Brazilian Rare Earths faces lawsuit over share repurchase

A legal dispute has emerged in Brazil between local investors and the Australian mining company Brazilian Rare Earths (BRE) regarding the repurchase of shares for a symbolic amount. In August, BRE exercised a contractual clause to repurchase 4 million shares from Brazilian partners for 1 Australian dollar, despite the shares being valued at approximately R$ 61.6 million at the time.

The conflict stems from a January 2024 agreement in which BRE acquired 11 mining rights in southeastern Bahia, covering roughly 108 km² in areas such as Jequié and Jitaúna. The original deal included R$ 5 million in cash and 8 million BRE shares. A specific clause allowed BRE to repurchase half of those shares for 1 Australian dollar if two specific mining rights failed to receive approval for their Final Research Reports from the National Mining Agency (ANM) within a two-year window.

Brazilian partners, including Antônio Marcos Quinteiro, Bernardo Siqueira dos Santos, and Helmo Bagdá Gama, have taken the matter to Federal Court, alleging they were deceived. They argue that since BRE assumed control of the areas and the legal processes, the company was responsible for meeting the ANM deadlines. BRE’s president in Brazil, Renato Gonzaga, maintains that the company was not responsible for the reports prepared by the sellers and was simply exercising a legitimate contractual right. The project involves an estimated investment of US$ 1 billion.