Brazil approves landmark rare earths bill

September 06, 2026

Brazil is moving closer to establishing a comprehensive regulatory framework for critical and strategic minerals after the Senate approved landmark legislation aimed at accelerating development of the country’s enormous rare earth reserves.

The measure cleared the Senate on Wednesday night after receiving overwhelming support in Brazil’s lower house on May 6. It will now be sent to President Luiz Inácio Lula da Silva, who is expected to approve the legislation.

The bill could significantly reshape Brazil’s mining and mineral-processing sector. In addition to establishing rules governing critical minerals and rare earth development, it creates financing mechanisms for eligible mining projects and offers incentives designed to encourage minerals to be processed domestically rather than exported primarily as raw materials.

Brazil holds the world’s second-largest known reserves of rare earth elements, behind China. These minerals are increasingly important to the global economy because they are used in technologies ranging from smartphones and electric vehicles to renewable-energy equipment, solar panels and aircraft engines.

Brazil seeks bigger role in global rare earth supply chain

China remains the dominant force in critical mineral and rare earth supply chains. However, Brazil’s substantial deposits have given the country an opportunity to emerge as an alternative source as governments and companies seek to diversify supplies and reduce their dependence on China.

International interest in Brazil’s mineral resources has already increased.

An investigation by the Associated Press and Repórter Brasil identified growing U.S. investment following China’s restrictions on some rare earth exports amid trade tensions with Washington. Among the most significant developments was a deal involving Serra Verde, Brazil’s only commercial-scale rare earth producer.

In April, USA Rare Earth announced an agreement valued at approximately $2.8 billion to acquire Serra Verde. The Brazilian company owns the Pela Ema rare earth mining and processing operation in Goiás state.

The transaction highlights the strategic importance of Brazil’s mineral deposits at a time when major economies are competing to secure reliable supplies of materials needed for advanced manufacturing, defense, clean energy and other technologies.

Lula pushes for domestic rare earth processing

President Lula has repeatedly argued that Brazil should use growing international demand for its critical minerals to develop domestic industries instead of limiting its role to supplying unprocessed resources to foreign markets.

Following a May 7 meeting in Washington with U.S. President Donald Trump, Lula said Brazil wanted to take a different approach to its mineral wealth than Latin America had historically taken with resources such as gold and silver.

His message was that Brazil intends to capture a larger share of the economic benefits generated by rare earth development through domestic industrialization and value-added production.

That strategy is reflected in several provisions contained in the new legislation.

Brazil creates $391 million mineral guarantee fund

One of the bill’s central measures is the creation of the Mineral Activity Guarantee Fund.

The federal government is expected to contribute 2 billion reais, equivalent to roughly $391 million, to support guarantees for projects and activities associated with critical and strategic mineral production.

The legislation also establishes a dedicated initiative to stimulate the processing and transformation of these resources inside Brazil.

Under the program, the federal government would make 5 billion reais, or approximately $978 million, available through tax credits over a five-year period.

The incentives are intended to help Brazil move beyond mineral extraction and develop more of the processing and industrial infrastructure required to participate in higher-value segments of the global supply chain.

New council could review foreign investment

The bill would also establish a National Council for the Industrialization of Critical and Strategic Minerals.

Among its responsibilities, the council would identify priority projects eligible for financial support under the new framework.

More significantly for international investors, the body would have authority to examine and approve certain types of foreign investment or influence involving businesses that control rights to minerals designated as critical or strategic.

The provision could effectively give Brazil’s government substantial power to restrict foreign participation in strategically important mineral projects.

Jaques Paes, a business professor at the Getulio Vargas Foundation, has warned that such government oversight could create additional uncertainty for investors by moving decisions involving rare earth assets further into the political sphere.

Environmental groups raise concerns over mining expansion

Brazil’s effort to accelerate critical mineral development is also facing scrutiny over its potential environmental consequences.

Some mineral deposits could be located in or near environmentally sensitive areas, including regions associated with the Amazon rainforest. Expanding mining operations in these locations could generate concerns surrounding deforestation, water resources, biodiversity and the rights of local communities.

The Climate Observatory, a major coalition of Brazilian environmental organizations, has criticized the legislation, arguing that greater regulatory flexibility should not come at the expense of environmental safeguards or social protections.

Suely Araújo, the organization’s Public Policy Coordinator, said in a Sept. 1 statement that critical minerals are important for the global transition toward cleaner energy, but that their importance should not provide unrestricted permission for mining development.

She argued that efforts to accelerate mining legislation should include meaningful protections for communities and territories that could be affected by new projects.

Brazil faces strategic choice over its mineral resources

Leonardo Paz Neves, an international relations professor at the Getulio Vargas Foundation, has argued that Brazil needs a broader public discussion about how its natural resources should be developed and how foreign companies should gain access to them.

Foreign access to Brazil’s rare earth industry is already a reality, as demonstrated by USA Rare Earth’s acquisition agreement involving Serra Verde.

The larger policy question is whether Brasília will attempt to negotiate preferential arrangements with individual countries or instead pursue a diversified strategy involving multiple international partners.

Lula has indicated that Brazil favors the latter approach.

Following his discussions with Trump, the Brazilian president emphasized that the country is willing to cooperate with a range of partners interested in participating in its mineral industry, including the United States, China and major European economies such as Germany and France.

Brazil expands critical minerals partnerships beyond the U.S.

Brazil’s international strategy is already extending beyond Washington and Beijing.

In February, Brazil and India signed a nonbinding memorandum of understanding focused on critical minerals and rare earth elements. The agreement was designed to deepen cooperation between the two countries in areas related to strategically important mineral resources.

Such partnerships could become increasingly important as global competition for rare earths intensifies.

Governments are looking for more diversified supply chains because rare earth elements and other critical minerals are essential inputs for electric vehicles, renewable energy systems, electronics, aerospace equipment and numerous advanced technologies.

Brazil could become a major alternative to China in rare earths

The new legislation represents an important step in Brazil’s effort to transform its vast mineral resources into a strategic economic advantage.

With the world’s second-largest rare earth reserves, Brazil has the geological resources necessary to become a much more influential participant in global critical mineral supply chains. The government’s challenge will be turning those reserves into a competitive domestic industry while attracting investment, protecting national interests and addressing environmental and community concerns.

If Brazil successfully expands extraction while developing domestic processing and manufacturing capabilities, the country could capture considerably more value from its mineral wealth.

At the same time, growing interest from the United States, China, India and European countries underscores the geopolitical importance of Brazil’s resources.

As countries seek alternatives to China-dominated rare earth supply chains, Brazil’s combination of massive reserves, emerging processing capacity and new government incentives could make it one of the most closely watched critical mineral markets in the world.