Brazil’s Congress has approved a government-backed bill establishing a national policy for critical minerals, as the country looks to accelerate investment in its vast resources.
The legislation establishes the National Policy for Critical and Strategic Minerals (PNMCE), designed to bolster the supply chain of minerals considered essential to industries including energy, automotive, and defence.
Amongst the key measures is the creation of a mineral guarantee fund totalling 7 billion reais ($1.9 billion). This includes an initial contribution of 2 billion reais for activities linked to mineral production, plus another 5 billion in tax credits for companies processing these minerals locally.
The bill has already passed the Chamber of Deputies and now heads to President Luiz Inácio Lula da Silva for approval, with no further review by lawmakers required.
New funding and investment incentives
Under the PNMCE, companies involved in the exploration, extraction, treatment, and transformation of critical and strategic minerals will be required to contribute 0.2% of their gross operating revenue to the mineral guarantee fund for six years.
Companies will also be required to allocate another 0.3% of gross operating revenue towards research and development (R&D).
After the six-year period, the 0.2% contribution to the guarantee fund may instead be redirected towards R&D, bringing the potential total allocation to 0.5%.
Companies may be able to meet their R&D obligations either through the guarantee fund or a private fund supporting research in the sector.
The policy also makes mining exploration projects eligible for so-called incentivised bonds, fixed-income instruments issued by Brazilian companies to finance priority infrastructure projects.
Government to define critical minerals
The legislation also establishes a federal council responsible for determining which commodities qualify as critical and strategic minerals.
The framework provides greater legal clarity around minerals including nickel, lithium, and rare earth elements, which are increasingly important to global energy and technology supply chains.
The new policy comes as Brazil seeks to capitalise on one of the world’s largest endowments of critical minerals.
Despite relatively modest production, Brazil holds the world’s second-largest rare earth reserves behind China.
According to the US Geological Survey, Brazil has an estimated 21 million tonnes of rare earth reserves, compared with China’s 44 million tonnes.
Write to Jackson Chen at Mining.com.au
Image: Pixabay
