A coordinated U.S. pressure campaign against Cuba is affecting Canadian miner Sherritt International. The company is collateral damage in a play that, as a second-order effect, re-positions U.S. strategic interests in Cuban nickel-cobalt assets. Cuba’s nickel-cobalt reserves are among the largest in the world.

On May 1, 2026, the Trump administration issued an executive order expanding sanctions against Cuba, including Sherritt International’s joint venture (JV) with the Cuban government (General Nickel Company, S.A. or “GNC”) to produce nickel and Cobalt in Moa, Eastern Cuba.

On May 7, Sherritt formally suspended its direct participation in the Moa JV. The Canadian company’s CFO, Yasmin Gabriel, and long-time auditor Deloitte resigned soon after. On May 15, Sherritt missed its Q1 filing deadline with the Ontario Securities Commission (OSC.) By May 19, Sherritt further updated its push to dissolve the JV as soon as possible, with the express intent of informing U.S. authorities and stakeholders.

On May 20, Acting U.S. Attorney General Todd Blanche indicted Cuban leader Raúl Castro over his alleged role in the shootdown of a civil aircraft in the Florida Strait in 1996. On the same day, Sherritt reversed the dissolution decision and announced a non-binding term sheet with Gillon Capital LLC (Gillon.) This firm is the family office of Ray Washburne, the former head of OPIC (Overseas Private Investment Corporation, 2017-2019) in Trump’s first term, former member of Trump’s Intelligence Advisory Board, vice chairman of the Trump Victory Committee 2016, former advisor to the U.S. Military Southern Command, and major Republican fundraiser. Gillon would acquire a 55% controlling stake via warrant at a discount to the May 15 closing price of C$0.11.

On May 21, the OSC issued a Failure-To-File Cease Trade Order (FFTCO) against Sherritt, effectively blocking all trading of the company’s stock. This is where the flight of auditor Deloitte and Sherritt’s CFO might offer some clues. Sherritt is owed $368 million by the Cuban government over five years (2023-2027), paid through a cobalt swap from their venture operation in Moa. That accounts receivable remains on Sherritt’s balance sheet.

Under the new sanctions’ architecture, the questions of whether that receivable is collectible, how it should be valued, and whether transactions to collect it would constitute prohibited dealings are unclear. Deloitte cannot sign financial statements containing a material receivable whose collectability and legal status it cannot assess. Likewise, CFOs do not resign at moments of maximum pressure unless they either cannot stand behind the numbers or a particular situation creates personal liability exposure. It is not unreasonable to imagine a situation where the board and the CFO disagreed about how to characterize the company’s financial position in the context of the emerging Gillon transaction and the dissolution reversal.

The U.S. Department of State and U.S. Treasury have both confirmed they do not object to the negotiations. However, the U.S. government’s non-objection to the Gillon deal does not constitute a legal authorization for Sherritt to continue running its Cuba venture. This is meaningfully different from issuing a specific license that protects Sherritt, Deloitte, or any individual officer from OFAC enforcement liability. In other words, the non-objection addresses whether Gillon can buy Sherritt; it does not address whether the underlying Cuban receivables are legally collectible, whether transactions to collect them are authorized, or whether an auditor certifying their value is exposing itself to liability.

Taken together, the U.S. government has essentially pre-approved a structure in which a Trump-connected operator acquires control of Sherritt’s equity in Cuba at a distressed price, with State Department and Treasury blessings, while simultaneously doing nothing to resolve the legal ambiguity that is destroying Sherritt’s corporate governance. The non-objection, as it turns out, seems deliberately selective: it protects the Gillon transaction alone; it does not protect anyone who has to certify the company’s existing financial position on the way to that transaction. Had the CFO and Deloitte been given assurances, Sherritt’s stock price may have stabilized, which may have improved its negotiating position with Gillon, which in turn may have cost Washburne more money.

Furthermore, the FFCTO creates a paradox that benefits Gillon considerably. Gillon is not buying Sherritt shares through the Toronto Stock Exchange (TSX.) Gillon is receiving a warrant—exercisable within nine months of closing—that gives it the right to acquire enough newly issued shares to reach 55% ownership. Thus, the FFCTO does not automatically kill the private placement mechanism. If and when the FFCTO is lifted and trading resumes, the market price may be even lower than C$0.11, given everything that has happened since May 15 and the continuous deterioration of the situation on the ground. This means Gillon may be able to renegotiate the exercise price downward if the deal formally closes. With trading halted, there is no updated market price, which plays to Gillon’s favor.

Overall, the U.S. is exerting maximum legal and diplomatic pressure on the Cuban government, while a Trump-connected operator acquires control of a significant Western mining and refining operation at clearance price. Sherritt will likely take a substantial financial and reputational hit after the matter is resolved. The fate of the Cuban operation, however, seems to be firmly in the plans of the U.S. government to enhance their critical minerals security, as a byproduct of their hostile position against Cuba.

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In this Edition | May 2026

Political decisions and market pressures in Latin America are reshaping control of resource extraction and allocation in several countries. These include governance failures, development priorities, and electoral transitions. This month’s edition covers four situations where reshaping of natural resources control, capital allocation, and revenue inflows are actively underway, at different stages of resolution.

In Colombia, Ecopetrol’s governance crisis has reached an impasse under Petro, and incoming administrations face inherited damage that is unlikely to be corrected quickly, regardless of who wins the upcoming presidential elections. In Argentina, Milei’s Super RIGI arrives in Congress as a USD 1 billion greenfield investment with aggressive deregulation, and a provincial adhesion mechanism that may prove more decisive than the congressional vote. In Guyana and Suriname, oil revenue management at scale is increasingly becoming both countries’ priorities, with Suriname now securing the financing to follow Guyana’s playbook offshore.

The ST Monitor proprietary classification is applied to interpret specific developments across Latin America based on their phase of execution. Some plans remain at the level of (1) political signaling without an operational framework; others are (2) constrained within permission-based systems; and others are (3) fully operational and institutionalized. The cases chosen for this edition should be read through that lens:

Level 1 — Pre-policy (no executable framework exists)

Level 2 — Constrained execution (activity exists but is permission-bound)

Level 3 — Execution Phase (system is operational and institutionalized)

Colombia: Ecopetrol’s Governance Crisis Reaches Its Logical End

The Ecopetrol governance crisis has moved beyond board dysfunction into institutional paralysis right at the gates of a presidential election in Colombia. The institutional drift of the largest company in the country may have serious impacts on Colombia’s fiscal health, if the situation is not corrected by the next administration.

On May 26, Ecopetrol’s CEO Ricardo Roa filed a medical leave notice with the company’s board, which approved a 30-day extension of his absence. Combined with existing vacation and unpaid leave already authorized, Roa will not return to the presidency of the SOE until July 27, 2026. The date falls within two weeks before Petro’s government ends. Thus, the executive that Petro installed as president of Colombia’s most important company, and whose conflicts of interest have been the subject of two criminal indictments by the country’s Attorney General, may return to his post barely a moment before the entire political architecture that protected him dissolves.

Additionally, on May 12, Juan Gonzalo Castaño resigned from Ecopetrol’s board. Castaño had, over time, taken positions that distanced him from Petro on two sensitive questions: he voted against Ecopetrol exiting the Permian Basin position, and he was part of the board majority that approved Roa’s temporary removal. His resignation may not be a voluntary departure after all, and rather just another interference by the Petro administration, enforcing board loyalty to the executive.

The Colombian elections will be decided on May 31, and a run-off may ensue on June 21 if needed. It is upon the winner to decide how to stabilize and reform the company they inherit. Ecopetrol is listed in the New York Stock Exchange (NYSE), and therefore exposed to SEC disclosures, DOJ and FCPA jurisdiction, among others. To reverse course, the new Colombian executive may need to address the exploration moratorium (including a fracking ban), the circumstances of the Crown Rock project exit, or the previous en-masse executive departures of the Petro era.

The candidates for the Colombian Presidency represent differing levels of engagement with the petroleum industry. Leading the polls is Senator Iván Cepeda, a committed left-leaning ideologue, often described as much more intransigent than Petro in his support for an assertive government or on his position against hydrocarbons. Likewise, Cepeda is expected to continue Petro’s policy of “Paz Total” (Total Peace), where the insurgent groups within Colombia are no longer considered to be motivated by ideology, only profit and criminal interests. Criminal activity and violence by insurgent groups has surged under the Petro administration.

If Paz Total remains the position of a prospective Cepeda administration, then onshore operations in Colombia’s E&P activities will remain subject to a risk premium for longer. This is so because if the State no longer sees insurgent groups as motivated by ideology and still decides to engage in negotiations with them, then the government is effectively renouncing its role as guarantor of security over its own territory. That is, the State is recognizing criminal groups as legitimate interlocutors in an official dialogue over the groups’ rights. This is not to say that an enforcement approach should be prescribed instead, just that Paz Total elevates the status of what should now be considered common criminals, if such insurgent groups no longer harbor political aspirations.

Taken together, Ecopetrol remains burdened by severe weaknesses in governance. Furthermore, it is unlikely that a change in Colombia’s presidency will mean a short-term solution to the company’s crisis or to its mid-term outlook. This is especially so under a future Cepeda Administration, who may be hostile toward the petroleum industry and lenient towards criminal activity within Colombian territory. Finally, it is also not clear that trailing candidates Paloma Valencia or Abelardo de la Espriella—although friendlier toward hydrocarbons—have answers to the company’s woes or the country’s political pressures.

Overall, Ecopetrol faces internal challenges and political problems that may continue to affect the company’s performance, and in a worse case scenario, even threaten institutional continuity.

Status: Level 2 — Constrained execution

Argentina: The Super RIGI Arrives in Congress, Milei Flexes Executive Muscle

Argentina’s executive submitted the Régimen de Incentivo para Grandes Inversiones en Nuevas Industrias (Super RIGI) to the Chamber of Deputies on May 26. The new regime sets a USD 1 billion minimum investment threshold, a 15% corporate tax rate, full import and export duty exemptions, unlimited loss carryforwards, and a 30-year tax, customs, and FX stabilization guarantee locked in as an acquired property right from the moment of adhesion.

The regime targets new industries that do not currently exist in Argentina or are in the experimental stage. Only greenfield projects will be considered. The original RIGI, enacted via Ley Bases in 2024, is explicitly excluded. The executive has singled out AI, semiconductors, advanced biotechnology, and digital infrastructure as strategic targets.

The passage of the draft law is likely, but not guaranteed. The Milei government does not currently hold a simple majority in either chamber of Congress. Thus, the critical path may run through governors, not legislators per se. Provinces must adhere individually, and governors who adhere will get projects while those who do not get nothing. To this effect, it is important to note that the draft law allows early adhesion by the provinces, independent of the voting process in Congress.

There is the carrot and stick mechanism by the Milei administration: Adhere early and get federal backing for local development; reject adherence and risk neglect from the executive. This binary choice embedded in the logic of the draft law may well come to define the political process ensuing submission. That is, provincial appetite for the perks of the draft law may tip the balance for or against the law, in lieu of strong Congressional support. Adherence from Buenos Aires (CABA) or Córdoba, for example, would be early indicators of viability.

Consequently, the Super RIGI’s deregulatory push is setting up a political fight in Argentina, not just over investment rules, but also over where capital will actually land in the country. The Milei administration is already negotiating directly with governors, pitching the regime as a provincial development tool to either pressure Congress to sign off on it or bypass the legislature altogether by securing enough provincial adherence before passage.

In that sense, the Super RIGI may end up reading less like an investment regime and more like a map of winners and losers across Argentina. Ironically, the most libertarian president in Argentina’s recent memory is arguably availing himself of the centralizing powers of federalism to bind local and national autonomy to his political agenda. That is, Milei is seeking to override congressional powers and recalcitrant provinces by forcing them to opt into his plan or be left out completely of major economic investments in the future. The draft law is, in practice, a maximalist political stance, despite its veneer of congressional procedure.

Whether the law passes with amendments or not, its spirit will remain the same: aggressive deregulation of the role of government as an economic and administrative actor, and gradual relaxation of capital controls.

I published a special report with full primary source legal analysis on May 27. All components regarding the draft law, including compliance implications for foreign investors, eligibility requirements, tax regime, dispute resolution mechanisms, and FX and capital controls are discussed in detail.

Status: Level 1 — Pre-policy (pending congressional approval and provincial adhesion)

Guyana’s Oil Output in Crescendo, Suriname Eager to Follow

Guyana

Guyana’s government reported its oil lift revenue for Q1 2026. The numbers were published in early April by the Natural Resource Fund (NRF): $761M. That tallies to well over three-quarters of a billion dollars in 90 days, in a country smaller than Idaho, with a population of barely one million people.

For a nation with historically low levels of institutional organization, the present-day Guyanese government’s ability to capture and manage oil revenue in an organized and relatively transparent manner is no small feat.

From an institutional standpoint, Guyana appears to be rapidly transitioning away from a small, low-capacity state with a commodity-based economy, chronic political fragmentation, and a thin administrative apparatus into a much more organized, rent-absorbing petrostate in rapid formation.

Before the Stabroek discovery in the 2010s, Guyana struggled with a minimal industrial base, economic activity oriented mostly toward sugar, rice, and gold mining, and contentious politics. Now, the oil riches guarantee revenue, but pose the question of whether the government can develop the absorption capacity for hydrocarbon rents in the long term, while politics remain fractured along ethnic lines and special interest groups.

The monthly inflows report from the NRF confirm the upward trend. The Stabroek Block brought the Natural Resource Fund (NRF) balance above USD 4.1 billion for the first time by early May, as a combination of oil revenue, royalties, bonuses, and interest income. Guyana has gone from a $4.28 billion GDP in 2015 (when Exxon first announced the Liza-1 discovery) to $24.66 billion in 2024. Its debt-to-GDP ratio (29.2%) and inflation levels (4.1%) are considered manageable and well within what the oil rents can absorb.

Overall, in its first decade since the oil discoveries, Guyana seems well-adjusted to the newfound oil bonanza, including by both fostering oil production growth and putting in place a basic fiscal mechanism to manage the revenue inflows. The country produced 830,000 bpd in 2025 and expects to expand further this year to 840,000 bpd.

Status: Level 3 – Execution Phase

Suriname

Staatsolie, Suriname’s state-owned oil company (SOE), raised $516M through their 2025-2033 bond scheme and also secured a $1.6 billion syndicated loan from a “consortium of 18 banks and financial institutions.” This development has not received much coverage from traditional outlets, with few exceptions.

The news appeared in Staatsolie’s 2025 Annual Report, released in mid-May. Paramaribo appears to have carefully studied its neighbor’s success and wants to reproduce Georgetown’s playbook in the offshore upstream.

Staatsolie’s institutional capacities are neither underdeveloped nor unexperienced. This company has been extracting conventional oil in Suriname for decades. In 2025 Staatsolie produced a modest 17,400 bpd onshore, which entails a certain baseline of technical development and a skilled workforce in place. The SOE has associated itself with a number of international oil companies (IOCs) for E&P activities offshore, especially in the Gran Morgu project (Block 58), a deepwater play that could yield up to 220,000 bpd at peak production, once online. French Total Energies is the project’s main operator and Staatsolie reserved a 20% stake option for itself. Drilling is expected to start in Q4 2026.

However, Suriname faces several institutional challenges that could hinder its ability to harness and manage future oil riches—including patronage networks inside the government, driven by ethnic-based clientelism. Suriname’s bureaucratic structure is inefficient and bloated and suffers from low-credibility among its citizenry. Likewise, legacies from the Bouterse era remain entrenched administrative practices, including the government’s outsized role as an economic actor and distrust of the private sector through regulatory barriers to growth.

Overall, Suriname has the political will to expand the petroleum industry and become a net oil & gas exporting nation in the medium term. Nevertheless, although plans to expand offshore E&P activities are in place, Suriname’s weak regulatory environment and clientelism may prevent the country from realizing its productive capacities in the immediate future.

Status: Level 2 — Constrained execution

Other Relevant News to Observe:

• Venezuela | Debt Restructuring Announcements: The Venezuelan government announced plans to restructure its debt, but this remains at the preparatory stage only, as full negotiations are still blocked by OFAC sanctions.

  • Watch for: Any further OFAC licenses that would allow actual creditor engagement versus continued legal posturing. It is clear by now that there is a political will in Washington to rehabilitate Caracas into the global financial system, but progress is not guaranteed and each action by the Trump administration on Venezuela should be carefully analyzed before taking it at face value.

• Brazil | Oil Royalties Dispute at Supreme Court (STF): Brazil’s Supreme Court resumed hearings on the constitutionality of the 2012 oil royalties’ distribution law, a case with major fiscal implications for producing vs. non-producing states.

  • Watch for: a decision favoring non-producing states. Revenue certainty for producing states is the main factor for IOCs at the time of
    investing. The 2012 royalties law gives producing states a larger share of pre-salt oil revenues. Producing states will lose substantial income if the STF rules in favor of greater redistribution to non-producing states. This may translate to higher local taxes or royalties demanded from operators to compensate for lost funds, and weaker local infrastructure investment (ports, roads, workforce training) that supports offshore operations.

• Brazil | PPSA Delays and Scales 6th Oil Auction: Brazilian state-owned PPSA has postponed the 6th Pre-Salt oil auction from July to August 2026, citing the need for more stable market conditions. The agency is also considering increasing the volume on offer from 106 million barrels to 110–115 million barrels and may split the process into two separate auctions.

  • Watch for: Indications of what PPSA considers “more stable market conditions” and whether the delay leads to better terms, or on the contrary, if it signals growing caution by Brasília amid the Hormuz crisis effects on international reserves and whether Brazil may be planning to hedge for a supply crunch, particularly at a delicate fiscal and regulatory time ahead of elections.

St Monitor | 2026-05

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Resources Realignment Under Political and Market Pressures in Latin America | Focus: Colombia’s Ecopetrol, Argentina’s Super RIGI, Guyana’s and Suriname’s Oil Industry

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In this Special Interest Note | May 11th, 2026

The Trump-Lula summit on Thursday, May 7th, 2026 ended with little visibility into what topics were discussed by the two leaders and what they actually agreed to, if anything.

On trade, the USTR’s investigation remains open as a pressure instrument against Brazil rather than a targeted enforcement action, with the summit producing no visible movement in either direction. On critical minerals, a U.S.-backed company is acquiring Brazil’s only fully operational rare earths producer, but the deal is pending regulatory clearance on both sides. On strategic alignment, Brazil’s executive branch suspended the TECON 10 tender process at the Port of Santos under geopolitical pressure, leaving Washington’s objective of containing China and Brasília’s fiscal need for foreign infrastructure capital both unresolved.

The lack of information after the summit, and the otherwise reserved statements since, suggests that at best, not much of substance was actually agreed on.

Following this, we chose to narrow this brief to a limited number of topics that, while not exhaustive, will remain the most important for both administrations moving forward. These are:

• Trade Frictions & USTR Investigation;

• Critical Minerals; and

• China Exposure & Strategic Alignment.

This brief implements the ST Monitor’s classification to interpret specific developments across Latin America based on their phase of execution. Issues may remain at the level of (1) political signaling without an operational framework; (2) constrained within permission-based systems; or (3) fully operational and institutionalized. The cases chosen for this brief should be read through that lens:

• Level 1 — Pre-policy (no executable framework exists)

• Level 2 — Constrained execution (activity exists but is permission-bound)

• Level 3 — Execution Phase (system is operational and institutionalized)

Trade Policy | USTR Investigation into Brazilian Industrial Policies

Key Takeaways

• The summit produced no public evidence of movement on any item in the U.S.-Brazil trade relationship, with neither country conceding ground nor securing relief.

• The Section 301 investigation into Brazil is unusually broad, spanning digital payments, ethanol tariffs, deforestation enforcement, and anti-corruption interference, reflecting a pressure campaign across multiple negotiating fronts rather than conventional trade enforcement.

• PIX and ethanol are the two most immediately consequential items. Both involve sovereignty arguments, over domestic monetary infrastructure and agricultural trade policy, respectively, that both countries may find hard to concede bilaterally.

The Trump-Lula summit did not (publicly) resolve the fundamental disputes in the bilateral trade relationship between the U.S. and Brazil. The lack of concrete announcements after the talks does not offer any evidence that core issues such as tariffs, agricultural market barriers or investigations that could result in enforcement measures were resolved.

The U.S. government investigation into Brazil’s industrial policies and political practices remains open. In 2025, the U.S. Office of the Trade Representative (USTR) initiated an investigation into Brazil’s commercial and political practices. The investigation is anchored on Section 301 of the Trade Act of 1974 and it entitles USTR to find whether a certain practice by a foreign government is unreasonable or discriminatory in a way that burdens U.S. commerce.

This particular probe is unusually broad, spanning Brazil’s PIX digital payment platform, tariffs on U.S. ethanol, lax enforcement against deforestation, and anti-corruption interference, among other concerns. Normally, USTR pursues targeted trade complaints focused on one sector with a specific remedy in mind. However, what USTR has constructed against Brazil looks like a list of grievances designed to give Washington leverage across multiple negotiation fronts, not a conventional trade enforcement mechanism.

Hence, if the investigation was meant as leverage against Brazil during the summit, then the silence afterward may suggest that Washington did not use it to its favor. Nevertheless, this should not be read as an automatic win for Brazil, given that Lula did not successfully negotiate a way out of the investigation or obtain any tariff concession. At best, the status quo persists with no meaningful change or signal as to the future of the bilateral relationship.

In the short term, the investigation’s two most pressing items may be PIX and ethanol.

On PIX: The U.S. government sees PIX as a threat to the dominance of U.S. card payment networks. PIX is operated by Brazil’s Central Bank, which means challenging the regulatory prerogative of the bank over its domestic payment infrastructure. This is a sovereignty argument that Brazil may defend vehemently, as they may not see domestic monetary infrastructure policy as equivalent to trade measures. This item is unlikely to be resolved bilaterally.

On Ethanol: Ethanol remains one of the most politically charged issues in the bilateral relationship. Brazil currently maintains an 18% tariff on U.S. corn-based ethanol. This situation makes ethanol an easy political target for a Trump administration that prioritizes quick, visible wins with its agricultural base. Thus, ethanol is more likely to be used as a bargaining chip or retaliation point in the short term.

Overall, no enforcement action has been taken, even as the USTR investigation remains active and has a statutory process with defined timelines. With the summit producing no results, although the enforcement mechanism is real, the U.S. political will to activate it fully is unclear, keeping the investigation in a pre-policy state in practice.

Status: Level 1 — Pre-policy.

Critical Minerals | The Serra Verde Acquisition and U.S. interest in Brazil’s Critical Minerals

Key Takeaways

• USA Rare Earths’ $2.8 billion acquisition of Serra Verde is a U.S.-government-backed vertical integration play covering all four critical magnetic rare earth elements, from Brazilian mine to Oklahoma magnet plant.

• The deal is commercially operational at the asset level but remains pending HSR antitrust clearance in the U.S. and mining concession review by Brazil’s ANM.

• A live constitutional challenge before Brazil’s Supreme Court questions whether the State of Goiás has the authority to support mining concessions.

• U.S. tariffs on Brazil create friction in the same bilateral relationship Washington needs for supply chain integration, and the summit produced no signal that this contradiction was addressed.

The U.S. government has a strategic interest in Brazilian mineral rights. On April 20, 2026, USA Rare Earths, Inc. (USAR) acquired Brazilian rare earths mining company Serra Verde for $2.8 billion. The deal is expected to close in Q3 of 2026, pending antitrust (HSR) clearances from the Federal Trade Commission (FTC) and the Department of Justice (DOJ) on the U.S. side, and from Brazil’s mining regulatory body (ANM), which has control over mining concessions.

USAR is directly backed by the U.S. government through a $1.6 billion funding agreement, aimed at securing sovereign, stable access to rare earths and critical minerals needed for defense and semiconductor manufacturing. At the upstream level, Serra Verde’s Pela Ema operation in Goiás, Brazil mines all four critical magnetic minerals (Neodymium, Praseodymium, Dysprosium, and Terbium). At the midstream level, Serra Verde processes the minerals in its plant on-site. Production is fully operational.

Thus, the acquisition of Serra Verde makes USAR a vertically integrated company, as USAR provides downstream capacity through their NdFeB magnet manufacturing plant in Stillwater, Oklahoma. Consequently, the Serra Verde deal is now a matter of supply chain security for the U.S. government, given its focus on the AI race and strategic competition with China.

However, U.S. tariffs on Brazil complicate Washington’s strategic objectives in Brazilian mining. The U.S. cannot simultaneously pressure Brazil commercially and expect frictionless cooperation on critical minerals supply chain integration. After all, the resources are located in Brazil and they are thus susceptible to both the U.S. tariff regime and to the Brazilian government’s jurisdiction.

Furthermore, Brazilian politics seem split on the matter, with state-side showing support for the deal, and a coalition of interests at the federal level opposing the deal. Specifically, the State of Goiás is being challenged, on constitutional grounds, over its limited capacity to decide over mining concessions, which the claim argues is a federal, not state, prerogative. The matter is on the docket of the Supreme Court of Brazil (STF.)

The Trump-Lula summit may have provided an opportunity to settle the matter in favor of the U.S., while providing at least some tariff concessions for Brazil. Nevertheless, the opacity of both administrations’ post-summit statements do not provide enough information to conclude there was indeed any progress made on this front.

Taken together, the question that remains unanswered is whether a critical minerals producer in a tariffed, non-allied country can complete the transition to integrate into the American supply chain in a manner that satisfies the U.S. government interests and is not perceived as a threat to the host country’s sovereignty.

Absent future statements from either administration, the Serra Verde deal and its ramifications for both countries may remain constrained by legal and political circumstances, even when the business side is operational.

Status: Level 2 — Constrained execution.

Strategic Alignment | TECON 10, the Port of Santos, and China Exposure

Key Takeaways

• Brazil’s executive branch involved itself in the suspension of the TECON 10 tender process, reflecting the geopolitical weight of the concession rather than a procedural dispute.

• China already holds a 25-year lease on TECON 11, the adjacent grains terminal. A Chinese operator winning TECON 10 would extend that footprint at the largest port in the Southern Hemisphere.

• Washington’s position is ambiguous: no preferred winner, only a prohibited one, offering Brazil no political cover for blocking Chinese participation.

Brazil’s Casa Civil (Presidential Chief of Staff’s Office) recently suspended the TECON 10 tender, escalating the battle over the mega terminal in the Port of Santos to the executive level. This issue involves the U.S. government, insofar as it has made explicit efforts to discourage Brazilian port executives from allowing China to win the tender.

The dispute around TECON 10 is two-fold: it ultimately centers on (1) who captures the margin on Brazil’s agricultural exports, and (2) whether China can wean itself off from U.S. soy through control of the Brazilian soy market.

From a geopolitical standpoint, the U.S. government has not expressed a preference for any one company to win the Santos mega terminal tender. Where the winner of the tender is incorporated does not seem to matter to Washington, so long as it is not a Chinese company. The U.S. government’s concern seems to be China’s rapid diversification away from the U.S. soy market and Beijing’s increasing grip over Brazilian key trade infrastructure and penetration of its soybean sector.

Brazil’s Ministry of Ports and Airports (MPor) had ordered the immediate suspension of the TECON 10 leasing process at the Port of Santos, in late April. The instrument, signed by National Ports Secretary Alex Ávila, instructs ANTAQ (Brazil’s port authority) to halt its analysis and return the file to the Ministry for reassessment. No new date exists for the publication of the notice to bidders or the auction itself.

The backdrop is not neutral. China already holds a 25-year lease over TECON 11, an expanding grains terminal adjacent to the proposed site. TECON 10 itself is designed as a container terminal, not a bulk grains facility, but that distinction is of no consequence: containerized agricultural flows originating in Brazil can still move through it, alongside inbound Chinese manufactured goods.

Brazil’s public debt-to-GDP ratio stood at 93.3% in 2025, while over 90% of federal spending is mandatory, leaving the PT (or any successor) with no room to maneuver. Infrastructure concessions are one of the few levers available that do not require mandatory spending. Thus, delaying or cancelling the TECON 10 tender is not a neutral act in this fiscal environment—especially in 2026, an election year in Brazil.

TECON 10 is where a particular macroeconomic tension is becoming visible. Brazil simultaneously needs foreign capital to build port infrastructure it cannot fund publicly, and protection of its agricultural margin from the same foreign capital once it controls the infrastructure. Those two needs are on a collision course and it’s now clear that the Brazilian government does not have a clean answer to it.

The Trump-Lula summit has not provided any leads on the matter so far. Likewise, neither Brazilian politics nor the U.S. diplomatic corps in Brazil have touched on the subject (publicly) since late April.

It is not clear from either Washington or Brasília that they are satisfied with the present situation. Washington desires to cap Chinese access and influence over Brazilian markets and trade infrastructure, and Brasília desires the benefits of FDI without the economic and political dependence. In the short term, TECON 10 may remain a stalled issue due to a combination of geopolitical, legal, and economic pressures, absent signals from the Brazilian government to the contrary.

Status: Level 2 — Constrained execution.

Other Relevant Context to the Post Trump-Lula Summit Scenario:

Brazil’s Political Landscape

Lula approached the May 7 White House meeting seeking a visible, positive diplomatic achievement, given his fragile political position at home. Brazil’s 2026 presidential race has become highly polarized, with recent polling showing opposition figure Flávio Bolsonaro in a statistical tie with Lula in a potential runoff.

Lula’s political vulnerability is clearest in the Senate’s rejection of one of his Supreme Court nominees, the first such failure since 1894.

However, Lula continues to dominate the Workers’ Party (PT), relying on strong support from labor unions, academia, and progressive Catholic groups, while opposition parties still struggle to match the PT’s organizational machinery. Veteran PT strategist José Dirceu has also re-emerged publicly, signaling an effort to rebuild influence despite his past corruption convictions and history as a leftist militant.

On the right, conservative governor Ronaldo Caiado has gained visibility as a potential alternative, representing a traditional, conservative strand linked to agribusiness, property rights, and the economic expansion of Brazil’s Center-West region.

Watch for: Lula may need a visible win or concession from the U.S. in the short term to project strength, stabilize his base, and improve his standing ahead of a difficult 2026 re-election campaign in an increasingly competitive environment.

Meatpacking Giant JBS comes under U.S. DOJ Scrutiny

JBS, Brazil’s meatpacking giant and historically one of the country’s largest corporate campaign donors, is facing a new U.S. Department of Justice investigation into price-fixing and anti-competitive conduct, alongside other firms including fellow Brazilian company Marfrig.

The group is also one of the most exposed to Trump’s tariffs on Brazilian beef. In parallel, JBS’s holding company J&F has recently announced investments in missile manufacturing (via Avibras) and a major potash project in Brazil.

Watch for: JBS has both a strong incentive and considerable political influence to lobby for tariff relief and improved U.S. relations. Its interests add a significant sector-specific dimension to the post-summit scenario, as the company seeks to protect and expand its critical U.S. market access while managing legal and reputational risks on both countries.

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This article is a collaboration between Manuel Reyes and Luis Vieira.

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In this Edition | April 2026

Energy developments in the past few weeks in Latin America show plans or operations with varying degrees of execution and state regulatory authority. Factors influencing the energy sector in the region include local political will, geopolitical and international sanctions pressure, and industrial policy priorities.

In Mexico, political intent to frack the Sabinas-Burgos basin has not yet translated into a federal framework ripe for implementation. In Venezuela, oil sector activity is re-emerging but remains tightly controlled through external OFAC licensing. In Brazil, a re-scaling and procurement re-design of the country’s grid system is already operational, with institutional mechanisms shaping investment and reliability.

The focus is not resource potential, but the degree to which that potential has been or may be converted into value-generating activities.

This edition of the ST Monitor introduces a simple classification to interpret specific energy developments across Latin America based on their phase of execution. Some plans remain at the level of (1) political signaling without an operational framework; others are (2) constrained within permission-based systems; and others are (3) fully operational and institutionalized. The cases chosen for this edition in Mexico, Venezuela, and Brazil should be read through that lens:

• Level 1 — Pre-policy (no executable framework exists)

• Level 2 — Constrained execution (activity exists but is permission-bound)

• Level 3 — Execution Phase (system is operational and institutionalized)

Mexico | Shale Gas | Fracking in Coahuila remains rhetorical, no policy plan in sight

Key takeaways

• “Gas Coahuila” is a political positioning initiative by Coahuila Governor Manolo Jiménez, not a formal policy or program at the federal level.

• The concept reflects a regional economic pivot toward shale gas in the Sabinas-Burgos basin, driven by the collapse of the AHMSA steel corporation, but lacks federal regulatory backing.

• Upstream hydrocarbon activity in Mexico requires federal authorization through SENER, CNH, or CRE, with alignment to the Hydrocarbons Law. Thus, Governor Jiménez has no authority over mineral rights or upstream licensing.

• The AHMSA bankruptcy asset sale was formally launched but collapsed at its first auction; the process is now in a second iteration.

• Both developments signal strategic intent without execution, pointing to a pre-policy phase rather than an active market opportunity.

What political and business figures in northern Mexico are calling “Gas Coahuila” does not exist as a formal policy instrument in primary records. The name belongs to an initiative of Coahuila Governor Manolo Jiménez, and its most prominent public articulation was at the XVI Plenary Session of the Asociación de Ciudades Capitales de México (ACCM) in February 2026, where it was presented as political messaging rather than codified policy.

There is no decree, program registration, regulatory filing, or federal initiative under that name. In Mexico’s energy system, upstream hydrocarbon activity requires federal backing, along with alignment to the Hydrocarbons Law and relevant permitting and budgetary mechanisms. Coahuila’s governor is actively marketing shale development to U.S. energy firms, particularly in Texas, positioning the state as a future production hub. However, this outreach occurs within a constitutional framework where mineral rights and upstream authorization remain exclusively federal. Therefore, state-level promotion should be understood as a prospective plan, not a formally proposed program.

The underlying structural logic holds, nonetheless. Coahuila sits atop the Sabinas-Burgos basin (343 Tcf), one of Mexico’s key shale gas regions. Any effort to replace the industrial decline left by the collapse of steel giant Altos Hornos de México (AHMSA) — which ceased operations in 2022 and was formally declared bankrupt in 2024 — would point toward hydrocarbons development. “Gas Coahuila” is, in that sense, an attempt to reposition the state economically around gas extraction and related industrial activity.

At the federal level, the Coahuila plan intersects with a broader but still incomplete shift by the Sheinbaum administration toward reconsidering unconventional gas development. Without explicit regulatory changes, licensing rounds, or investment frameworks, however, no executable pathway is yet visible.

The AHMSA bankruptcy is similarly unresolved. A first auction round collapsed last February when the court declared it void after the sole qualified bidder failed to post its seriousness guarantee and secured creditors withheld consent for the integral sale. The company remains within Mexico’s commercial bankruptcy proceedings, and the case trustee has since submitted a revised sale proposal for judicial review, entering a second iteration of the process.

Together, both threads point to the same conclusion: Coahuila is pushing for a strategic reframing of its industrial base, but that reframing has not yet translated into formal policy instruments or market-accessible processes. The result is political positioning ahead of regulatory and legal action.

Status: Level 1 — Pre-policy

Venezuela | Oil Sector | OFAC, IMF Move to Normalize Economic Relations with Venezuela under Delcy Rodriguez

Key takeaways

• The U.S. is not lifting Venezuela sanctions broadly, but building a layered licensing system through OFAC that selectively permits activity in oil and finance.

• Oil licenses reopen trade in existing crude flows, while financial licenses restore limited payment and settlement channels needed to support that trade.

• The framework enables a closed-loop system: physical oil flows can restart, but only within tightly controlled financial and legal pathways.

• Investment, production expansion, and full financial normalization remain explicitly prohibited, keeping Venezuela structurally constrained despite partial reopening.

• The IMF will resume “dealings” with Venezuela and technical coordination, signaling early-stage multilateral normalization alongside the sanctions easing.

The U.S. continues selective easing of sanctions on Venezuela through specific OFAC licenses that separate physical oil trade from financial channels supporting it. Washington is building a layered “permit system” for limited re-engagement with Venezuela’s hydrocarbons sector.

On the oil side, General Licenses 46/46B and 50A authorize defined commercial activities involving Venezuelan-origin crude and gas. These include lifting, transport, marketing, refining, and related services, allowing crude to re-enter international circulation under strict compliance rules. However, these licenses explicitly exclude upstream investment, production expansion, and new field development, meaning the framework enables trade in existing output but does not restore investment control or full operational autonomy.

On the financial side, General Licenses 56 and 57 extend this controlled opening by authorizing transactions involving the Central Bank of Venezuela (BCV) and other state financial institutions. The licenses reopen limited payment processing, settlement activity, and financial intermediation that had remained blocked even after oil-sector easing. Jointly, these licenses begin to reconstruct the financial conduit for oil trade, but only within a tightly monitored perimeter.

Taken together, the structure effectively creates a closed-loop: oil licenses reactivate physical crude flows, while financial licenses partially restore settlement channels. The result is not sanctions relief in the traditional sense, but a controlled exposure regime in which engagement is possible only through narrowly defined legal pathways.

From a governance and compliance perspective, this shifts the operating model for companies from a binary “allowed vs. prohibited” framework to a granular, transaction-by-transaction licensing system. Legal exposure is no longer determined primarily by market entry, but by routing, counterparties, and compliance with evolving license conditions across a multi-step chain of transactions.

From a financial crime and corruption risk perspective, the reintroduction of BCV-linked channels brings sovereign-controlled settlement infrastructure back into play. This increases exposure to opaque flows, indirect counterparties, and multi-jurisdictional routing through state and quasi-state entities. Even when compliant with OFAC rules, the structure raises AML complexity due to layering risk and reduced transparency in settlement chains.

Parallel to this sanctions’ evolution, the IMF announced a resumption of “dealings” with Venezuela, according to Managing Director Kristalina Georgieva. Early steps include technical engagement and data coordination with Venezuelan authorities. This signals that the international community is getting ready to normalize economic relations with Venezuela under Delcy Rodríguez.

Overall, Venezuela is being gradually (but quickly) reintroduced into the global financial and commodity systems through layered permissions and toward full normalization. That is, the system is opening selectively, with oil, finance, and institutions all reconnected through controlled, reversible channels rather than full reintegration.

My earlier coverage has repeatedly insisted that “uninvestable” was never a technical or financial assessment of the Venezuelan oil sector, but a negotiating position by U.S. oil companies.

Status: Level 2 — Constrained execution

Brazil | Electric Power Sector | Brazil Restructures Electricity Reliability Through 2026 Tender Process

Key takeaways

• Brazil is shifting from paying for electricity generation to paying for guaranteed power availability (capacity).

• The 2026 LRCAP contracted roughly 19 GW of firm capacity across multiple technologies through 2031.

• Competitive bidding significantly reduced costs, with savings potentially reaching billions of reais.

• The system prioritizes reliability and flexibility to manage rising demand and renewable intermittency.

• The auction strengthens long-term investment certainty for energy companies while reshaping Brazil’s electricity market design.

Brazil is restructuring its grid reliability and procurement system by contracting “capacity” rather than just energy produced. The 2026 “Tender for Reserved Capacity in the form of Power” (LRCAP) coordinated auctions to secure reliable dispatchable power for the Brazilian grid under peak demand and variability conditions.

The Brazilian grid is no longer planned purely on megawatt-hours generated over time. Instead, it now prioritizes the degree to which available power can be called upon when needed. The National Electric System Operator (ONS), the Energy Research Office (EPE), and the National Electric Energy Agency (ANEEL) jointly designed and executed the tender, with the Ministry of Mines and Energy (MME) setting the regulatory framework. Their technical notes defined the modeling assumptions:

• transmission constraints;

• system reliability needs; and

• “remaining capacity” available for new generation connections.

These technical layers determined which projects could compete in the auction and at what scale.

The 2026 LRCAP covered different technology groups, including gas, coal, hydro, and liquid-fuel sources such as oil and biodiesel. This separation reflects Brazil’s balance between cost, flexibility, and fuel security. Baseload capacity is secured with gas, coal, and hydro at lower cost, while oil and biodiesel units are retained at higher cost for peak demand or system stress conditions.

The system contracted about 19 gigawatts (GW) in the main LRCAP cycle. Eneva and Petrobras emerged as major winners. Competitive bidding produced discounts (avg. 5.52%) relative to reference prices, generating estimated savings in the billions of reais over contract lifetimes. Companies competed aggressively for long-term guaranteed revenue streams, which pushed prices down while still ensuring sufficient capacity for the grid.

Contract design evolution was also central to the process, not just total capacity volume. Earlier Brazilian energy auctions focused on electricity produced, but the 2026 LRCAP shifted toward capacity payments, meaning generators are paid for availability rather than only energy generated.

Corporate and market reactions reflect the importance of this auction for investment planning. Large state-owned and private energy companies use these auctions to secure long-term cash flow stability. Winning capacity contracts helps justify major capital investments in new thermal plants and fuel infrastructure.

Finally, the broader implication is that Brazil is strengthening system reliability through diversification of energy sources. The scale of the auction also signals expectations of rising electricity demand and greater renewable intermittency, requiring additional firm capacity.

In summary, the 2026 LRCAP cycle is best understood as a coordinated national capacity procurement program, not just a single auction result. It contracted roughly 19 GW of firm power across multiple technologies, shifted toward a capacity-based market structure, generated cost savings through competition, and strengthened reliability by ensuring flexible thermal and hydro resources remain available to stabilize a rapidly evolving grid.

Status: Level 3 — Execution Phase

Other Energy-related News to Observe:

• Oil & Gas | Mexico: PEMEX is experiencing financial pressures due to the federal government’s limited capacity to invest in it.

  • Watch for: Federal support mechanisms (e.g., capital injections, debt restructuring). Any shift may signal to what extent the Mexican government is prepared to stabilize PEMEX.

• Shale | Mexico: Sheinbaum signals further moves for shale gas. A scientific committee will evaluate eco-friendlier shale gas extraction technologies. The committee will deliver recommendations within two months.

  • Watch for: The report is not important, better shale gas extraction techniques have been around for years. What’s important is Sheinbaum’s tolerance for the Iran war’s negative effects on the Mexican economy vis-a-vis the 2027 midterm elections.

• Shale | Argentina: Vaca Muerta will require at least $114 billion in investment over the next 10 years to sustain its current pace of development.

  • Watch for: Midstream capacity bottlenecks. If the terminal at Punta Colorada and the pipeline system stemming from the Neuquén basin deliver volume as projected, capital input won’t be an issue.

• Organized Crime | Peru: A new form of criminal activity has emerged in Perú, after a convoy transporting 10.5K bbl of oil was detained by non-state actors on the Trompeteros River. The group is demanding S/2 million for safe passage.

  • Watch for: Replication of this tactic across oil transport routes. Government tolerance would likely lead to rising operating risk and potential cost pressures for inland logistics.

• Geopolitics | Panama Canal: China is pressuring Maersk to abandon activities at the Balboa and Cristobal port terminals in the Panama Canal, following its takeover of CK Hutchison’s operations. China’s NDRC (regulatory body) has reportedly threatened Maersk directly, citing national security grounds.

  • Watch for: Formal NDRC rule-making against Maersk. If carriers start hedging against instability in the Panama Canal, freight rate volatility may feed into bunker price behavior.

ST Monitor | April, 2026

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Energy Sector Developments in Latin America | Focus: Mexico Shale Gas, Venezuela Oil Licenses, Brazil Power Markets

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