Lula’s Brazil rare earths policy: investment and supply-chain notes for miners
Reviewed by Tom Sullivan
First reported on MINING.com
30 Second Briefing
Lula’s narrow victory over Flávio Bolsonaro, securing a fourth term from 5 January 2027, cements Brazil’s new critical minerals policy and tighter state oversight of its 21 Mt of rare earth reserves, the world’s second-largest after China. Foreign firms already account for 42% of 2,727 rare earth exploration applications lodged with the National Mining Agency, while USA Rare Earth’s acquisition of Serra Verde and planned Lynas processing capacity signal growing US and Australian exposure. From 2030–2034, tax credits of up to 20% on processing and refining spend, capped at 1 billion reais a year, aim to pull beneficiation and separation onshore, but investors face more screening of ownership changes and supply agreements.
Technical Brief
- Brazil’s National Mining Agency recorded 2,727 rare earth exploration applications to June, 42% foreign-owned.
- Over 86% of those rare earth applications were lodged in just the last three years.
- USA Rare Earth (Nasdaq: USAR) now owns Serra Verde, Brazil’s only commercial rare earth producer; the US government holds 10%.
- Critical minerals policy extends screening to changes in corporate control and cross-border supply agreements for “strategic” assets.
- Tax credits cover “processing, transformation and urban mining” spend, but only for projects individually approved by government.
- Annual tax credit support is capped at 1 billion reais from 2030–2034, constraining aggregate qualifying capex.
- Lula’s limited congressional support is flagged as a practical brake on more aggressive resource-nationalist measures.
- Analysts see project economics hinging on balancing tighter screening with the foreign capital and technical know‑how Brazil still needs.
Our Take
Brazil’s 21 million tonnes of rare earth reserves sit against a backdrop where GEM Mining Consulting’s Volume Scarcity Index flags rare earths and rare earth magnets as structurally tight by 2035, suggesting Lula-era incentives could make Brazilian projects central to closing that gap.
The tax-credit cap of 1 billion reais per year for processing and urban mining is modest relative to Brazil’s roughly $2.6 trillion GDP, implying that projects like those pursued by USA Rare Earth and Serra Verde will likely need substantial private or foreign capital beyond federal support.
With foreign-owned firms already behind 42% of Brazil’s rare earth exploration applications and more than 86% of recent filings, the pattern our database shows in other critical minerals (copper, lithium, graphite) suggests Brasília may eventually tighten local-content or processing-onshore requirements to retain more value in-country.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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