Brazil will fund its critical minerals policy by charging mining companies 0.5% of their own revenue

Congress approved the National Policy on Critical and Strategic Minerals, which allocates R$7 billion in incentives and creates a new governance council tied to the Presidency. The bill now moves to presidential sanction.

Brazil's Senate approved Bill 2,780/2024 on Wednesday, September 2, establishing the National Policy on Critical and Strategic Minerals. The text, already passed by the Chamber of Deputies without substantive changes, goes straight to presidential sanction without needing to return to its house of origin. The policy creates the National Council for the Industrialization of Critical and Strategic Minerals (Cimce), tied to the Presidency of the Republic and responsible for setting guidelines and approving projects, and allocates R$7 billion in incentives: R$2 billion for a Mining Activity Guarantee Fund (FGAM) and R$5 billion in tax credits, over five years, for mineral processing and transformation projects within national territory.

The law separates two concepts that are often treated as synonyms but aren't. A "critical" mineral is one carrying a real risk of supply shortage that would affect priority sectors, such as the energy transition or food security — the urgency comes from the fragility of the supply chain, not from the size of Brazil's own reserves. A "strategic" mineral is one where Brazil already holds large reserves and technological relevance, especially tied to emissions reduction — here the logic is about competitive advantage to exploit, not vulnerability to fix. Separating the two categories keeps the policy from treating the same way an input the country depends on from others and one it could become a global supplier of — Brazilian rare earths, for instance, fall into that second basket, since the country holds the world's second-largest reserve, behind only China. The financing model also breaks with the common pattern of industrial policy funded solely by the public budget: in the first six years, mining companies producing critical minerals will themselves contribute 0.2% of gross revenue to the guarantee fund plus another 0.3% toward research, development and technological innovation — 0.5% in total, a compliance cost that now has to factor into any new project in the sector. There's also a pressure mechanism rarely seen in Brazilian mining law: mineral exploration now carries a maximum, non-renewable ten-year deadline, after which the mining right is automatically extinguished if the company hasn't filed a final report — a "use it or lose it" rule meant to speed up investment decisions on areas currently stalled in the exploration phase. The point to watch is governance: experts are already questioning whether the new Cimce's approval and oversight powers, tied to the Presidency, will overlap with the authority of the National Mining Agency (ANM), the agency that currently regulates the sector — an institutional tension that only the law's later regulation will resolve in practice.

Brazil formally enters the global race for critical minerals industrial policy — a move the United States, the European Union and Australia have already made in recent years, each with its own incentive and governance design. Holding one of the world's largest rare earth reserves doesn't automatically translate into local processing and beneficiation capacity, which is where the chain's added value sits — and that's exactly the gap the R$5 billion in tax credits is meant to address. For companies in the sector, the law changes the financial equation of new projects: on one side, access to a guarantee fund that lowers the cost of capital; on the other, a mandatory revenue contribution and a tighter clock to turn mining rights into actual production. And for anyone studying public policy and regulation, the Cimce-versus-ANM case is a reminder that creating a new governance body alongside an existing regulatory agency solves a short-term political priority problem but creates an institutional coordination problem that only shows up later, at implementation time.