Government, private sector, and experts discuss whether such promising market really requires any incentives
11/24/2025
As Brazil faces a historic opportunity to transform its reserves of critical minerals, strategic minerals, and rare earths into a high-value industry, the government, the productive sector, and specialists are still debating how to unlock this chain. Some defend the implementation of specific incentives to offset the high costs and long investment-return cycles, while others argue that global scarcity and strong demand already give the country sufficient leverage to negotiate local production without necessarily relying on broad subsidies. The consensus, however, is that Brazil now holds “bargaining power” to carve out space in this market.
This diagnosis comes amid growing recognition that the energy transition and geopolitical shifts have, for the first time, created an environment in which countries possessing these minerals can exercise real leverage over global supply chains. The combination of structurally rising demand and efforts by the U.S. and Europe to reduce dependence on China has opened an unprecedented window for Brazil to use its geological advantages as a platform for industrialization rather than merely supplying raw materials.
Behind the scenes, government officials say that in the case of critical minerals and rare earths, U.S. interest is focused on securing raw materials with no commitment to local value-added stage, something Brazil does not intend to accept. Some insiders also estimate that a more robust national proposal for the sector will only advance after the 2026 electoral cycle. The creation of an incentive policy remains a point of contention.
The interim president of the Brazilian Geological Survey (SGB), Valdir Silveira, says Brazil produces more than 90 mineral goods demanded worldwide but must recognize this window of opportunity and decide what type of mineral industry it wants to develop: extract and export raw materials as is done today; export only what exceeds domestic industry needs; or fully verticalize production.
According to him, the current trend is to sell raw materials to other countries, but he believes the intermediate option is the most suitable for now, as it fosters supply-chain development while generating trade surpluses, jobs, and income.
Starting from this approach, he says, it would later be possible to develop the entire chain and offer finished products. However, he stresses that beyond the materials themselves, Brazil will also need, and is in a position, to negotiate alongside other nations, since most technologies are dominated by foreign countries. “We must use mineral goods as bargaining chips. I supply them, but in return, technology must be brought in for developing the chain. That would be the most appropriate path.”
Echoing this view, Jorge Arbache, a economics professor at the University of Brasília (UnB), also highlights the unprecedented bargaining power of countries that hold these resources. He says Brazil, with strong potential and only 27% of its territory prospected, can condition access to deposits on the gradual addition of value within its borders, reducing reliance on raw-material exports.
“This bargaining power is increasingly visible and will become even more so in the coming years and decades. There is no reason for the government, Congress, and other leaders not to discuss an agenda that is entirely reasonable and far from new,” he told Valor.
According to Arbache, subsidies may accelerate certain processes in some chains but are not always essential, especially for highly attractive minerals. For this reason, such incentives should not be treated generically, he says. The greater the strategic value of the input and the fewer the alternative suppliers, the lower the need for government incentives.
He notes that projects involving critical minerals and rare earths tend to be profitable despite exploration risks, since expectations of strong price appreciation increase potential returns and justify long-term investments. In such cases, investors, and even governments like that of the U.S., are more willing to assume risks and pay premiums to secure access to reserves.
Brazil’s main gap today, according to Arbache, is the lack of a national strategy for mineral policy, one capable of distinguishing critical from strategic minerals and guiding decisions according to national interests. Each supply chain has its own dynamics and requires specific policies. “For example, demand for lithium is projected to grow significantly over the coming years and decades. We need to understand today’s nuances. What we need now is an intelligent, well-informed, medium- and long-term strategy,” he explains.
The debate is also gaining traction in Congress. In the Chamber of Deputies, congressman Arnaldo Jardim (Citizenship of São Paulo) is the rapporteur for a bill authored by deputy Zé Silva (Solidarity of Minas Gerais) that defines criteria for prioritizing minerals. The proposal foresees tax and regulatory incentives to attract investments and creates the Committee on Critical and Strategic Minerals (CMCE). The most sensitive point, which still is under negotiation, involves the chapter on tax incentives, which depends on discussions with the Ministry of Finance.
“We will set clear guidance in the legislation so that Brazil is not merely an exporter of commodities, but develops beneficiation and even transformation—higher stages in the mineral value-added process,” Jardim told Valor.
He says the bill will establish processing levels that scale up support as companies expand their activities domestically. In other words, the greater the value added domestically, the greater the incentive.
By Giordanna Neves and Marlla Sabino — Brasília
Source: Valor International
https://valorinternational.globo.com/