Brazilian President Luiz Inácio Lula da Silva recently signed a bill to introduce the "National Policy on Key and Strategic Minerals" (hereinafter referred to as the "Policy"), and concurrently issued a decree to establish the National Commission for the Industrialization of Key and Strategic Minerals (CIMCE). The Policy plans to provide up to 7 billion reais in incentive funds to support research, mining, processing, and deep processing of key and strategic minerals, as well as urban mineral projects, aiming to enhance the added value of local minerals, safeguard the sovereignty of natural resources, and support the country's industrialization, technological innovation, energy security, sustainable development, and regional economic growth. The Policy means something to Brazil. Brazil is a major country in terms of mineral reserves, with 29 types of minerals ranking among the world's top. Among them, the reserves of niobium account for approximately 90% of the global total; iron reserves are approximately 33.3 billion tons, accounting for nearly 10% of the global total, and the grade is generally above 60%.
Especially in the rare earth sector, Brazil ranks second in the world in terms of reserves, and it also has relatively abundant graphite, nickel, lithium, and other resources. However, there has long been a problem of "having minerals but few processed". The global share of rare earth production is relatively low, and the separation, refining, and high-end processing capabilities are weak. According to the content of the bill, Brazil will establish a mining activity guarantee fund, with the Brazilian federal government contributing 2 billion reais to support the priority projects recognized by the Policy, and it can also attract funds from states, cities, and private entities; establish a federal plan for the selection, processing, and transformation of key and strategic minerals, and the country's enterprises can convert up to 20% of their expenditures related to selection, processing, transformation, and urban mineral projects into tax credits. This plan has an annual fiscal limit of 1 billion reais from 2030 to 2034, and the projects must be approved by the National Commission for the Industrialization of Key and Strategic Minerals in advance; establish a "National Commission for the Industrialization of Key and Strategic Minerals" directly under the presidential office, responsible for identifying key minerals, selecting priority projects, supervising the policy, and participating in the review of sensitive transactions involving changes in mineral asset control rights, transfer of mining rights, and international supply contracts. The Brazilian government stated, "We hope to discuss with governments of other countries, mining companies, investors, and international institutions on how to promote the formation of a more socially fair, environmentally sustainable, and conducive to the industrialization of developing countries' mining model." It can be seen that through this new legislation, the Brazilian government hopes to transform its resource advantages into industrial capabilities, tax revenue, and employment, rather than remaining at the stage of raw material exports. The core meaning is: Brazil no longer satisfies itself with merely selling raw minerals, but is using the system to incorporate the exploration, processing, trading, and export of key minerals such as rare earths, lithium, nickel, and graphite into national coordination, striving to retain more added value within the country. The Campana mining area of Vale. Vale provided the picture. The Policy means something to the global mineral supply chain. The "National Policy on Key and Strategic Minerals" of Brazil has been widely interpreted globally as the global competition for key minerals escalating from "resource grabbing" to "grabbing processing capabilities and supply chain nodes". However, Brazil should not be merely regarded as a new supplier of rare earths, lithium, nickel, and graphite, but should be seen as an important variable that may reshape the global processing map of key minerals. Because Brazil simultaneously possesses multiple external factors such as mineral resource reserves, policy shift, and high capital favorability. It is not a simple addition of new mineral sources, but is transforming from a "raw material exporter" to a "processing and supply chain node". The Policy clearly requires "processing in Brazil", and no longer accepts only mining of raw minerals. More importantly, the Brazilian government can also impose local processing or value-added requirements on key mineral exports and establish a traceability mechanism. This means that the "model of mining in Brazil and transporting back overseas for refining" is being tightened. Brazil has abundant mineral resources, with its graphite reserves ranking second globally, nickel reserves ranking third globally, and niobium reserves ranking first globally. Some mineral types have the potential to change the supply structure. However, for a long time, Brazil's processing capacity for mineral products has been almost non-existent. This contrast of "huge reserves but weak processing" is precisely the reason why Brazil is highly concerned by the market. Once the domestic processing capacity is activated, Brazil may become one of the few supply nodes with potential for large-scale operations. Currently, global capital is accelerating the integration of Brazil into the supply chain layout. Enterprises from countries such as the United States, Australia, France, and Germany are accelerating their layout of rare earth, lithium, nickel, and graphite projects in Brazil. For instance, the US company USA Rare Earth plans to acquire Brazil's Serra Verde for approximately 2.8 billion US dollars and integrate its mining, separation, and magnet manufacturing capabilities. The European Union, Australia are also striving to promote Brazil's rare earth exploration, separation plants, and pilot projects. Brazil has clearly stated that it is open to the United States, the European Union, and China, but the prerequisite is that the partners must help Brazil develop its local processing capacity, technology, and employment. Relevant analysis suggests that in the short term, Brazil's "policies" have a limited impact on global supply shocks. Brazil currently has insufficient processing capacity, a long environmental approval cycle, and infrastructure and financing remain bottlenecks. Policy implementation still requires time and will not immediately significantly change the global mineral supply pattern. However, it is worth noting that Brazil's policies and the cooperation with South American minerals form a response. Chile, Argentina, Bolivia, Peru have also signed a strategic mineral joint declaration. This resource and regional linkage advantage enables Brazil and several countries in South America to attract multiple capital and technologies, but it also increases the uncertainty of global supply chain competition. In the future, Brazil and South America may no longer merely be resource bases, but may become a processing hub in the global mineral resource supply chain.
