with less room in their budgets for new purchases.

She also highlighted the fact that households are still highly indebted, inhibiting consumption.

However, Gouveia was cautious when asked if the ICC would continue to fall in the coming months, given the likely continuation of high market interest rates and high levels of indebtedness. For her, the trajectory of the index cannot be projected with certainty, as there are positive and negative factors influencing consumption in 2026.

Regarding positive factors that can influence domestic consumption, she mentioned the entry into force of the income tax exemption for those who earn up to R$5,000 per month, which can help boost consumption, especially among low-income households.

“Inflation is more controlled, and this income tax issue will help a lot [the consumption of] very low-income households,” she said. “But, on the other hand, we already have signs of an economic slowdown,” she noted. “We have high interest rates and indebtedness, which I think are very negative factors that weigh or will end up weighing on the consumer at some point, even if the supply of credit remains. Because consumers will only become more indebted,” she said. “I think we need to evaluate a little more, wait two or three months, to understand what the trajectory [of the ICC] would be,” Gouveia concluded.

*By Alessandra Saraiva — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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CSN studying full exit from steel business

Company started approaching competitors to sell stake or even entire steel arm, and plans to hire bank soon

 

01/27/2026 

Companhia Siderúrgica Nacional (CSN) has made informal contacts with competitors to gauge potential interest in its steel business, Valor has learned. According to two sources, the group controlled by Benjamin Steinbruch could sell up to 100% of its steelmaking operation as part of a strategic asset review launched in the second half of last year.

For now, discussions about selling a stake, or even the entirety, of the steel arm have been conducted by the company itself, which is expected to mandate a bank soon to advise on the divestment.

CSN announced this month that it plans to sell between R$15 billion and R$18 billion in assets to reduce financial leverage. At the time, the company said only that it would assess strategic alternatives and paths, which could include partnerships in steelmaking.

In cement, a relatively recent business in the group’s portfolio that has gained scale through a series of acquisitions in recent years, CSN said the plan is to sell control. Morgan Stanley is advising the company on this front.

The group also said it intends to sell a “relevant stake” in its infrastructure assets. According to a source heard by Valor, the idea in this case is to divest 20% to 30% of the operation, bringing in a new partner. Bradesco and Citibank have been mandated to run the transaction.

In both cement and infrastructure, the company’s goal is to sign a sale agreement in the third quarter of this year. Valor has learned that CSN began initial contacts with interested parties last year and already has ongoing talks. The cement business has attracted potential Brazilian and foreign buyers, while the infrastructure stake is being evaluated by international groups, according to a source.

The group’s strategy is to concentrate its businesses in mining and infrastructure, which offer better prospects and are expected to contribute more to margins. In steelmaking, the assessment, according to one interlocutor, is that the business will remain under pressure from imports, competing for CSN resources that could be allocated to more profitable assets.

On the balance-sheet side, the plan is to reduce financial leverage—measured by the ratio of net debt to EBITDA (earnings before interest, taxes, depreciation and amortization)—to around 1 time and to double EBITDA within up to eight years.

Last week, S&P cut the company’s credit rating to “B+” with a negative outlook (implying the possibility of another downgrade within 12 months), citing persistently high leverage.

For 2026 and 2027, the ratings agency projects net debt of more than five times EBITDA, with potential reduction—excluding asset sales—only from 2028 onward. With divestments in cement and infrastructure, the group could reduce debt by about one-third by 2027, according to S&P estimates.

In September, CSN’s financial leverage stood at 3.14 times on an adjusted basis, with net debt of R$37.5 billion.

CSN did not immediately respond to a request for comment.

*By Mônica Scaramuzzo and Stella Fontes — São Paulo

Source: Valor International

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Blocking Mercosur-EU deal is ‘an own goal,’ French chamber head says France-Brazil Chamber of Commerce sees pact as win-win for both sides

Despite resistance from some sectors of the French economy, the free trade agreement between Mercosur and the European Union is being welcomed by French businesses and investors active in Brazil, according to Thierry Besse, president of the France-Brazil Chamber of Commerce (CCIFB).

 

 

 

01/26/2026 

After 25 years of negotiations, Besse said that rejecting the agreement now would be a wasted opportunity to expand markets, strengthen production chains, and reduce the influence of other global competitors.

“Signing the agreement was a game-winning goal for Europe in the last minute of the match,” he said in an interview with Valor. Opposing its ratification now, he argued, “would be like scoring an own goal and handing the game over to China.”

He emphasized that the deal offers a historic opportunity for strategic economic integration between two blocs that share common values and institutions, especially at a time of growing global instability.

Broad benefits

Besse said a range of French sectors stand to benefit from the agreement’s implementation, including wine, champagne, and spirits, dairy products, and goods with protected designations of origin. Industrial sectors such as aerospace, automotive, pharmaceuticals, and energy—particularly renewables—would also see gains.

The agreement was signed on Saturday (17) in Paraguay by Mercosur representatives and European Commission President Ursula von der Leyen. It creates the world’s largest free trade area, encompassing over 700 million consumers across 32 countries—27 in the EU and five in Mercosur—with a combined GDP of $22 trillion.

Despite optimism among business leaders, the deal hit a political setback on Wednesday (21), when the European Parliament voted to request a legal review of the agreement. The decision, passed with 334 votes in favor, 324 against, and 11 abstentions, sends the text to the European Court of Justice to assess its compliance with EU laws, potentially freezing the process for at least two years.

To overcome such opposition, Besse said it is essential to raise awareness across Europe of the deal’s benefits. “European investors and entrepreneurs in this region need to help educate people in their home countries. We are living proof that this is a land of opportunity,” he said.

Farming concerns

France has been at the center of the resistance. The country was one of five that voted against the deal within the European Commission and has led opposition driven by pressure from the agricultural sector. French producers argue the agreement would lead to unfair competition and misaligned environmental and sanitary standards between the EU and Mercosur.

Concerns include the use of pesticides banned in the EU and looser rules on environmental protection and deforestation. European producers fear that complying with stricter rules at home will make their products more expensive and less competitive.

Besse acknowledged that some concerns—particularly in the livestock sector—are legitimate but argued that the debate in France has been “hijacked” by narratives he considers exaggerated and out of touch. “Unfortunately, we’ve ended up with an irrational interpretation of the agreement,” he said.

He drew parallels to the EU-Canada free trade agreement, which initially faced resistance from French agricultural groups. “Ten years later, we can see that it worked out well for everyone. Trade flows increased in both directions,” he said.

Untapped potential

Besse said the agreement includes important safeguards. For example, beef imports from Mercosur to the EU will be capped at 99,000 tonnes per year, just 1.2% of the bloc’s total beef consumption. “It’s not like half the beef consumed in Europe is suddenly going to be replaced,” he noted.

Among the sectors likely to benefit immediately are wines, champagnes, spirits, dairy, and protected-origin products, which will receive legal protection in the South American market. France currently exports about 700,000 bottles of wine and champagne to Brazil each year, a number that should increase as tariffs drop. “French wine will finally compete on equal footing with Argentinian and Chilean wine,” Besse said.

In the industrial sector, expected gains include aerospace, automotive, electrical equipment, pharmaceuticals, cosmetics and beauty products, infrastructure, and energy. In particular, Besse highlighted growth in renewable energy, where French and European firms have a strong and growing presence in Brazil, including in wind and solar energy, transmission lines, and hydropower plants.

Corporate presence

French corporate presence in Brazil is significant. According to Besse, about 1,300 French companies operate in the country, generating more than R$400 billion in revenue in 2024 and employing approximately 560,000 people. That makes France the largest foreign employer in Brazil and the second-largest foreign investor, behind only the United States.

Still, bilateral trade remains modest. In 2024, it totaled around €8 billion, with a relatively balanced flow between imports and exports.

Besse said the agreement opens “a highway” for expanding trade in the medium term, as tariff reductions will be gradual. He noted that in addition to large multinationals, the deal should benefit French small and medium-sized enterprises, which currently face greater hurdles in accessing the Brazilian market.

He also stressed the deal’s geopolitical importance at a time when multilateralism is under pressure and trade tensions—particularly with the United States—are on the rise.

“Integration between Europe and South America is more necessary than ever,” Besse said. In his view, it’s a “win-win game” between blocs that “play by the same rules,” with the potential to strengthen supply chains, diversify trade partners, and expand prosperity on both sides.

*By Victoria Netto — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Government wins in court lower fiscal risks, but major liabilities remain

Supreme Court rulings drive decline as probable losses raise new warnings

 

 

01/26/2026

The federal government reduced the risk of losses from lawsuits by 30.6% from the peak in 2022, when the total reached R$3.758 trillion. Despite the decline, the amount remains substantial. At the end of 2025, the figure totaled R$2.607 trillion, including the impact of court cases classified as possible and probable—those with a higher likelihood of defeat for public coffers. The data are included in the Fiscal Risks Annex of the 2026 Budget Guidelines Law (LDO).

Compared with 2024, the 2025 figure represents a 2% decline—equivalent to R$53 billion. The reduction is largely the result of victories the federal government has secured in higher courts. The total can also fluctuate due to the reclassification of risks—when cases are downgraded to “remote”—as well as court defeats, which remove items from the government’s risk list. These figures are used by the government to assess how much it can spend or needs to save to achieve fiscal balance.

Victories in tax-related cases at the Supreme Federal Court were the most significant factor behind the reduction recorded in 2025. Contingent liabilities in this area fell by 17.6%, the sharpest drop among all categories. The amount declined from R$649.2 billion in 2024 to R$534.6 billion last year.

One of these cases involved the limit on deductions for education expenses from personal income tax (IRPF). The Supreme Court ruled in favor of the Treasury in March last year, removing it from the list of fiscal risks. The case could have resulted in losses of R$115 billion (ADI 4927).

The performance of the National Treasury Attorney’s Office (PGFN) at the Supreme Court also prevented losses of R$4 billion to public coffers in a case involving the 90-day waiting period before new rules on tax benefits for exporters take effect, under the Special Regime for the Reinstatement of Tax Values for Exporting Companies (Reintegra). Taxpayers argued that a one-year waiting period should apply (Theme 1108).

“Even a 2% figure can mean a great deal,” said Raquel Godoy de Miranda Araujo, deputy attorney general for judicial representation. The PGFN’s victories, however, were offset by the inclusion of other high-impact tax lawsuits, as well as increased fiscal risk in other areas.

Potential losses in lawsuits involving the Central Bank, for example, tripled in 2025, rising from R$5.5 billion to R$16.2 billion. According to the LDO, these cases involve economic stabilization plans, labor claims, government bonds, and the liquidation of financial institutions.

The volume of probable risks against foundations and autonomous agencies, such as the National Social Security Institute (INSS), doubled over the same period, increasing from R$2.5 billion to R$5.2 billion. One case involves a request for contract termination with compensation. Another is a class action discussing the expansion of a judicial settlement related to the so-called “whole life review” thesis, which concerns the recalculation of pension benefits.

According to lawyer and economist João Leme, an analyst at Tendências Consultoria, the risk profile of judicial disputes changed between 2024 and 2025. “The risks that remained and were adjusted upward were the probable ones, which the federal government has a greater chance of losing,” he said. “That, in a way, raises a warning sign.”

This is a warning because such risks may affect public accounts, either by reducing revenue or increasing spending in future primary balances. “They may materialize as lower tax collection, due to changes in the tax base that create ongoing revenue challenges,” he said. “They can also generate compensation liabilities, in which the government must return amounts in the form of credits that companies can use to pay other taxes.” These liabilities may also materialize as court-ordered payments.

At the Supreme Court, the PGFN prevailed in the most relevant cases of 2025—whether listed in the fiscal risks annex or not—according to a survey by Machado Associados. One such case, which still appears in the LDO annex, involved the levy of the federal tax Cide on remittances sent abroad, preventing an annual loss of R$19.6 billion to public coffers. The justices ruled that the tax should apply broadly to all contracts, not only technology transfer agreements (Theme 914).

According to Godoy, this was a particularly important victory, given its implications for promoting domestic investment in science and technology and the amounts at stake—the Treasury had estimated it might have to refund R$60 billion related to the previous five years.

Another relevant ruling, on the setting of a cap on fines, was concluded on December 17. According to the deputy attorney general, the federal government does not impose penalties exceeding this cap, and the carve-out for customs fines was particularly significant.

Also in 2025, the Supreme Court ruling that relaxed the limits of tax-related court decisions became final and unappealable. The Court allowed the revision of decisions that conflict with theses approved at a later stage (Theme 881). Once the ruling became final, the PGFN was able to identify and notify the Federal Revenue Service of companies that could once again be subject to taxation.

The Court also upheld the inclusion of social taxes PIS and Cofins in the calculation base of the Social Security Contribution on Gross Revenue (CPRB). The case is considered a spin-off of the so-called “thesis of the century,” a landmark legal decision in which the Supreme Court ruled that the sales tax ICMS should not be included in the social taxes PIS and Cofins bases, significantly impacting businesses with potential substantial tax refunds, but it ended differently (Theme 69). Expectations of success among companies were low, as a similar ruling on ICMS had already been unfavorable (Theme 1048).

According to João Leme, since the “thesis of the century,” the Supreme Court has taken a closer look at the economic impact of its decisions. “From the ministers’ reasoning, it appears that the Court has become more aware that its pen carries significant weight in the government’s ability to meet fiscal targets and design the budget,” he said.

According to lawyer Renato Silveira, a partner at Machado Associados, most STF rulings favorable to companies in 2025 were partial victories. In other words, the main request was not granted, as in the Reintegra case. “Taxpayers suffered a major defeat with the non-application of the annual waiting period. For the purposes of calculating Reintegra credits, that makes a very large difference,” he said.

A similar outcome occurred in the case involving the ICMS rate differential (Difal), as the 90-day waiting period was applied. At least, it preserved the rights of taxpayers who had already filed lawsuits on the matter. “The key issue is how this applies when the taxpayer has an ongoing administrative or judicial case,” said tax lawyer João Amadeus, a partner at Martorelli Advogados.

There had previously been, he added, “a very unfavorable modulation, and now, due to a dissenting opinion by Justice Flávio Dino, the Supreme Court ruled that if the taxpayer had filed an administrative claim or lawsuit by November 29, 2023, the tax charge would only apply to them starting in January 2023” (Theme 1266).

At the Superior Court of Justice (STJ), outcomes were more balanced, with nearly the same number of victories for the federal government and for taxpayers. A relevant win for companies was the ability to deduct Interest on Equity (JCP) from corporate income tax (IRPJ) and the social contribution on net profit (CSLL) in a year subsequent to the shareholders’ decision authorizing payment (Theme 1319). “There was already favorable case law from both the First and Second Panels, so the First Section’s ruling served to consolidate it,” said Silveira.

For the National Treasury, meanwhile, a key victory at the STJ was the requirement of prior registration with the National Registry of Tourism Service Providers (Cadastur) to qualify for the Emergency Program to Support the Events Sector (Perse), Godoy noted.

*By Marcela Villar and Beatriz Olivon — São Paulo and Brasília

Source: Valor International

https://valorinternational.globo.com/

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Brazil lost ‘last bastion’ with Judiciary crisis, Schalka says

Executive warns Brazilians are losing hope amid revelations of Master case, criticizes justices and backs code of conduct

 

01/26/2026

In recent weeks, reports about relationships between justices of Brazil’s Federal Supreme Court and private interests, as well as episodes involving ethics and institutional conduct, have begun to draw public attention. In December, a manifesto titled “For a code of conduct at the Supreme Court now” emerged, with a petition hosted on the Change.org platform. The document, still open for signatures, supports a proposal by Chief Justice Edson Fachin to create a code of conduct to ensure the impartiality of Supreme Court justices.

The manifesto has already gathered more than 15,000 signatures from business leaders, academics and public figures. Among them is Walter Schalka, a board member at Suzano and an active voice in civil society mobilizations, such as the letter in defense of democratic institutions released in 2022 amid pre-election tensions. According to him, the new initiative arises because after “repeated scandals” across different governments, the country has also lost its “bastion,” the Judiciary.

Schalka criticizes the fact that justices do not recuse themselves from cases involving relatives or situations in which they themselves received funding. “The combination of concentrated power with single-judge decisions creates an imperialism of decision-making that is not part of a democratic nation,” he says. “What was supposed to be a constitutional court has turned into a criminal court,” he adds.

In Schalka’s view, today “the Judiciary wants to legislate, the Legislature wants to execute, and the Executive is financially exhausted.” Beyond “putting each branch of government back in its proper box,” he argues that Brazil must work to attract investment and ensure an education system capable of retaining young people who, without hope, are leaving the country.

He says he will work for a presidential candidate who offers an alternative to the polarization between President Lula and the “Bolsonaro clan.” Below are key excerpts from his interview with Valor:

Valor: What motivated the manifesto and the petition for a code of conduct at the Supreme Court?

Walter Schalka: Over recent decades, we have seen repeated scandals in the Executive and the Legislature. In both there are serious people, but we see many deviations in behavior. The bastion we had was the Judiciary, a sense of security that institutions would be safeguarded by a branch that was absolutely unquestioned. That is why we strongly support the initiative by Justice Fachin and others. It is also necessary to extend this to other levels of the courts to restore confidence that decisions are based on technical criteria, not lobbying or economic interests.

Valor: Some causes raised in the past led to larger mobilizations. Is this the case with this manifesto?

Schalka: We started with the manifesto, but we want to turn this into a broader movement of society. Unfortunately, Brazilians are losing something fundamental: hope. We constantly hear bad news, which erodes confidence in the long-term viability of society. It also creates a very serious problem, which is brain drain. Young people want to leave Brazil—those who can. It is urgent to begin reversing this trend. We need to prepare the country for future generations, leveraging Brazil’s advantages for global integration.

Valor: Are there international references in discussions about the code?

Schalka: Several countries have codes of conduct for the Judiciary—Germany and England, for example. They serve as a basis to make it very clear to society and to judges what is acceptable and what is not.

Valor: What most stands out among things a Supreme Court justice should not do?

Schalka: It is hard to accept that, as we are seeing, justices do not recuse themselves from cases involving relatives or situations in which they received funding for trips or events abroad.

Valor: But within the Supreme Court itself, a group resists creating a code of conduct…

Schalka: The next question is: why not have a code of conduct? Watching a debate with Luciano Sica, president of the São Paulo Bar Association, he made it very clear: one thing is to discuss what will be in the code. Blocking its creation presumes a freedom of action that cannot be the basis for the moral and ethical standards of the highest body of the Judiciary.

Valor: What impact can the loss of credibility of the Judiciary have on society?

Schalka: If the three fundamental institutions—legislative, executive and judicial—have low credibility with the population, we lack the foundation to believe in a society capable of transforming itself and carrying out necessary reforms. In the case of the Judiciary, there are single-judge decisions. This combination of concentrated power with such decisions creates an imperialism of decision-making that is not part of a democratic nation.

Valor: With a code, who would oversee this “bastion”?

Schalka: The only way to change the Supreme Court is through impeachment, which the Senate decides. But what criteria should be used? With a code of conduct, we can say that the code is not being respected by Justice A or B and thereby generate grounds for disqualification.

Valor: In your assessment, has the Supreme Court acted beyond the limits of its constitutional mandate?

Schalka: The Supreme Court was created to be a constitutional court, but today a relevant part of it has become a criminal court. People want to bring everything to the Supreme Court. One example is the Master case. Shouldn’t it be in the first instance? But it went straight to the Supreme Court on the claim that a federal lawmaker was linked to the case. There is not even proof. This raises a troubling issue: lobbying. Brazil is a country that unfortunately has, at its core, a very bad combination of patrimonialism and corporatism, which means interests are constantly serving some group or category.

Valor: Some experts say the National Organic Law of the Judiciary, already applied to other levels, would be sufficient to regulate the Supreme Court as well. Was this discussed?

Schalka: No, we did not discuss this because the problem exists at other levels too. We are seeing cases of appellate judges linked to corruption. So the issue is not only the Supreme Court. In the past, people would say: this law applies or it doesn’t. Now, we don’t know what will happen.

Valor: What is your view on the frequent presence of Supreme Court justices at events and in the media?

Schalka: Twenty years ago, I didn’t know who the Supreme Court justices were, maybe one or two. Today I know all of them by heart and their ideological positions. The court has become an entity tied to political and ideological issues, not to defending the Constitution. The court needs to adopt a more reserved stance.

Valor: Does the fact that the president appoints justices compromise the court’s independence?

Schalka: That is true, with exceptions. In the past, nominees were people of great legal knowledge and high reputation. We had fantastic Supreme Court justices. After appointment, they should be absolutely neutral, focused only on constitutional matters. I want to add a caveat: Justice Edson Fachin was appointed by [former] president Dilma Rousseff and is absolutely committed to constitutional issues. That is a positive example. We all have natural biases, it’s human. But today the Judiciary wants to legislate.

Valor: Can you give an example?

Schalka: Marijuana possession. They assigned a specific number of grams. Why not three times more or less? That is for the Legislature to decide.

Valor: So there are role reversals among institutions?

Schalka: Today the Legislature wants to execute through budget amendments, taking a significant share of public funds. It amounts to R$60 billion a year, a massive sum. The Judiciary wants to legislate, and the Executive is tied up because it lacks budgetary space and has entered financial exhaustion. It does not carry out the necessary reforms, and the country stalls. With reforms, Brazil would have a chance to gain presence and offer opportunities to new generations.

Valor: And which reforms are most urgent?

Schalka: One is administrative reform. The Brazilian state is inefficient—it collects a lot and spends poorly. All privatizations have shown this. We also need a new pension reform. Brazil cannot spend R$1 trillion a year on a pension deficit.

Valor: You mentioned young people wanting to leave the country. How do you assess education in Brazil?

Schalka: Brazilian education is almost universal, but of very low quality. We are rapidly losing ground in rankings and training our young people based on an economic reality from 20 years ago, even though they will enter the workforce in 15 or 20 years. That means a gap of 35 to 40 years compared with the rest of the world, and Brazil is not waking up to this.

Valor: For the productive sector, what is the impact of this scenario?

Schalka: Brazil needs a significant reduction in interest rates and in country risk, and it needs to attract investment to generate what is essential for the population: jobs. I strongly support social programs, but we cannot measure them by the number of participants. The goal should be to gradually reduce that number by placing people in the labor market. Saying unemployment is low is misleading. The figure is correct, but 40 million people are not looking for jobs because they are doing informal work. They work, but do not want formal contracts to avoid losing social benefits. A country cannot be driven by people selling brigadeiros [sweets] on street corners. I am not against it, but that is not what moves a country forward.

Valor: Does being an election year make decisions harder?

Schalka: The government will use all the fuel left in the tank this year to reach the election. Whoever is elected will inherit an extremely difficult fiscal situation and will have to make decisions, which always leads to the issue of raising taxes.

Valor: What are your expectations for the presidential election?

Schalka: If the runoff is Lula versus someone from the Bolsonaro clan, Brazil will be in a very bad position. Neither side will help attract investment. I will work to ensure that the runoff includes someone who can restore fundamental values such as ethics and morality. When you join a company, a CEO creates a plan and evaluates competitive advantages to transform it. Brazil needs the same approach.

Valor: Is there already a candidate you intend to support? A “third way”?

Schalka: I don’t like the term “third way” because we used it in the last election and it didn’t succeed. There are excellent potential candidates who could step forward. We have a strong group of governors. I will work hard for whoever makes it into the race.

*By Marli Olmos — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Reimbursement of Banco Master CDBs injects extra liquidity in market

Advisory firms see excess of funds released all at once and lack of assets to absorb them

 

 

01/20/2026

More than R$40 billion (about $8 billion) that the Credit Guarantee Fund (FGC) has begun to disburse to reimburse investors holding Banco Master certificates of deposit (CDBs), following the bank’s extrajudicial liquidation, has injected an unusual, out-of-season surge of liquidity into the investment market. Advisory firms that work directly with clients are campaigning to retain those funds, but the volume released all at once is too large to be absorbed immediately.

“It’s a lot of liquidity in a very short period of time and without sufficient assets to back it,” said Samy Botsman, a managing partner at Fami Capital. “Some of it will go into Treasury Direct bonds, some into funds, but the market doesn’t have R$40 billion in assets to reallocate all at once.”

Botsman added that a bank failure significantly undermines investor confidence and that small and mid-sized institutions tend to face greater difficulty in raising funds. Yields offered by stronger issuers, in turn, are likely to decline, squeezing returns for investors.

Even before the funds were released, advisory firms and major investment platforms had already begun efforts to ensure that eligible investors listed accounts at their own institutions when registering to receive FGC payments.

Fernando Katsonis, a partner and chief executive of Lifetime, which is connected to BTG Pactual’s network, described the situation as a “significant liquidity surplus,” noting that some institutions may fail to retain part of the funds as the money flows back into the system. “XP had a much larger volume [of Banco Master CDBs] than others and, obviously, is the one that stands to lose the most when the funds return. Everyone is running product campaigns to attract more money. Our mission is to bring in twice what we had before.”

XP is the largest distributor of securities issued by small and mid-sized banks and held about 70% of the assets issued by Banco Master and Will Financeira—which was not liquidated—totaling more than R$30 billion. BTG Pactual held R$6.7 billion, while Nubank also carried Banco Master paper on its platform, with nearly R$3 billion outstanding.

Katsonis said both BTG and XP have been offering short-term alternatives, including CDBs, as the market has fewer offerings available at the start of the year. “There’s the Claro transaction [R$3 billion in debentures], secondary-market fixed income or government bonds,” he said. “After a bad experience with CDBs, investors shouldn’t be moving into anything that isn’t top tier. They want blue-chip bank CDBs or government securities.”

André Albo, a founding partner at Alta Vista Investimentos, also sees an excess of liquidity hitting the market over a short period. “There won’t be enough products for that amount of money,” he said. “So our recommendation is to keep it in liquid fixed income and allocate it gradually over the coming weeks.” He added that tax-exempt fixed income, international investments and public offerings of debt securities or private credit funds are likely destinations for the funds.

Some investors may still be willing to roll into new CDBs, but with yields at rock-bottom levels, that is unlikely to be the most obvious path, Albo said. “Mid-sized banks have raised a lot of funding in recent months. Since they’re no longer as hungry for funding, they’re lowering rates.”

Guilherme Mendes, head of fixed income at Blue3 Investimentos, part of XP’s network, said Banco Master’s CDBs had won over investors because they combined very attractive yields with the backing of the FGC guarantee — “which at the time seemed like an appropriate risk-return trade-off.” Now, with the guarantee being paid out, the market is facing an “extremely significant and concentrated financial movement that is likely to intensify over the coming weeks.”

The Banco Master episode, Mendes added, “shines a light on the fact that poor allocations — even when backed by potential guarantees — can and will generate discomfort, noise and reactive decisions that are not, or should not be, appropriate when building a portfolio.” “Our role is to prevent this kind of situation from happening again,” he said.

This is now a moment to rethink portfolios based on each client’s profile and objectives. Liquidity needs, risk tolerance and time horizon should factor into the assessment, guiding the allocation of resources with discipline and responsibility, the Blue3 executive said. That means there is no single reallocation recommendation or “miracle” asset to which the funds should be directed. “Each portfolio has its own complexity, and the investment rationale is handled at the micro level, in the relationship between advisor and client, respecting the individuality of each portfolio and its objectives.”

Looking at the macroeconomic backdrop and market guidelines for 2026, Mendes said the funds are likely to remain in fixed income. “There is an anchor in place, with strong expectations of interest rate cuts over the cycle,” he said. “It tends to be a year in which returns in Brazil will come much more from asset repricing — from the cost of money — than from any other internal or external variable.” In his view, inflation-linked and fixed-rate assets are set to gain prominence, with real interest rates at historically high levels.

At Miura Investimentos, an advisory firm in BTG’s network, appetite is also focused on fixed income, according to co-founder Diego Ramiro, “taking advantage of the fact that the Selic rate is high and the yield curve is set to flatten.” Government bonds, bank products and AAA-rated private credit are the preferred choices, he said. “We’re advising clients to invest as soon as possible because once the money is released, demand will be very high and rates will compress. There’s R$40 billion entering the market, and there aren’t enough products to absorb it all.”

*By Adriana Cotias, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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