On 16 September 2026, President Luiz Inácio Lula da Silva signed Law No. 15,506, creating Brazil’s National Policy on Critical and Strategic Minerals and a council attached to the presidency to coordinate it. This was barely two weeks after the American company, USA Rare Earth, completed its combination with Serra Verde, which operated Brazil’s sole large-scale rare-earth mine. The deal had been made public as a valuation of $2.8 billion. The timing illustrates the question the law is meant to address. The Ministry of Finance says it aims to reduce dependence on raw material exports by encouraging processing and industrial production in Brazil. The country has substantial mineral resources but far less capacity in some intermediate stages of industry. The law offers a framework for changing that. Whether it works will depend on regulations, public funding, and investment decisions that have yet to be made.
Owning minerals is not the same as capturing value.
Rare earths used in permanent magnets in electric cars and wind turbines provide a good example. According to the United States Geological Survey, Brazil has an estimated 21 million tonnes of rare earth reserves, second only to China with 44 million tonnes. Still, it extracted only 2,000 tonnes in 2025, which is about 0.5% of the world’s supply. Serra Verde mines a mixed rare earth carbonate from its Goiás mine. This material requires further separation before it can be used for magnet manufacturing. Another company, Aclara, plans to process Brazilian feedstock in Louisiana.
This processing stage, often called the midstream, is important to supply security. As cited by the International Energy Agency, “restrictions imposed by China on the exports of seven heavy rare earth elements in April 2025 have resulted in some automakers having to reduce or cease production.” In addition, this source also reports that prices of dysprosium and terbium were approximately five times higher in Europe than in China.
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The problem extends across the region. The Economic Commission for Latin America and the Caribbean found that 62 percent of the region’s critical mineral exports in 2019–2023 were unprocessed or only lightly refined. The energy agency estimates that Latin America refines about one-fifth of its mined output of key energy minerals, except for lithium. Brazil has shown that it can export a processed mineral product: it supplies about 93 percent of global niobium mine output and exported 92,000 tonnes of ferroniobium in 2024, according to the Geological Survey. The new law also concerns domestic needs. Fertilizer products are among those eligible for support, while Brazil imports more than 80 percent of the fertilizers it uses.
What the law provides and what it still promises
The law’s economic logic is that new processing plants face substantial financing, technology, and market risks. The energy agency estimates that refining projects outside dominant supplier countries cost between 20 per cent and more than 150 per cent more to build than comparable projects in those countries, with operating costs around 50 per cent higher on average. Brazil’s law tries to reduce financing barriers, encourage technical capability, and give the state oversight of strategic mineral assets.
Some institutional provisions are already in place. Decree No. 13,118, issued alongside the law, sets out the council’s structure and separates broad policy decisions from decisions on individual cases. The law and decree provide for screening of changes of control, significant foreign participation, and certain international supply agreements. The council can approve, condition, or reject transactions within that mechanism, but detailed screening criteria and procedures remain to be defined. The law also limits exploration authorizations in covered areas to ten years and provides a route for priority projects to be considered for special environmental licensing under the 2025 licensing law. It creates a project register and a voluntary low-carbon mineral certificate, both of which further implementation.
The financial measures are largely prospective. Tax credits of up to 20 percent of eligible processing expenditure are subject to an annual ceiling of R$1 billion from 2030 to 2034. The amount must be provided for in annual budget proposals, and projects must compete for support; the rate depends on the value they add. A guarantee fund is authorized with a possible federal contribution of up to R$2 billion, subject to budget provision. For the first six years after implementing rules take effect, covered firms must allocate at least 0.3 percent of relevant revenue to research and 0.2 percent to the fund. The list of covered minerals, export-linked value-addition requirements, and several eligibility rules are still awaiting regulation. These figures are ceilings and future obligations, not funds already distributed to plants.
The scale of the challenge is considerable. In 2025, the Brazilian Development Bank and the federal innovation agency Finep selected 56 strategic-minerals project proposals representing proposed investments of R$45.8 billion. This is evidence of interest, not a list of projects approved for the new tax credit. Eligibility and actual claims cannot be calculated from that headline investment figure.
The constraints money alone will not fix
Technology is a major obstacle. The energy agency notes that separation and magnet production depend on specialized equipment and expertise concentrated in a few countries. One important magnet-making process has only one equipment supplier outside China. An industry magnet center in Minas Gerais received its first 20-kilogram batch of Brazilian rare earth material in February 2026. That is a step in domestic research, but it does not amount to commercial processing capacity.
In Brazil, electricity stands out as one factor because 86.8 percent of its electricity supply in 2025 came from renewable sources. This would enable processors to be able to offer lower-emission products if the certification proves that the emissions are low throughout the production process. High costs of financing, infrastructure deficits, technology requirements, and skills shortages are challenges.
The issue of predictability is another challenge. While predictability is a principle under the law, there must be certainty on which transactions will be subject to review and on what basis and how much time is required. If conditional approval is allowed in the certification process, then this can help Brazil negotiate investments in local processing facilities.
Social legitimacy matters too. The tailings-dam collapse at Mariana in 2015 resulted in a major reparations agreement. In the law on minerals, preference is given to those projects that use local labor and keep dialogue with the concerned people without overlooking free, prior, and informed consultations wherever required. However, the council does not have a reserved seat for the affected community in the voting process. If there is a need for rapid approval of projects, then consultations are essential.
Foreign capital was screened but also needed.
Foreign investments have become an attraction for Brazil due to the global demand. The energy body reports that developed countries invested approximately US$65 billion in public finances in crucial minerals in 2025 compared to US$14 billion in 2023. Serra Verde is an example of the investment that can help in securing a supply of rare earths. Serra Verde received US$565 million in financing from the United States International Development Finance Corporation and entered into a 15-year deal on its first production guaranteeing minimum price floors for some rare earth elements. This does not alone help in locating separation and magnet production in Brazil.
The screening power therefore matters. Used without clear standards, it could deter investment Brazil needs. Used with transparent and feasible conditions, it could encourage some later production stages to be located in Brazil. The combined USA Rare Earth group has assets in several countries. The relevant test for Brazilian industrial policy is where new processing capacity, skills, and associated economic activity will actually be built.
Chile is a case in point. Chile’s development organization made preferential lithium available to lure downstream operations, but BYD and Tsingshan abandoned planned investments in 2025 owing to price falls and delays. The case does not predict what will happen in Brazil. It does show, however, that construction of factories hinges on market conditions and permitting, as well as incentives. Conditions can relate to domestic availability under Brazilian legislation, but they need to be achievable to have any chance of factories operating.
What success would look like
It is too early to evaluate the law in terms of its industrial impact. In 2030, an indicator of success will be the construction and operation of the Brazilian facility for processing a significant amount of domestic rare earths. Prior signs will be the establishment of the council according to the terms set in the law – in 90 days, publication of criteria and deadlines for decisions, budget allocation for financial instruments, and publication of the beneficiaries of the first tax credits. A firm decision on building a separation facility will carry more weight than a mere commitment. The trade statistics will later show whether the separated or only carbonate products are being exported from Brazil.
Brazil now has legal tools to seek more than mineral extraction. Whether they create an industry will depend on careful project selection, predictable decisions, technical capability, and agreements that make processing in Brazil commercially viable.
