Brazil’s Senate passes rare earth minerals regulation, paving the way
for boosted exploration
[September 04, 2026] By
ELÉONORE HUGHES
RIO DE JANEIRO (AP) — Brazil’s Senate Wednesday night approved a
landmark bill to regulate the exploration of critical and strategic
minerals in the South American country, a step toward increased
exploitation of its vast reserves of rare earths that are second only to
China.
The Senate’s backing of the bill comes after the lower house
overwhelmingly voted in favor on May 6. It now heads to President Luiz
Inácio Lula da Silva, who is expected to sign the measure into law.
The proposed legislation creates a basic legal framework for rare earths
and other critical minerals and a fund to provide credit to mining
projects. It also provides for tax incentives for domestic processing.
Brazil has the world’s second-largest reserves of rare earth elements,
used in a wide range of products, including smartphones, electric
vehicles, solar panels and jet engines.
While China continues to dominate critical minerals in global supply
chains, Brazil is positioning itself as an alternative by leveraging its
vast reserves. Countries around the world have shown interest as they
seek to diversify partnerships and reduce reliance on the Asian
powerhouse.
A joint analysis by the AP and Reporter Brazil identified a wave of U.S.
investment after China last year restricted rare earth exports in
response to U.S. tariffs, including the purchase of Brazil’s only
commercial rare earth producer, Serra Verde, by a firm in which the U.S.
government has a stake.
In April, USA Rare Earth said it had agreed to pay approximately $2.8
billion for Serra Verde, owner of the Pela Ema rare earth mine and
processing plant in Brazil’s Goias state.
Government-screening power
Lula has repeatedly said that the South American nation should seek to
capitalize on interest in the minerals to develop a national industry,
rather than simply export the 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 his
meeting with U.S. President Donald Trump. “With rare earths, we’re going
to change our behavior. We want Brazil to be the big winner of these
riches.”
The bill establishes the Mineral Activity Guarantee Fund with a
contribution of 2 billion reais (about $391 million) from the federal
government to guarantee projects and activities linked to the production
of critical and strategic minerals.
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 The legislation also includes a
specific program to encourage processing and transforming the
minerals in Brazil, with federal incentives of 5 billion reais ($978
million) in tax credits over five years.
In addition, the bill creates the National Council for the
Industrialization of Critical and Strategic Minerals, which will
indicate priority projects to receive support from the fund.
The council will screen and approve certain forms of foreign
investment and influence in companies holding critical and strategic
mineral rights, potentially giving the government a de facto veto.
That increases legal uncertainty for investors, said Jaques Paes, a
business professor at the Getulio Vargas Foundation. “It puts rare
earths in a political realm rather than a technical one.”
Environmental risks
Mining, which in some cases could happen near reserves in the Amazon
rainforest, also comes with major environmental risks.
The Climate Observatory, Brazil’s largest network of environmental
groups, has criticized the bill, alleging that it increases
regulatory flexibility without economic, climate or
socioenvironmental 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,” said
Suely Araújo, Public Policy Coordinator at the Climate Observatory,
in a statement on Sept. 1.
Leonardo Paz Neves, an international relations professor at the
Getulio Vargas Foundation, a think tank and university, said Brazil
should engage in a public debate with regard to exploration and
production of its resources.
“Access already exists,” said Paz Neves, pointing 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 with Trump, Lula made clear that Brazil is talking to
other countries too. “Brazil has the obligation to share with
whoever wants to participate with us, be that the U.S., China,
Germany or France.”
In February, Brazil and India signed a nonbinding memorandum of
understanding on critical minerals and rare earths, enhancing
cooperation on crucial resources between both countries.
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