The National Policy on Critical and Strategic Minerals, the sector’s main focus, faces an uncertain legislative path

There is concern that political maneuvering could ultimately create legal uncertainty capable of stalling investments, which in the mining sector are long-term and inherently high-risk.

The transition to a low-carbon economy and the global race to secure supplies of critical and strategic minerals have highlighted the need for Brazil to update its outdated and complex mining laws and regulations. The issue currently attracting the greatest attention from industry stakeholders is the proposed National Policy on Critical and Strategic Minerals (PNMCE), recently approved by the Chamber of Deputies and now under consideration in the Senate (Bill No. 2,780/24).

While there is broad consensus on the need to modernize the regulatory framework, considering that the sector still largely operates under the 1967 Mining Code and a patchwork of scattered regulations, there is concern that the new policy could create legal uncertainty capable of discouraging investment, particularly in a sector characterized by long-term, high-risk projects.

“Mining in Brazil has the particular characteristic of depending primarily on foreign investment. For that reason, the policy should take into account mechanisms to preserve the attractiveness of our market. We hope a middle ground can be found,” says Pablo Cesário, Acting CEO of the Brazilian Mining Institute (Ibram).

The substitute text for Bill No. 2,780/24, which establishes the PNMCE, consolidates various proposals presented to the Chamber of Deputies over recent years. It was approved by lawmakers in May with several provisions that, in the view of industry participants, may have adverse effects. One of the most significant is the proposal to create a committee, composed primarily of Executive Branch appointees, with authority to approve corporate transactions involving Brazilian or foreign mining companies.

Industry stakeholders argue that this provision could discourage investment by reducing predictability. Foreign investors, in particular, would face the additional risk that their exit strategy could be blocked by an Executive Branch decision based on unclear criteria. From this perspective, granting approval powers to the committee would be detrimental to the market because, unlike other major global mineral producers such as Canada and Australia, Brazil lacks sufficient private domestic capital to finance the lengthy and capital-intensive mineral production chain.

A different view holds that the committee would provide the government with greater oversight of the political implications of transactions such as the recent acquisition of the Serra Verde rare earth mine in Goiás by US Rare Earth, a company partially owned by the U.S. government. In this sense, what is essentially a business transaction could become a tool in broader geopolitical disputes. Serra Verde is currently the only rare earth mine in operation in Brazil, although four other projects remain in the exploration phase, which precedes extraction and involves geological surveys and resource assessment. Moreover, as mining has increasingly become a geopolitical issue, other countries have also implemented oversight mechanisms for critical and strategic mineral projects.

Another source of concern regarding the PNMCE is the emphasis placed on mineral processing. Industry participants argue that incentives are being directed toward the wrong end of the value chain. Brazil still requires significant development in the earlier stages of mining activity, since processing can only occur after mineral exploration, mine development, and mineral extraction, all of which continue to demand substantial investment.

“The key question is whether it makes sense to concentrate incentives on the final link of the chain rather than placing greater emphasis on exploration,” says Oswaldo Dalla Torre, partner in the mining practice at TozziniFreire.

“The bill fails to address production concerns, even though Brazil currently lacks mechanisms to ensure greater production capacity. The impression is that it seeks to create a refining market by legislative decree,” says Adriano Drummond, partner at Mattos Filho.

Despite its approval by the Chamber of Deputies, the PNMCE may still be far from taking effect. At the same time that the Senate began considering the substitute text to Bill No. 2,780/2024, it also introduced another proposal, Bill No. 4,443/2025, sponsored by Senator Renan Calheiros (MDB-AL), with a similar structure and purpose. The bill is currently under review by the Senate Infrastructure Services Committee.

While the bill originating in the Chamber awaits a decision by Senate President Davi Alcolumbre (União Brasil-AP) on whether to send it to the Senate floor, with no deadline established, the Senate-sponsored proposal could move ahead more quickly because it only requires committee approval before being submitted to the Chamber of Deputies.

In theory, the Senate bill is considered more favorable to the mining industry because it does not create a committee with broad powers. Instead, Bill No. 4,443/2025 establishes Mineral Transformation Processing Zones (ZPTMs), designated areas intended to promote greater integration and densification of the mining value chain. These zones would enjoy benefits such as expedited environmental licensing for strategic projects covered by Law No. 15,190/2025, Brazil’s new environmental licensing law.

The legislative impasse makes it clear that efforts to modernize Brazil’s mining regulatory framework have become entangled in Brasília’s political disputes.

“The political factor is an element of uncertainty in this scenario and may divert the attention of long-term investors,” comments Christiano Rehder, partner in the mining practice at Lefosse.

Notably, the Senate bill modifies one of the most controversial aspects of the version approved by the Chamber. It abandons the concept of “approval” within the Executive Branch committee’s powers and instead adopts the concepts of registration and monitoring of corporate transactions involving mining companies. This change could help ease foreign investors’ concerns by eliminating the possibility that transactions might be vetoed through the committee’s approval authority.

What remains clear is that the ongoing uncertainty surrounding the PNMCE and the competing bills before Congress is fueling the legal uncertainty that threatens to drive away the capital needed to finance a significant portion of Brazil’s mining activity. This concern is compounded by environmental regulation.

Unlike other industries, which can potentially relocate operations, mining is subject to what is known as “location rigidity.” Companies do not choose where to operate; they must develop projects where nature has deposited mineral resources. Quite often, these deposits are located in areas subject to environmental protection or inhabited by traditional communities. As a result, mining regulation inevitably intersects with environmental and social legislation. Licensing procedures are therefore complex and involve multiple government agencies.

On the environmental front, efforts are focused on enabling faster licensing procedures for mining projects. Mining activities could qualify as strategic projects under Brazil’s new Environmental Licensing Law (Law No. 15,190/2025). Article 24 of the law requires competent authorities to prioritize environmental license applications in such cases. Nevertheless, concerns remain regarding the lack of budgetary resources and personnel necessary to ensure that the law’s provisions are effectively implemented.

Even the longstanding debate over foreign ownership of land must remain on the mining industry’s radar, according to Ludmila Braga, partner in the real estate transactions and investments practice at Tauil & Chequer.

“Given the location rigidity inherent to mining activities, the issue of foreign land acquisitions is one that this industry should monitor closely, even though the legislation does not specifically address mining,” she notes.

Braga points out that the debate stems from multiple interpretations of Law No. 5,709/1971, particularly following a 2010 opinion issued by Brazil’s Attorney General’s Office (AGU). After years of legal uncertainty, the matter reached the Supreme Federal Court (STF), which reaffirmed the validity of the law, prohibiting foreign companies from acquiring or using rural properties in Brazil.

Apart from the bills currently under discussion in Congress, the mining sector is also awaiting a decree from the Ministry of Mines and Energy governing mining activities in natural cavities (caves). According to industry representatives, clearer and more detailed rules regarding activities in these locations are essential to enhancing legal certainty. The expectation is that the decree will reduce the scope for divergent interpretations by authorities responsible for issuing permits, thereby improving the feasibility and implementation of mining projects.