Brazil Senate clears rare earth bill to rival China in critical minerals

Riodejaneiro,UPDATED: Sep 3, 2026 22:50 IST

Brazil's Senate has approved a bill to regulate the exploration of critical and strategic minerals, moving the country closer to expanding the use of its large rare earth reserves, which are second only to China's. The lower house had overwhelmingly backed the bill on May 6, and it now goes to President Luiz Inacio Lula da Silva, who is expected to sign it into law.

The bill lays down a legal framework for rare earths and other critical minerals, creates a fund to support mining projects with credit, and offers tax incentives for domestic processing. Brazil is seeking to position itself as an alternative in global supply chains at a time when countries are looking to reduce dependence on China, even as the proposed expansion has drawn criticism over environmental and community concerns.

Rare earth elements are used in products such as smartphones, electric vehicles, solar panels and jet engines. While China remains dominant in critical minerals supply chains, Brazil is trying to use its reserves to attract partners from around the world. A joint analysis by AP and Reporter Brazil said there had been a wave of US investment after China last year restricted rare earth exports in response to US tariffs, including the purchase of Serra Verde, Brazil's only commercial rare earth producer, by a firm in which the US government has a stake.

In April, USA Rare Earth said it had agreed to pay about USD 2.8 billion for Serra Verde, which owns the Pela Ema rare earth mine and processing plant in Goias state. Lula has repeatedly said Brazil should use the growing interest in these minerals to build a national industry instead of only exporting raw materials. "We're not going to repeat what happened with silver and gold in Latin America," Lula told journalists in Washington on May 7 after meeting US President Donald Trump. "With rare earths, we're going to change our behaviour. We want Brazil to be the big winner of these riches."

Under the bill, the Mineral Activity Guarantee Fund will be created with a federal government contribution of 2 billion reais, about USD 391 million, to guarantee projects and activities linked to the production of critical and strategic minerals. The legislation also proposes a specific programme to encourage processing and transformation of these minerals in Brazil, with federal incentives of 5 billion reais, or USD 978 million, in tax credits over five years. It also creates the Council for the Industrialisation of Critical and Strategic Minerals, which will identify priority projects for support from the fund.

The proposed expansion of mining, which in some cases could take place near reserves in the Amazon rainforest, has raised concerns over environmental risks. The Climate Observatory, Brazil's largest network of environmental groups, has criticised the bill, saying it increases regulatory flexibility without economic, climate or socio-environmental trade-offs. "Critical and strategic minerals are necessary for the energy transition, but this cannot become a blank check for mining. It makes no sense (...) to accelerate legislative proposals that do not guarantee the rights of affected communities and territories," Suely Araujo, Public Policy Coordinator at the Climate Observatory, said in a statement on September 1.

Leonardo Paz Neves, an international relations professor at the Getulio Vargas Foundation, said Brazil should hold a public debate on the exploration and production of its resources. "Access already exists," Paz Neves said, referring to USA Rare Earth's recent purchase. "The big question here is whether the state will want to try to negotiate some kind of privileged agreement regarding that access." After meeting Trump, Lula also said Brazil was in talks with other countries. "Brazil has the obligation to share with whoever wants to participate with us, be that the US, China, Germany or France." In February, Brazil and India signed a nonbinding memorandum of understanding on critical minerals and rare earths to strengthen cooperation in the sector.

With Senate approval secured, the bill now awaits Lula's signature and would give Brazil a clearer framework to develop its rare earth and critical minerals sector, while the debate continues over industrial policy, foreign participation and environmental safeguards.

With PTI Inputs

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