Brazil tightens control over critical mineral deals

President Lula signed a law giving a new presidential council authority to approve or block foreign acquisitions, mining rights transfers, and international contracts involving critical and strategic minerals. The law also offers tax credits worth up to 5 billion reais and a 2 billion reais guarantee fund to encourage domestic processing, though it stops short of banning raw ore exports.

Brazil holds the world's second largest rare earth reserves but, according to a fellow at the Brazilian Center for International Relations, virtually no capacity to separate, refine, or turn them into magnets. The law does not include price floors or guaranteed purchases, the very tools a study found could cut a separation plant's payback period from ten years to four.

The signing comes less than two weeks after USA Rare Earth completed its $2.8 billion purchase of Serra Verde, Brazil's only commercial rare earth producer, whose entire output for fifteen years is already committed to a U.S.-backed buyer at guaranteed minimum prices. Lula invoked the colonial gold boom, warning that ore might again leave with value captured elsewhere.

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