Anglo’s Sanches says Brazil must ‘negotiate with everyone’

Anglo American Plc’s top executive in Brazil says the nation should avoid picking sides in the global race for critical minerals and seek to supply nations across geopolitical blocs.

“We have to negotiate with everyone. There’s no reason for us to choose a side,” Ana Sanches said in an interview Monday, a day after leftist President Luiz Inácio Lula da Silva won reelection as the head of Latin America’s largest economy.

Brazil holds one of the world’s largest reserves of rare earths — used in everything from electric vehicles and wind turbines to drones — second only to China. As the South American country seeks to capitalize on its vast mineral resources, Lula will be challenged to balance ties with China, its biggest trading partner, and the US, which is seeking alternative supplies of critical minerals to reduce its reliance on Beijing.

Sanches urged Brazil to move quickly to set clear rules for its new critical-minerals policy to give mining companies greater predictability over their investments. September’s policy overhaul will give a government council special powers to approve mining deals and supply agreements while offering incentives for domestic processing, but it’s yet to be enforced.

“The government has to play its role. I don’t see anything wrong with that,” said Sanches, who is also president of the board of the Brazilian Mining Institute, or Ibram. “We just need clarity on what that means and how it will be implemented.”

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That means setting clear criteria and deadlines for carrying out the new framework, she said. Fighting illegal mining, expanding geological mapping, and making permitting more predictable are also key for the sector, which “has to move forward regardless of which government is elected.”

Critical ore

Brazil, as a major global producer, should treat high-grade iron ore as a critical mineral, she said. Scarce premium grades will play an increasingly important role in decarbonizing steel production.

While Anglo’s planned merger with Teck Resources Ltd. is set to create a new copper mining colossus, Sanches said Brazilian operations will stay focused on premium iron ore. Anglo also recently sold its nickel operations in Brazil to China’s MMG Ltd. and the two companies are seeking to avoid a potential European Union veto of the planned $500 million deal.

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Anglo’s business in Brazil is now concentrated at Minas-Rio, which includes a fully integrated iron ore operation, a mine in Minas Gerais State, a processing plant, a slurry pipeline and a port in Rio de Janeiro. The mining project has high-grade ore with about 67% iron content.

Besides Anglo, the country is home to Vale SA, the world’s top iron ore producer. Vale bought a 15% stake in Minas-Rio, and both Vale and Anglo are looking to integrate Vale’s contiguous Serpentina project. An investment decision is expected after feasibility studies, which are still ongoing, she said.

While Minas-Rio’s third-quarter realized prices fell 12% year-over-year on higher freight costs, Sanches said Anglo isn’t planning to cut production and expects shipping rates to retreat. War-related disruptions have prompted the company to redirect cargoes bound for Bahrain Steel to markets including Asia, North Africa, Europe and Japan, Sanches said.

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