Brazil's Congress recently approved a critical minerals bill aimed at enhancing the nation's control over its vast mineral resources, particularly rare earths. This legislation grants the government increased scrutiny over mining deals, a move that has drawn concern from some industry players regarding potential deterrence of foreign investment. However, experts like Pablo Cesário, president of the Brazilian Mining Institute (Ibram), believe the bill maintains openness for productive investment and aligns Brazil with global regulatory changes.
The new policy is designed to add value to Brazil's mineral supply chain, moving beyond simply exporting raw ore to developing domestic processing and manufacturing capabilities. To achieve this, the bill authorizes the creation of the Mineral Activity Guarantee Fund (FGAM), allowing the federal government to invest up to $2 billion. This fund will provide guarantees to mitigate risks associated with critical and strategic mineral projects, covering exploration, extraction, processing, and transformation. Additionally, the framework allocates up to $5 billion in tax credits over five years for beneficiation, chemical transformation, and domestic metallurgical operations.
Brazil holds the world's second-largest rare-earth reserves, estimated at 21 million tonnes, trailing only China. Despite this, Brazilian facilities currently process less than 1% of the global output. The legislation comes amid a global scramble for critical minerals, essential for industries like energy, defense, and technology. The bill's progress follows significant international interest in Brazil's rare earth sector, including a $1.55 billion funding package from a U.S. government-backed special purpose vehicle for the Pela Ema mine, demonstrating Washington's efforts to diversify its rare earth supply chains away from China.
