Senate approves National Policy on Critical and Strategic Minerals; bill advances to presidential sanction

The Federal Senate approved Bill No. 2,780/2024, which establishes the National Policy on Critical and Strategic Minerals (“PNMCE”), creates the National Council for the Industrialization of Critical and Strategic Minerals (“CIMCE”), and establishes a set of instruments aimed at promoting mineral exploration, mining, beneficiation, mineral processing, and the industrialization of minerals considered critical and strategic for the national economy.

In a global scenario of increasing competition for minerals essential to the energy transition, high-tech industry, and national security, the legislative proposal was driven by the objective of positioning Brazil as a strategic supplier of mineral inputs and stimulating value addition within the national territory. However, some matters retained in the wording submitted for presidential consideration have been met with reservations and concern by the sector.

Among the main measures provided for in the bill, the granting of tax, financial, credit, and regulatory incentives to projects considered a priority stands out. The bill also authorizes the creation of the Mineral Activity Guarantee Fund (“FGAM”), with potential assets of up to BRL 2 billion, intended to provide guarantees to projects that fall within the scope of the policy. The bill also establishes the Federal Program for the Processing and Transformation of Critical and Strategic Minerals (“PFMCE”), which provides for the granting of tax credits to projects for processing, mineral transformation, and urban mining, for a total amount that could reach BRL 5 billion between 2030 and 2034.

Another relevant aspect is the promotion of the industrialization of Brazilian mineral production. The bill prioritizes projects that promote mineral processing and transformation stages in the country, especially those related to the production of inputs for batteries, fertilizers, energy storage systems, permanent magnets, and other technologies associated with the energy transition and the decarbonization of the economy.

In addition, the bill grants priority treatment to projects falling under the PNMCE. Among the established guidelines are the prioritization of environmental licensing processes and the priority review of projects before the National Mining Agency (“ANM”), the Ministry of Mines and Energy (“MME”), and other relevant public agencies.

At the institutional level, the bill establishes the National Registry of Critical and Strategic Mineral Projects (“CNPMCE”), and registration therein will be a requirement for access to the development instruments provided for in the policy. Projects must be qualified by the CIMCE, an agency linked to the Presidency of the Republic, which will play a central role in the governance of the sector, including the definition of minerals classified as critical and strategic and the selection of priority projects.

The forthcoming legislation also provides for the creation of a national traceability system for critical and strategic minerals, aimed at ensuring the lawful origin of products and socio-environmental, regulatory, and fiscal compliance throughout the entire production chain. Information subject to traceability will include data related to the origin of the ore, environmental licensing, and mining rights, as well as the mandatory registration of all transactions and participants involved in the production chain to ensure auditability.

Although some changes address the sector’s specific needs, other issues raise concerns about potential effects on attracting investment.

From a regulatory perspective, the bill grants the Federal Government powers related to the screening and ratification of certain transactions involving assets considered strategic. Among these operations, the following stand out:

• Changes in corporate control (direct and indirect) of companies holding mining rights subject to the policy;
• Transactions involving a relevant stake or significant influence (without any defined quantitative or qualitative parameters) by foreign investors in companies holding mining rights; and
• International contracts, agreements, or partnerships involving the supply of critical and strategic minerals under conditions that affect the country’s economic or geopolitical security, without any clear parameters.

The need to create a policy for critical and strategic minerals has long been recognized. However, given its significant impact on the sector’s development, it will be necessary to assess whether certain matters still require more detail and attention to ensure the desired benefits are effectively achieved.

The bill has been submitted for presidential sanction.

Read Bill No. 2780/2024

Demarest’s Mining team remains available to analyze the impacts of the new policy and assist companies in the mining sector in assessing regulatory risks and opportunities.