Brazil's Senate on Wednesday (September 2) approved a bill creating the National Policy for Critical and Strategic Minerals, a legal framework for rare earths and other minerals key to batteries, electronics and defense. The bill now goes to President Luiz Inácio Lula da Silva for signature or veto.
The measure (PL 2.780/2024) was introduced by lower house lawmaker Zé Silva of the Solidariedade party and guided through the Senate by its rapporteur, Senator Eduardo Braga of the MDB, the lawmaker who reviews and presents a bill for a vote. It passed with no substantive changes, so it will not return to the Chamber of Deputies.
The policy provides up to R$ 7 billion in government incentives, according to the Senate's official news agency. According to G1, the package includes R$ 5 billion in tax credits for mining companies and a guarantee fund with up to R$ 2 billion in federal money. The goal, G1 reports, is to stop Brazil from remaining a raw material exporter and to push companies to process minerals inside the country.
The minerals covered include rare earths, a group of 17 elements used in smartphones, drones and wind power equipment, plus lithium, used in batteries for phones and electric cars, and niobium, used in strong metal alloys and aerospace products. Brazil holds the world's second largest rare earths reserve, behind only China, according to G1.
"Critical minerals have become the backbone of other productive chains, and their rupture or shortage can cause unwanted and significant effects in other relevant national sectors"
rapporteur Eduardo Braga said during the floor debate. The bill was on the priority list set by Senate President Davi Alcolumbre together with Lula and Chamber President Hugo Motta.
Rules for companies
Under the new rules, companies involved in exploration, mining, processing or transformation must direct 0.2% of gross operating revenue to the Mineral Activity Guarantee Fund (FGAM) for six years, plus another 0.3% to research, development and innovation projects. After that period, the mandatory fund share can be redirected to research, raising the total to 0.5%. The bill also adds mineral prospecting and research to the projects eligible for incentive debentures, a financing tool already used in energy, transport and sanitation.
"Today, research and technology, mainly when you think about applications, are a risky investment. They need this support so they can develop the technology", André Pimenta, coordinator of the Rare Earths Laboratory at FIEMG, the industry federation of Minas Gerais state, told Jornal Nacional.
State control and industry reaction
The bill also creates a national council charged with approving mergers, acquisitions, foreign capital entry and other market moves. Most of its members will come from the federal government, which worries mining industry representatives, who fear course changes in long term projects, according to G1.
"It is very important for us, as a country, to find the balance that means how we guarantee safety for people, safety for the country, but also guarantee the continuity of these financing flows, which remain the sector's great challenge"
said Pablo Cesário, president of the Brazilian Mining Institute (Ibram). Senator Marcos Pontes (PL-SP) praised the vote: "It will help many sectors and mainly generate invoices, jobs, income and development".
The bill now sits with the presidency. Lula can sign it into law, in full or in part, or veto it. According to the Senate news agency, the private research funds created by the law still depend on regulation.