Brazil's New Critical Minerals Framework: Opportunities and Challenges for Foreign Investors

November 2, 2026

By Fádia Tuma Antunes and Felipe Rettore Starling Pereira

1.               Introduction: The Backdrop

Over the last three decades, Chinese actors have largely dominated the critical minerals sector. According to data from the U.S. Geological Survey (the “USGS”), in the rare earth sector alone, the country accounts for over 60% of global production, and holds an even more dominant position in processing and refining.[1] This dominance reflects a combination of large domestic reserves, sustained State support, relatively low production costs, a comparatively permissive regulatory environment, and decades of investment in processing, refining, and downstream manufacturing capacity in an industry that has received limited strategic attention outside of China until recent years.

As critical minerals have become increasingly essential to the global energy transition, advanced technologies, economic security, and national defense capabilities, however, Western governments have –in varying degrees– grown increasingly concerned about their dependence on a single country for the production and processing of these materials, given that this concentration creates significant vulnerabilities to supply chain disruptions, export restrictions, and potential market and pricing distortions.

It is against this backdrop that the USGS estimates that Brazil holds approximately 11 million metric tons of rare earth reserves –the second-largest declared reserves in the world, after China.[2] Brazil’s rare earth potential has been identified across a dozen states, and additional studies in cooperation between the USGS and its Brazilian counterpart (in Portuguese, Serviço Geológico do Brasil) have resumed in 2025.[3] There remains considerable potential for further discoveries as geological mapping and exploration advance.

Despite this substantial resource base, Brazil currently accounts for only a small share of global rare earth production. Its estimated production in 2025 was approximately 2,000 metric tons of rare earth oxides,[4] compared with 270,000 metric tons in China.[5]

Brazil’s substantial critical minerals reserves position the country well to play a key role in the diversification of global critical mineral supply chains, and the significant disparity between its geological potential and current production levels underscore the considerable opportunities for investment and industrial development.

Realizing these opportunities, however, will require investors to understand Brazil's investment climate, regulatory and political risk profile, environmental and social requirements, and broader national policy objectives for the sector. Brazil’s aim is not simply to increase mineral extraction to supply foreign industrial value chains. Rather, the emerging priority is to leverage the country’s mineral resources to develop domestic industrial, technological, and scientific capabilities, and to capture a greater share of the value generated across the critical minerals supply chain.

To advance these objectives, on September 16, 2026, Brazil enacted Law No. 15.506/26, establishing the Brazilian National Policy on Critical and Strategic Minerals (in Portuguese, Política Nacional de Minerais Críticos e Estratégicos, “PNMCE”). The legislation creates a nationwide framework for the exploration, mining, processing, refining, and industrialization of minerals deemed critical or strategic to the country, including rare earths. In addition, it established the Brazilian National Council for the Industrialization of Critical and Strategic Minerals (in Portuguese, Conselho Nacional para Industrialização de Minerais Críticos ou Estratégicos, “CIMCE”)[6] to oversee its implementation, including foreign investments in the sector.

This article briefly highlights key aspects of Brazil’s recently enacted PNMCE and the role of the CIMCE, and examines some relevant considerations, opportunities and risks for investors and other stakeholders in Brazil’s emerging critical minerals sector.

2.               Brazil’s Newly Enacted Policy

Brazil took a crucial step toward developing a domestic critical minerals industry with the enactment of Law No. 15,506/26. The legislation combines greater federal government oversight with substantial incentives for investment. Importantly, it covers the broader value chain –from exploration and mining through processing, refining, and industrialization– and places particular emphasis on increasing domestic value addition, technological development, and environmental and social sustainability.

The newly created CIMCE[7] will establish national priorities, approve strategic projects, help define and periodically update the list of critical and strategic minerals, and oversee foreign investments in the sector.

Projects that may benefit from the incentives provided by the law include those that align Brazil’s strategic objectives and satisfy applicable eligibility requirements, including (a) hiring local workers from affected communities; (b) providing support for local development and social inclusion initiatives; (c) implementing appropriate community engagement measures and environmental and social management plans; and (d) promote domestic value addition.

Some of the main highlights of this framework include:

(i)                  Tax Incentives: the law establishes the Federal Program for the Processing and Refining of Critical Minerals (in Portuguese, Programa Federal de Beneficiamento e Transformação de Minerais Críticos), which provides companies incorporated in Brazil with tax credits of up to 20% of qualifying expenditures incurred in connection with domestic mineral processing, refining, and urban mining activities involving critical and strategic minerals. The program provides for an aggregate maximum of R$5 billion in tax credits between 2030 and 2034, subject to an annual cap of R$1 billion.  

(ii)            The Mineral Activity Guarantee Fund: additionally, the law authorizes the federal government to contribute up to R$ 2 billion to a Mineral Activity Guarantee Fund (in Portuguese, Fundo Garantidor da Atividade Mineral), which is intended to provide guarantees and other risk-mitigation instruments for qualifying projects. The fund is authorized to provide solutions that complement, or operate alongside, financing and investments provided by public or private financial institutions, sovereign wealth fund, multilaterals, and development agencies.

(iii)              Access to Tax-Advantaged Capital Markets Financing: the PNMCE extends Brazil's existing tax-advantaged debenture regimes to qualifying critical and strategic mineral projects. Companies undertaking domestic mineral processing, refining, and urban mining activities, as well as exploration, geological research, deposit evaluation, mining, and mine development activities linked to qualifying downstream investments, may be eligible to raise financing through incentivized debentures under Law No. 12,431/2011 and infrastructure debentures under Law No. 14,801/2024.

The law explicitly prioritizes projects involving mineral concentrates, battery-grade minerals, and minerals processed to grades suitable for permanent magnets. The measure is designed to broaden access to long-term private capital and reduce financing costs, while reinforcing the PNMCE’s broader emphasis on domestic processing and value addition.

(iv)           Priority for Strategic Projects: the law provides that qualifying projects shall be afforded priority consideration in permitting and licensing procedures before competent environmental authorities and the Brazilian Mining Agency (in Portuguese, Agência Nacional de Mineração).

(v)                Research and Development: moreover, the law establishes a National Network for Research, Technological Development and Professional Training in Critical and Strategic Minerals, with the objective of promoting national research and development, technological innovation, specialized technical expertise, workforce training, and technology transfer throughout the critical minerals value chain.

(vi)           Low-carbon Certification: the legislation also creates a framework for a Low-carbon Mineral Certificate, designed to recognize mineral production that satisfies applicable emissions and environmental standards. The certification mechanism is intended to promote sustainable production practices and strengthen Brazil’s position as a supplier of sustainably produced critical minerals.

Importantly, in addition to these incentives, the PNMCE introduces, as part of the CIMCE’s attributions, a screening and approval mechanism for transactions involving critical and strategic mineral assets that may be considered sensitive to Brazil’s national interests.

The Council will have the authority to ratify,[8] or refuse to ratify, the participation of foreign companies in companies falling within the scope of the legislation. This includes sales, mergers, asset transfers, and changes of control, which will require the Council’s prior approval. International contracts, agreements, or partnerships involving the supply of critical and strategic minerals on terms that may affect the country's economic or geopolitical security are likewise subject to the Council's prior approval. Ratification may be granted with or without conditions, and the Council may also find the mechanism inapplicable or refuse approval altogether.

The screening mechanism is intended to safeguard Brazil’s economic and geopolitical security by allowing the government to review foreign participation in strategic mineral assets and international supply arrangements that could affect national interests. More broadly, the measure seeks to preserve Brazilian control over strategically important resources and supply chains, while supporting domestic value addition, technological autonomy, and national industrial development.

For foreign investors, these provisions introduce an additional layer of regulatory scrutiny that should be considered when structuring acquisitions, joint ventures, project financing arrangements, and offtake commitments. In particular, investors should assess whether contemplated transactions may trigger approval requirements and how those requirements could affect transaction timelines, contractual conditions precedent, and the allocation of regulatory risk among the parties.

Although the new framework is already in force, several aspects remain subject to further implementing regulations. Accordingly, the practical application of the PNMCE, including the scope and procedures of the CIMCE's review and approval powers, will be particularly important for investors evaluating projects and transactions in the sector.

3.     Some Considerations on Brazil’s Advantages and Risks

Brazil boasts significant advantages that make it an attractive host for investments in the critical minerals sector, particularly when compared with certain other mineral-rich jurisdictions. The country has a mature mining industry, a well-developed legal framework, a sophisticated judicial system, and extensive experience with foreign investment in mining, infrastructure, and energy. There is currently no established pattern of expropriation of foreign mining investments, and other traditional political risks, such as political violence and armed conflict, are comparatively low.

Brazil also benefits from an advantage that is likely to become increasingly important as consumers, financial institutions, and governments place greater emphasis on the carbon intensity of mineral supply chains: its relatively clean electricity mix.

Critical mineral separation and refining processes can be energy-intensive and environmentally complex. Locating these activities in Brazil could enable certain minerals and intermediate products to achieve a lower carbon footprint than comparable products manufactured in jurisdictions with electricity grids more heavily dependent on fossil fuels. This creates an opportunity to position Brazil not merely as an alternative supplier, but as a supplier of critical minerals with verifiable environmental attributes –an advantage that may be particularly relevant to development finance institutions, electric vehicle manufacturers, and companies subject to supply-chain decarbonization targets.

Notwithstanding these advantages, investors should carefully assess three categories of risk that may be particularly consequential for project development and financing in Brazil: regulatory and policy uncertainty, technological and operational constraints, and environmental and social risks.

The newly enacted framework still requires additional implementing regulations to clarify the scope and practical application of many of its provisions.

Furthermore, changes in public policy may affect project priority and the administration of permitting and licensing procedures by the relevant governmental agencies. More pointedly, while the new framework contemplates a strategic approach and seeks to streamline permitting and licensing for eligible projects, relevant approval processes continue to be distributed among multiple federal, state, and local authorities. Coordination challenges among these authorities are a chronic problem for the sector in Brazil, which can contribute to administrative delays and uncertainty regarding project timelines. It is still unclear how the newly enacted framework will affect this issue in practice. Additionally, political shifts may also affect the approval of strategic transactions and create uncertainty regarding which projects are prioritized. Investors should recognize from the project-development stage that strategic minerals are likely to be increasingly treated as assets of national interest rather than ordinary commodities.

From a technological and operational perspective, China’s longstanding dominance of the rare earth sector has resulted not only in a concentration of processing capacity, but also of technical expertise, specialized technology, and skilled human capital.

While Brazil has significant geological resources and an established mining industry, important gaps remain in areas such as advanced mineral characterization, metallurgical process development, separation and solvent extraction, high-purity refining, and the downstream production of rare earth metals, alloys, and permanent magnets.

Developing these capabilities at commercial scale will require substantial investment in research and development, specialized workforce training, and institutional capacity building –a process that will necessarily require sustained commitments over time. Technology transfer and strategic partnerships with experienced international producers, technology providers, universities, and research institutions will therefore be critical to bridge these gaps and enable Brazil to move from mineral extraction toward higher-value processing and downstream industrial production.

Finally, environmental and social considerations will remain central to the viability of critical minerals projects. Brazil's relatively clean electricity mix, while potentially advantageous from a carbon-emissions perspective, does not eliminate the environmental risks associated with mineral extraction and processing. The development of a Brazilian rare earth supply chain will require particular attention to environmental and social impacts, especially at the beneficiation, separation, and refining stages.

Mining operations may involve significant water consumption, tailings generation, land disturbance, the use of chemicals in processing, and, depending on the mineralogy of the deposit, the management of associated radioactive materials.

Potential social impacts include community displacement, loss of traditional livelihoods, impacts on Indigenous Peoples and cultural heritage, and conflicts resulting from inadequate consultation processes.

In Brazil, these issues are particularly significant given the legacy of the Mariana and Brumadinho disasters and the resulting public sensitivity toward mining activities. Reported local opposition to Serra Verde's operations in Goiás further illustrates the importance of addressing community concerns and maintaining a social license to operate.[9]

Accordingly, community engagement should not be treated merely as a regulatory requirement or a public-relations exercise. It should instead be viewed as an integral component of project development and risk management.

A relatively low carbon footprint does not, in itself, establish environmental compliance or guarantee the support necessary for a project’s long-term success. Projects should incorporate community consultation and participation from the earliest stages; transparent grievance mechanisms; local hiring and workforce development; economic development initiatives benefiting affected communities; rigorous management of water, tailings, and biodiversity; and internationally recognized environmental and social performance standards. Where applicable to the relevant financing institution or project structure, standards such as the IFC Performance Standards, Equator Principles, and OECD due diligence practices can serve not only as safeguards but also as important tools for strengthening a project's bankability, mitigating execution risks, and building the confidence of lenders, investors, and affected communities.

4.     The Takeaway  

Brazil’s critical minerals sector is entering a particularly favorable period. Growing geopolitical demand for diversified supply chains, substantial mineral resources that remain unexplored, and the increasing availability of public and private capital are creating opportunities across the value chain.

For the United States in particular, diversifying critical mineral supply chains has become a matter of economic and national security explicitly prioritized in current U.S. domestic and foreign policy. Consequently, the country has not been shy about moving to secure access to Brazil’s critical mineral resources. This includes by mobilizing capital and financial tools that may not have been otherwise available to similarly situated projects and early-stage exploration activities.[10]

Recent transactions illustrate both the scale of this commitment and the increasingly strategic role of U.S. investments in the sector.

The approximately $2.8 billion combination of USA Rare Earth and Serra Verde, completed in September 2026, has integrated Brazil’s principal commercial rare earth operation into a broader Western mine-to-magnet supply chain.[11] The transaction is complemented by a 15-year offtake arrangement for 100% of Serra Verde’s Phase 1 production, supported by a U.S. government-backed structure capitalized with approximately $1.55 billion, including a $750 million U.S. government investment, a $500 million senior debt commitment, and a forward purchase commitment of at least $300 million over five years.[12]

Other developments are equally worth watching. In October 2026, Lynas Rare Earths announced its proposed acquisition, valued at approximately $672 million, of Meteoric Resources, which would give it access to the Caldeira rare earth project in Minas Gerais.[13] Lynas has indicated that it is considering downstream processing in Brazil and anticipates a significant additional capital expenditure to advance the project. These transactions, together with the continuing development of projects such as Colossus[14] and Ema,[15] will provide important early tests of how Brazil’s new critical minerals framework interacts with foreign investment, technology partnerships, financing, processing commitments, and international offtake arrangements.

Despite this favorable outlook, emerging challenges in the negotiation and implementation of transactions, together with the political sensitivities surrounding foreign participation in the sector, underscore the importance of approaching Brazil as more than an alternative source of raw materials.

Successful projects will require investors to understand both Brazil’s investment climate and the country’s broader policy objectives. Ultimately, Brazil offers a favorable combination of geological potential, institutional stability, and potentially lower-carbon production, but converting those advantages into commercially viable projects will require investors to navigate regulatory complexity, overcome technical capacity constraints, and secure lasting community support.

Footnotes:

[1] U.S. Geological Survey, Mineral Commodity Summaries 2026: Rare Earths 152–53 (2026), https://doi.org/10.3133/mcs2026, (estimating 2025 world rare earth mine production at approximately 390,000 metric tons, of which China accounted for approximately 270,000 metric tons).

[2] U.S. Geological Survey, supra note 1, at 153. Significant revisions were made to Brazil's reserve estimates in the 2026 edition; earlier editions reported reserves of approximately 21 million metric tons.

[3] Serviço Geológico do Brasil, Panorama dos ETR no Brasil (Apr. 27, 2026), https://apex.sgb.gov.br/terras-raras; see also Serviço Geológico do Brasil, Pesquisa de minerais críticos volta a unir Brasil e Estados Unidos (Mar. 11, 2025).

[4] U.S. Geological Survey, supra note 1, at 153. Figures are expressed as rare earth oxide (REO) equivalent.

[5] Id.

[6] Lei No. 15.506, de 16 de setembro de 2026, D.O.U. de 16 de setembro de 2026 (Braz.); Decreto No. 13.118, de 16 de setembro de 2026, art. 1, D.O.U. de 16 de setembro de 2026 (Braz.).

[7] Lei No. 15.506, de 16 de setembro de 2026, art. 13, III (Braz.); Decreto No. 13.118, de 16 de setembro de 2026, arts. 3, 4, 6–7, 10 (Braz.).

[8] Or in the classical translation from Portuguese, to “homologate”; legal term typically applied in civil law traditions meaning to officially approve, confirm, or ratify.

[9] On concerns related to the environmental and social impact of Serra Verde's operations, see Marília da Silva, O greenwashing da mineração de terras raras em Goiás, ((O))eco Jornalismo Ambiental (Jul. 27, 2026), Maquiada de verde, mineração de terras raras impacta territórios  e amplia conflitos pela água em Goiás - ((o))eco.

[10] Exec. Order No. 14,241, 90 Fed. Reg. 13,673 (Mar. 25, 2025); Exec. Order No. 14,272, 90 Fed. Reg. 16,437 (Apr. 18, 2025).

[11] BNamericas, Race for rare earths: USA Rare Earth completes US$2.8bn acquisition of Serra Verde in Brazil (Sept. 8, 2026), Race for rare earths: USA Rare Earth completes US$2.8bn acquisition of Serra Verde in Brazil - BNamericas.

[12] Press Release, USA Rare Earth, Inc. (Aug. 24, 2026), sec.gov/Archives/edgar/data/1970622/000121390026092810/ea030292401ex99-1.htm.

[13] Wall Street Journal, Lynas Rare Earths to Buy Meteoric Resources in $672 Million Deal (Oct. 1, 2026), Lynas Rare Earths to Buy Meteoric Resources in $672 Million Deal - WSJ.

[14] Viridis Mining & Minerals Ltd., Colossus Project, https://viridismining.com.au/projects/colossus/ (last visited Oct. 28, 2026).

[15] Brazilian Critical Minerals Ltd., INCRA Amazonas Issues Land Access Agreement (ASX announcement, Oct. 2026) (Ema ionic clay rare earth project, Amazonas).