Brazil's Senate approved on Wednesday (2) the bill that creates a legal framework for mining critical minerals and rare earths. The legislation provides R$ 5 billion in tax credits, a new guarantee fund and a council tied to the presidency with power to block deals involving foreign partners. The vote was symbolic, with no roll call, according to Folha de S.Paulo. The bill now goes to President Luiz Inacio Lula da Silva for his signature.
The bill, numbered PL 2780/2024, was written by lower house lawmaker Ze Silva and guided through the Senate by rapporteur Eduardo Braga of the MDB party. It advanced with practically no changes from the version passed by the Chamber of Deputies. Approval was a priority for Lula's government and was unlocked after the president reconciled with Senate leader Davi Alcolumbre. The agenda moved even as Brasilia faced a political crisis over messages exchanged between former banker Daniel Vorcaro and Supreme Court Justice Alexandre de Moraes, as Folha reported.
What the bill does
The tax credits start in 2030. Companies incorporated under Brazilian law, with headquarters and management in the country, can receive up to R$ 1 billion per year through 2034. The benefit can reach 20% of spending on processing, transformation and urban mining. The bill also authorizes a Mineral Activity Guarantee Fund, private in nature, with federal participation capped at R$ 2 billion. Mining companies must set aside 0.5% of revenue in the first six years, split between research and the fund itself. According to Braga, the state development bank BNDES estimates that R$ 5 billion is needed to unlock projects in the sector.
"This bill will finally make it possible to generate jobs and income in national territory, adding value to the critical ores Brazil has and that, unfortunately, were being exported raw," Braga said.
The National Council for the Industrialization of Critical and Strategic Minerals, known as CIMCE, will have up to 15 representatives from the federal executive plus states, municipalities, the private sector and academia. The council must sign off on operations deemed relevant to national sovereignty. The list includes direct or indirect changes of control at companies holding mineral rights, contracts, international supply agreements and partnerships, and the sale of mining titles granted by the federal government. Without the council's approval, a deal is blocked. Amendments that would have replaced the approval requirement with simple registration were rejected, and the bill also lets the executive branch attach value-added conditions to exports.
A global race
Brazil holds the world's second-largest rare earths reserves, about 21 million tonnes, behind only China, according to the United States Geological Survey. Rare earths are a group of 17 chemical elements used in electric vehicle motors, wind turbines, electronics and defense systems. According to Folha, the bill is part of Lula's answer to US advances in the sector: the administration of Donald Trump struck a deal to buy Serra Verde, a company based in the state of Goias, and the US Department of Defense announced an investment of US$ 750 million (R$ 3.8 billion).
Lula says any partnerships must ensure processing in Brazil, technology transfer and national control over extraction. "Because it belongs to Brazil, we have to make sure these things become something that makes the Brazilian people dream of the possibility we have to mine, treat and produce important things in this country," he said at a lunch with Alcolumbre and Chamber of Deputies President Hugo Motta. The next step is Lula's: sign the bill into law or veto it. After enactment, the executive has 90 days to regulate the council and set the criteria for reviewing deals.