In the regulation of rare earth elements, there is one point on which the Government is adamant and unwilling to budge.

Brasilia — After the mining sector heavily criticized the National Council for the Industrialization of Critical and Strategic Minerals (CIMCE), a mechanism foreseen in the bill regulating the exploration of these minerals, the government decided to stand firm in its defense of the council. Behind the scenes, it has been reacting and stating that it will not relinquish this instrument to control the access of foreign companies to the rare earth sector, NeoFeed has learned.

The mining sector began to push for changes to the text of the rapporteur, Deputy Arnaldo Jardim (Cidadania-SP), as soon as the bill was approved in the Chamber's plenary session in May and reached the Senate.

The Executive branch, for its part, is unwilling to change the Council, which was an initiative negotiated between various ministries, such as Mines and Energy and Planning, in conjunction with the rapporteur. This was even one of the topics discussed at the interministerial meeting with President Luiz Inácio Lula da Silva (PT) last Friday, July 10th.

The meeting with several ministers served to harden the government's position in favor of controlling critical minerals produced and processed within the national territory, despite the bill not progressing in the Senate —there isn't even a senator appointed as rapporteur yet—according to sources who participated in the meeting.

This Monday, July 13th, Lula once again defended the council, this time during a visit to the Institute of Aeronautics and Space in São José dos Campos (SP). "We will not allow what happened with our gold, our silver, our iron ore to happen again. Now, whoever wants to explore critical minerals and rare earths will have to do so in the country because we don't want to be an exporter of raw materials."

This Council was proposed by the Chamber as a kind of "antidote to Terrabrás ," a state-owned company that the PT (Workers' Party) fiercely defended in order to control the production, exploration, and processing of critical minerals in Brazil.

According to the proposal approved by the Chamber, CIMCE will have power over decisions made by mining companies, such as corporate restructuring and mergers and acquisitions.

If a multinational mining company were to acquire a stake in a particular company to operate in the rare earth sector, for example, this decision would have to be approved by the Council. However, the mining sector fears that this new body will concentrate too much power and exert excessive control over the market, creating bureaucracy and even hindering investments in the area. The National Mining Agency (ANM), the regulatory agency for the sector, has also criticized the Council, arguing that it already has the authority to oversee the sector.

Initially, Representative Jardim had proposed that the Council require "prior approval" for each critical mineral production project. However, after resistance from business entities, law firms, and even the government, he replaced the term with "approval" in the final version of his report, as it was ultimately approved by the Chamber.

Even so, the business community remains concerned about the potentially excessive power that could be conferred upon the Council. But the government, in turn, believes that this body is an important legal instrument to guarantee national sovereignty, especially at a time when Brazil is receiving overtures from the United States for a possible partnership in the production of critical minerals.

The Trump administration is waging a geopolitical battle with China, which holds the largest deposits of these minerals and the production technology. And it wants to involve Brazil in this strategic race over these critical minerals.

On the other hand, the Brazilian government has been signaling that it needs to take a stand in favor of rare earth processing on Brazilian soil, to prevent the majority of this production from being destined for exports. This strengthened stance even came days before Washington decided whether or not to implement the new round of tariffs announced by Trump — the American government is expected to give Brazil an answer this Wednesday, July 15th.

According to Congressman Jardim, who has been following the issue closely with the government, the Presidential Palace has "raised its tone" regarding the Senate, in a clear sign of pressure to get the bill moving through there as well.

“The business community wanted to weaken the committee. But the government didn’t give in to the radical wing of the PT and helped to balance things out,” the congressman told NeoFeed . “The government wants to implement the measures in our report: guarantee fund, innovation policy, and benefits in Brazil.”

Although the process is currently stalled in the Senate, Jardim says he hopes the text can be voted on after the parliamentary recess – which begins this weekend – even before the elections.

Rare Earth Bill

The bill, submitted in 2024 by Congressman Zé Silva (União-MG), establishes the National Policy for Critical Minerals. The proposal regulates this exploration in Brazil, creating incentives and promoting the production, processing, and transformation of these minerals within the national territory.

The text approved in the Chamber's plenary session, based on Arnaldo Jardim's report, proposes specific environmental licensing for critical minerals, tax benefits, and the creation of a guarantee fund of R$ 5 billion (R$ 2 billion from the government alone) to finance projects and investments in this type of mining. It also provides for income tax exemption on the use of trademarks, patents, and technological licenses.

The proposal also stipulates that companies in the critical minerals sector in Brazil commit to technology transfer. A 0.5% tax on mining companies' revenue, to be reinvested in innovation and technology, was also established.