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Transition Minerals: Cross-Border M&A in Brazil and Chile

Isabelle Montezano Ziolkowski and Pedro Novo Bergh


  • Brazil and Chile's main mining companies, Vale S.A. and the National Copper Corporation of Chile (Codelco), are constantly involved in cross-border acquisitions. While Codelco remains state-owned, Vale was privatised, reflecting divergent regulatory approaches.
  • Chilean Government has proposed a National Lithium Company to hold a majority stake in strategic mines.
  • Brazil lifted restrictions on lithium exports and actively encourages private exploration which fosters a favorable environment for M&A activity.
Transition Minerals: Cross-Border M&A in Brazil and Chile
Bloomberg Creative via Getty Images


Brazil and Chile are relevant producers and exporters of mineral resources, giving the mining sector significant importance in their GDPs and positive trade balances. The two countries also have large reserves of mineral substances, such as lithium, copper, manganese, and others, used in electrification of vehicles, the so-called “transition minerals”. Although these countries have several similarities, the way each of them regulates the exploration and exploitation of minerals significantly impacts the cross-border mergers and acquisitions (“M&A”) scenario.

Cross-border M&A transactions involving mining companies are common in Brazil and Chile due to abundant mineral resources and export-oriented policies, usually with foreign companies or private equity funds seeking to acquire companies and/or assets in Brazilian and Chilean territory.

Mining Sector Context in Brazil and Chile

Brazil and Chile have globally recognized mining companies recently involved in cross-border acquisitions to expand their operations. In Chile, the National Copper Corporation of Chile (“Codelco"), a state-owned company, is the world's largest copper producer. In Brazil, Vale S.A. stands out as one of the world's largest iron ore producers, founded by the Brazilian government in 1942.

The contrast between these two industry leaders offers valuable insights into regulatory aspects and protectionist practices on cross-border M&A transactions within the mining sector. While Codelco was established as part of a significant nationalization process of the domestic mining industry during the 1960s and remained a state-owned company,Vale was privatized in 1997 and subsequently became a listed company with a global presence on multiple stock exchanges, such as Brazilian Stock Exchange, New York Stock Exchange and Spanish Stock Exchange.

Mining Regulation in Brazil and Chile

Brazil’s mining sector operates under a concession regime whereby permission is granted by the state to interested parties for the exploration and exploitation of mineral resources. Under the Brazilian federal constitution, companies carrying out mining activities must be established under Brazilian law and have their headquarters and administration in the country. However, there is no restriction on the majority of the corporate capital being foreign, except in the border areas (i.e., a 150-kilometer strip along the country borders). It is also worth noting that the country does not limit the exploration and/or exploitation of critical or strategic minerals to public-owned companies, thereby encouraging foreign investment in the sector. These minerals, including lithium, cobalt, graphite, and rare earth, are crucial for the ongoing energy transition and have recently attracted relevant investments from China, Australia, Canada, and other jurisdictions.

In Chile, the mineral exploration and exploitation regime is similar to Brazil’s, as state concessions are granted to private companies, and there are no restrictions on foreign acquisitions of companies holding mineral concessions. Unlike Brazil, the Chilean government is still dominant in the mineral sector. The government has recently proposed greater regulation and state participation in critical minerals, such as lithium, for the energy transition.

Lithium mining in Brazil and Chile

Lithium is a critical mineral for the ongoing energy transition. It is crucial for enhancing battery performance, durability, and density and developing green technologies. Due to its importance, the mineral also became the main target of foreign investment geopolitical disputes, which makes its regulation a critical factor in whether or not it encourages the flow of foreign currency through transactions with mining companies.

Chile is currently the world's largest producer of lithium. However, its exploitation is limited to companies that obtained their concessions before 1979 or through production lease agreements with the state-owned company Production Development Corporation of Chile (“CORFO”), which holds most of the country's lithium mining rights concessions. Additionally, in April 2023, the current government announced its National Lithium Strategy, which proposes the creation of a National Lithium Company to negotiate partnerships with the private sector. This public-private relationship aims to allow the state to participate in the lithium production cycle and hold a majority stake in mines considered of greater strategic value to the state, being an active and decisive player in the development of the mineral in the country.

On the other hand, the Brazilian government has been focusing on providing greater economic freedom to national or foreign private entities and actively encouraging private exploration and exploitation of critical and strategic minerals, the value of which has been increasing worldwide.

Brazil has the world's seventh-largest lithium reservesand has excelled in this field recently. In 2022, the Brazilian government lifted the restriction on lithium exports . It established the Inter- Ministry Committee for the Analysis of Strategic Mineral Projects, in which the Ministry of Finance can actively assist companies with exploration projects to obtain the necessary environmental licenses.


Brazil's favorable treatment of the exploration and exploitation of transition minerals made the country an attractive target for national and foreign companies interested in operating in the Brazilian mining sector, presenting opportunities in the M&A market.

Therefore, despite both countries being significant players in global mineral production, the differences in regulation and state approach between Chile and Brazil can significantly impact cross-border transactions. The differences in regulation and state approach between Chile and Brazil offer substantial insights into the impact of regulatory and legal factors on cross-border M&A in the mining industry, affecting the approaches taken by companies in the dynamic mineral market of South America.