Brazil & Southern Cone - June 2026

The world wants rare earth minerals and Brazil has the planet’s second-largest reserves of them. While President Luiz Inácio Lula da Silva is eager for foreign investors to help develop a nascent industry and kickstart a sluggish economy, he is adamant it should be on his terms. The leftist leader has repeatedly said that Brazil will not raffle off its raw materials to the highest bidder but instead will seek to maximise value added by processing them domestically. 

Unlike Argentina, Chile, Ecuador, and other countries in the region which rushed to sign rare earths agreements with the US, Lula stuck to Brazil’s long-standing diplomatic tradition of non-alignment, pursuing investments from multiple countries [EB-26-02]. Describing rare earths an issue of national security, he insists that foreign companies not only invest in refining rare earths but also transfer the technology and know-how to do so.

“Anyone is welcome here, provided they understand that Brazil will not relinquish its sovereignty,” Lula said during a public works ceremony in São Paulo in mid-May. “We are going to have to rely on intelligence and science to make a qualitative leap,” he added. He has frequently insisted that he did not want to repeat the country’s long history of exporting unprocessed raw materials such as gold or iron ore. And the president was not alone in taking that stance. On 6 May the lower chamber of Brazil’s congress approved landmark legislation that went a long way to reinforce his discourse.

The bill entitled Política Nacional de Minerais Críticos e Estratégicos was passed by 343 votes to 97, consolidating various prior legislative proposals into a single legislation aimed at boosting support for the critical minerals sector, the first of its kind in Brazilian history.

Although not authored by lawmakers affiliated with the governing coalition, the bill broadly aligns with Lula’s aim of boosting national industry. It proposes rewarding processing rather than extraction volume, providing tax credits of up to 20% on qualifying capital expenditures in domestic mineral transformation. The total fiscal incentives would amount to R$5bn (US$970m) over a five-year period. A proposed government-backed fund with up to R$2bn in state contributions would also help promote research and development as well as entrepreneurial endeavours, as determined by a new national council for critical and strategic minerals industrialisation.

The downside of pursuing a more nationalistic mining or industrial policy is that it may attract less foreign capital and take longer to complete the finished product. For example, in the area of military technology, it took Brazil over a decade to build a French-designed attack submarine domestically, rather than just buying a completed product from a French manufacturer. But the upside is that Brazil does have the know-how and infrastructure to produce high-value finished goods, as shown by the first Brazilian-made Gripen supersonic fighter jets unveiled in March this year. 

Keenly aware of the risks of extreme resource nationalism, Lula stopped short of an even more statist approach on critical minerals. In a cabinet meeting discussing the government’s strategy, Lula decided to reject calls backed by some members of the ruling left-wing Partido dos Trabalhadores (PT) to create a new state-run rare earths mining company.

Serra Verde

On 20 April Oklahoma-based USA Rare Earth announced a US$2.8bn deal to acquire Serra Verde, the operator of Brazil’s only mine that currently produces all four critical magnetic rare earth metals. For critics, the transaction represented precisely what Lula’s mineral sovereignty doctrine aims to prevent: a strategic asset moving under foreign control, with its entire output contractually committed abroad, and without significant development for Brazil’s industrial sector. In April and May left-wing parties Partido Socialismo e Liberdade (PSOL) and Rede Sustentabilidade filed petitions at Brazil’s supreme court (STF) to block the acquisition. On 11 May Brazil’s antitrust regulator (Cade) also opened an investigation to assess the deal.