Brazil’s Congress on Wednesday approved a government-backed bill establishing a national policy on critical and strategic minerals, as President Luiz Inacio Lula da Silva moves to set a legal framework for a sector getting rising interest from foreign investors.
The bill establishes a guarantee fund with an initial amount of 2 billion reais ($392.7 million) from the government and provides for 5 billion reais in tax credits over five years.
Under the new proposal, the government will also create a federal council responsible for determining which minerals will be classified as critical and strategic.
Critics fear the council could bring overwhelming government intervention to the sector, creating obstacles to its development.
The bill, pending Lula’s sign-off and approved by the Senate after the lower house green-lit it in May, clarifies the legal definition of minerals including nickel, lithium and other rare earths.
Despite a modest production, Brazil has the world’s second-largest reserve of rare earths behind China.
The abundance has garnered interest from countries seeking to lower their dependence on the Asian country, such as the United States and the European Union.
Rare earths are considered essential for technology in key industries from renewable energy sources to electric vehicles and weapons.
($1 = 5.0929 reais) (Reporting by Maria Carolina Marcello and Marta Nogueira; Writing by Fernando Cardoso, Editing by Iñigo Alexander)
