By Brazil Stock Guide – Brazil is trying to position itself as more than just a supplier of raw minerals in the global race for lithium, rare earths and other strategic resources.
Finance Minister Dario Durigan said foreign investment in Brazil’s critical minerals sector is welcome, but argued that the industrial processing of those materials should happen domestically, in partnership with Brazilian universities and local industry.
The remarks signal a broader shift in Brasília’s approach to mining policy. Rather than simply expanding extraction, the government is increasingly framing critical minerals as part of a wider industrial and geopolitical strategy tied to energy transition supply chains.
Guarantee fund structure
At the center of the proposal is the creation of the Mineral Activity Guarantee Fund, or FGAM, designed to reduce credit risk and unlock financing for mining, processing and industrial transformation projects tied to strategic minerals.
A bill reported by Congressman Arnaldo Jardim would also allow the government to grant up to R$5 billion in tax credits between 2030 and 2034 to stimulate the sector’s development.
Under the proposal, the federal government could contribute up to R$2 billion to the guarantee fund, while mining and processing companies operating in the sector would also participate as shareholders. According to Valor Econômico, Brazil’s development bank BNDES estimates roughly R$5 billion may be needed to unlock projects currently stalled by financing constraints.
China comparison
Durigan explicitly referenced China’s rare earths strategy as a model. Beijing moved beyond extraction decades ago and built a vertically integrated industrial ecosystem around processing and manufacturing — a structure that now gives China dominant influence across several strategic supply chains.
Brazil is trying to avoid becoming merely another exporter of unprocessed commodities while foreign groups capture the higher-margin industrial stages abroad. That ambition, however, comes with execution risks.
A guarantee fund can lower financing costs and mitigate project risk, but it does not automatically solve structural bottlenecks such as environmental licensing, industrial scale, processing technology, infrastructure and access to long-term buyers.
A broader strategic shift
The most important signal from the proposal may not be the tax incentives themselves, but the change in policy language surrounding mining.
Critical minerals are increasingly being treated not simply as a natural resources issue, but as a national industrial strategy tied to energy security, geopolitical positioning and advanced manufacturing.
For global investors, the message is becoming clearer: Brazil wants foreign capital in critical minerals, but it also wants more of the value chain — and the industrial capacity behind it — to remain inside the country.
Leave a Reply