“Brazil can be seen as a low-cost reference compared with other global spodumene producers. We compete very well with several geographies: better costs due to geological issues, cheaper labor and electricity… There’s a list of factors that makes us competitive, ” Vinicius Alvarenga, chief executive officer of Companhia Brasileira de Lítio (CBL), told Fastmarkets in an interview.
CBL currently produces 45,000 tonnes per year of spodumene concentrate, of which 30,000 tonnes is exported – mainly to China – while 15,000 tonnes are used in the company’s own refinery, which produces around 2,000 tonnes of lithium carbonate equivalent (LCE). Half of the produced LCE is exported and half is used domestically. Additionally, CBL is currently working on a project to increase mining production to 100,000 tpy of spodumene and expand its chemicals production to 6,000 tpy of LCE.
In Brazil, lithium is produced mainly in the Vale do Jequitinhonha, in the state of Minas Gerais in southeastern Brazil. The region is usually called “Lithium Valley.”
The State Secretariat for Economic Development (SEDE) of Minas Gerais told Fastmarkets that the state has the largest national lithium reserves, and the mineral deposits in Brazil have competitive characteristics and advantages when compared with deposits in other countries.
“The way in which Brazilian reserves are presented, as well as industrial-mineral integration, make the production cost of lithium concentrate lower,” a press officer said.
The Brazilian Development Bank (BNDES) told Fastmarkets that Brazil is more than a low-cost producer: “It is a safe and sustainable one, capable of providing greater resilience to the global lithium market. The country is a reference in sustainability with competitiveness, attracting foreign investments.”
On the other hand, Brazil is still a country of promises in terms of lithium production, and it’s not seen yet as a relevant player in the global scenario, according to Rodrigo Menck, board director at Atlas Lithium.
“So far, with the lower lithium prices, projects are taking longer in Brazil; some due to lack of funding — they are taking longer to mature, and no one is in a hurry to make money,” Menck said.
Fastmarkets spodumene price assessment
Fastmarkets’ daily assessment for the spodumene min 6% Li2O, spot price, cif China was $760-790 per tonne on Monday April 28, down by 1.90% from $780-800 per tonne on Friday April 25.
But according to Menck, Brazil has everything it needs to be a reference for hard-rock low-cost lithium production in the future.
“We will produce spodumene at a cost of around $450-500 per tonne, while some countries are above the current price curve of $700-750 per tonne,” he said. “By the end of the decade, lithium production in Brazil will potentially be much more relevant globally, with all current projects in the country being operational. The country may reach a production of 2 million tonnes of spodumene per year by the end of the decade.”
But the path toward expansion will take time, and challenges must be overcome, he said.
“Brazil still has many challenges – licensing is something that takes time. How to ensure funding after a long licensing process? Implementation is slow. All this limits the pace of projects’ implementation and causes delays,” Menck said.
Funding
In January, BNDES and Brazil’s Funding Authority for Studies and Projects (Finep) launched a public notice calling for proposals to promote business plans aimed at developing the chain of sustainable strategic materials in Brazil, including lithium, rare earths, nickel, graphite and silicon, among others, as well as the mobilization of investments for the manufacturing of battery cells, photovoltaic cells and permanent magnets.
“In the case of lithium, the initiative may benefit the viability of new projects in Brazil. For BNDES, the country may become a relevant hub for the production of lithium chemicals (lithium sulfate, carbonate or hydroxide), taking into account the competitiveness of the country’s mineral projects, the high sustainability parameters, the low costs of renewable energy and the security to be a reliable global supplier, in addition to the growth prospects of the domestic battery market itself,” BNDES stated.
In addition to the public notice, BNDES will be an anchor shareholder in a Private Equity Investment Fund (FIP) dedicated to mineral exploration and development of strategic mineral mines.
“The two initiatives will come together to build the necessary pathways for financing projects in Brazil,” BNDES stated.
In September, Sigma Lithium received a binding commitment from BNDES for a development loan of 487 million Brazilian Reais ($89 million) to fully fund the construction of its second plant, with commissioning expected to begin in the fourth quarter of 2025. The goal is to more than double spodumene concentrate production capacity in 2025, from the current 270,000 tpy to a total of 520,000 tpy.
But, BNDES said, many of the strategic mineral production and projects are quite capital intensive and follow a financing structure based on the return on the projects themselves.
“The various risks involved in these projects – geological, engineering and market fluctuations – represent a challenge for the composition of funding. However, these challenges are common to projects all over the world,” the bank stated.
According to Menck, one difficulty that start-up projects face with development banks like BNDES in Brazil is having the guarantees they require to obtain funding.
“It’s a standard requirement: they demand a physical plant or a guarantee. The plant is not yet assembled, and credit lines for projects are rare. For Atlas Lithium specifically, BNDES has a much more complex menu of financing options; you have to fit into the specific programs, and we are not there yet, because we are in the project phase, for example,” Menck said.
In March, Atlas Lithium announced the successful arrival of its modular Dense Media Separation (DMS) lithium processing plant in Brazil. The company is in the planning phase for construction of its plant and updated its forecast, and is expecting to start producing by the second half of 2026. The project is positioned to initially produce up to 150,000 tpy of battery-grade spodumene concentrate.
Funding is also seen as complicated in Brazil by solid producers, like CBL.
“It’s very competitive to get the credit lines. They require a very expensive and difficult structure. Many lithium developers are still struggling to get it. Whoever wants funding, has to present a letter of guarantee, assets, etc. Just too much bureaucracy to get the funding,” Alvarenga said.
Foreign investments amid challenges
CBL’s CEO added that, in addition to funding, Brazil also faces other internal problems, such as bad infrastructure, mid-level professionals, logistics and a very complicated jurisdiction.
Despite the challenges, Australia-based lithium miner Pilbara Minerals entered a deal to acquire Latin Resources, owner of an important spodumene project in Brazil in August.
For Menck, the fact that Pilbara bought Latin Resources showed a trust in Brazilian lithium production.
“There will be other movements of investments from global players, as Brazil is much lower cost. But foreign capital coming to Brazil depends on making technical factors viable that provide security to invest money, such as logistics, funding, licensing. We only have roads, for example — there is no railway to the lithium regions. Roads are expensive. We should at least leave the roads in good condition,” he said.
Large-scale chemical plants
Many market participants wonder if Brazil might start producing lithium chemicals on a large scale, and if foreign companies might attempt to invest in Brazilian chemical refineries. For Menck, this is not a possible scenario at the moment.
“Large-scale chemical plants for refining lithium for battery manufacturing are very expensive. It needs a large, dedicated production and an economically viable plant. Brazil would need to have a bigger supply of spodumene to cover the chemical plants,” he said. “I don’t see it in the short term. Maybe when some of the projects start producing and we have more incentive for exporting.”
Alvarenga also highlighted that Brazil is the only major economy in the world without any state policy to support lithium consumption.
“We don’t have incentives for demand. Lithium needs state policies. China is already more mature, for example. I don’t see the government playing an important role at the moment in Brazil,” he said.
BNDES has stated that demand for chemicals produced in Brazil is an essential factor for projects to happen in the country.
“[It is] fully possible to negotiate with external demand related to battery cell production in other countries. Besides, Brazil is moving toward battery cell production, which is certainly reinforcing the thesis of investing in refining plants in the country,” the bank stated.
ESG in Brazilian lithium mining
Brazil is well known for its low-carbon lithium production, mainly because of its energy matrix.
“Electricity in Minas Gerais comes from 99% renewable sources (solar or hydroelectric), which makes the state’s production process sustainable from the outset. Companies that announce investments in the state are connected to ESG by developing economically sustainable projects that combine social initiatives and hiring local labor, generating employment and income in the territories. Furthermore, as these companies are listed on stock exchanges in Canada, the USA and Australia, their governance models meet the highest transparency criteria,” Henrique Tavares, manager of mining, steel and metal-mechanical chains at Invest Minas, said.
SEDE noted some of the ESG measures taken by the lithium producers in Brazil:
- Sigma Lithium reuses 90% of the water used in mineral treatment, does not use chemicals, and the waste is stacked dry without the need for dams, which is why the company’s water use is even lower. In the social sphere, Sigma created the non-profit Green Lithium Institute, which will receive 500 million Brazilian Reals in funding for socio-environmental projects in the cities of Araçuaí and Itinga.
- CBL directly and indirectly plays a leading role in social works and services, promoting programs and building facilities. The actions include the construction of a school in Araçuaí, the construction of the largest public daycare center in Divisa Alegre, the intense collaboration with the São Vicente de Paulo Hospital in Araçuaí, including the donation for the establishment of a blood donor center, and the construction of a clinical outpatient clinic adjacent to the chemical plant with a doctor and nurse for daily care.
- AMG has an environmental and social sustainability policy, incorporating the principles of circular economy, energy generation, waste recovery and reprocessing, rational use of water, and reduction of CO2 emissions into its operations. In addition, the company has several social programs in the region where it operates.
Lithium scenario, forecast in Brazil
Currently, there are three operational plants, owned by Sigma Lithium, CBL and AMG, and another 25 projects in different stages, shown in the table below with data from Fastmarkets’ research team:
Fastmarkets forecasts that Brazil’s production will grow at a compound annual growth rate (CAGR) of 6% between 2025 and 2035.
Brazilian LCE production is forecast to reach 57,500 tonnes in 2025.
“We expect a steady increase in production growth until 2032, when LCE production reaches about 102,000 tonnes, and remains at this level until the end of the forecast period, in 2035,” according to Fastmarkets’ research team.
“Brazil is well endowed with lithium resources and is under-explored relative to many other regions. The ‘Lithium Valley’ initiative, aims to improve regulatory frameworks and streamline the permitting process, and Sigma Lithium has demonstrated that projects can be quickly developed in the country. Despite this, we maintain a relatively conservative attitude toward supply growth from the country, given the limited project pipeline, the convoluted fiscal regime and operational challenges in remote regions,” Fastmarkets’ research team said.
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