Op-Ed: Brazil’s critical minerals push comes with a catch

Brazil is revving up its ambitions to play a bigger part in the global critical minerals market. However, the new law passed by Congress may be judged on whether it can balance national control with the certainty needed to attract mining investment. The Senate approved Bill No. 2,780/2024 on September 2, which establishes the National Policy on Critical and Strategic Minerals.

The bill, which has already cleared the House of Representatives, is now awaiting the President's signature or veto. This move comes at a crucial time, as countries worldwide are vying for stable supplies of minerals essential for clean energy, advanced technologies, and defense. Brazil has a natural advantage, given its geological potential, which could help it become more than just a raw material producer and a significant player in global mineral supply chains.

The legislation seeks to grant the federal government a more significant role in determining how critical and strategic minerals are developed, financed, and transferred. This includes a new National Council for the Industrialization of Critical and Strategic Minerals, which would set policies, classify minerals, identify priority projects, and create a national plan.

This council would have up to 20 members, with most seats held by the federal government. However, a key aspect for investors is the requirement for government approval, or homologação, for specific transactions involving these minerals. This includes changes in control of companies with relevant mineral rights, acquisitions by foreign entities, certain transfers or encumbrances of mineral rights, access to important strategic geological information, and supply contracts that could impact Brazil's security.

While there is a legitimate reason to scrutinize assets that may be vital to national security and economic development, the challenge lies in balancing government oversight with the need for predictable investment environments.