Brazil launches critical minerals policy with up to R$7bn in incentives

Brazilian President Luiz Inácio Lula da Silva signed into law a new national framework for critical and strategic minerals on Wednesday, September 16, creating incentives worth up to R$7 billion for mineral processing and transformation projects.

Brazil’s critical minerals policy is designed to stimulate research, extraction and domestic processing of resources considered critical or strategic to the country.

“Mining requires intensive investment and production cycles that often reach 40 years. That is why predictability and stability, especially fiscal stability, are essential conditions for attracting long-term investment,” said Pablo Cesário of the Brazilian Mining Institute.

The law creates the Mineral Activity Guarantee Fund, known as Fgam, with an initial R$2 billion contribution from the federal government to back projects and activities linked to critical and strategic mineral production. The fund may eventually reach R$5 billion and can only support projects classified as priorities under the new policy.

Mines and Energy Minister Alexandre Silveira said the legislation will also help Brazil gain a better understanding of its mineral resources.

“Brazil will gain in-depth knowledge of its resources and preserve its ability to make decisions over its production chains,” Silveira said.

He added that funding for the Geological Survey of Brazil will rise from R$8 million to R$300 million to expand research and improve knowledge of the country’s geology.

Sovereignty and domestic processing

After signing the law, Lula called for greater investment in training professionals for a market that is expected to expand. He urged universities and federal institutes to develop new courses so Brazil does not fall behind other countries in workforce preparation.

The president also stressed the importance of developing a domestic mining industry with greater industrialization and refining and production technology in Brazil.

He then criticized those he said had sought to sell raw critical minerals to the United States “for next to nothing,” as he argued had happened with iron ore.

“We will not allow history to repeat itself. Let Brazil’s enemies understand this once and for all. Our sovereignty is not for sale. Brazil’s wealth has only one owner: the Brazilian people,” Lula said.

Lula also signed a decree establishing the National Council for the Industrialization of Critical and Strategic Minerals. The council will be responsible for coordinating, planning and monitoring the national strategy and proposing public policies aimed at developing critical and strategic mineral supply chains.

Why critical minerals matter

Critical minerals and rare earths are essential inputs for the technology, automotive and defense industries, as well as for the energy transition.

Critical minerals are resources whose supply may be exposed to risks including geographic concentration of production, import dependence, geopolitical instability, technological limitations, supply disruptions and a lack of readily available substitutes.

Rare earths are a group of 17 chemical elements found dispersed in nature, making extraction more challenging. They are used in products and technologies including wind turbines, smartphones, electric vehicles and defense systems.

Brazil has about 21 million metric tons of mapped rare-earth reserves, the second-largest total in the world after China, with approximately 44 million tons. Yet only around 25% of Brazilian territory has been mapped, suggesting that significant resources may remain unidentified.

What qualifies as a critical or strategic mineral varies from country to country and may change over time as technology advances, new geological deposits are discovered, geopolitical conditions shift and demand evolves.

By combining mineral exploration, financing mechanisms and incentives for domestic processing, Brazil’s critical minerals policy seeks to expand knowledge of the country’s resource base while encouraging more value to be added before those minerals enter global supply chains.

Source: Agência Brasil

Sharing is caring!