RIO DE JANEIRO (CN) - Critical minerals are at the center of a political and institutional dispute in Brazil after Ronaldo Caiado and Flavio Bolsonaro, both pre-candidates in October's presidential election, signaled openness to partnerships with the United States in a sector regulated by the federal government.

On March 18, Caiado, then governor of Goias, signed a memorandum of understanding with the U.S. government on critical minerals. Goias is home to the only company outside Asia producing rare earths at scale.

According to the state government, the agreement covers technical cooperation, investment promotion, capacity building and development of local processing and manufacturing capabilities.

Ten days later, Sen. Flavio Bolsonaro said at the Conservative Political Action Conference in the United States that Brazil is "the solution for the United States to break its dependence on China for critical minerals, especially rare earths."

Rafaela Guedes, a senior fellow at the Brazilian Center for International Relations, said critical minerals are no longer viewed merely as commodities, but as key inputs for the energy transition, digital infrastructure, national security and defense.

"In this context, the United States' goal is not only to secure access to these mineral resources, but to reduce its vulnerability tied to the concentration of processing and manufacturing, especially in China," she said. "And that is where Brazil comes in, given its geological base for rare earths, nickel, niobium, bauxite, among others."

Maria Jose Mesquita, a professor of the University of Campinas' Institute of Geosciences, said rare earths are a group of 17 chemical elements that, despite the name, are not necessarily scarce in the Earth's crust. Rather, she said, the challenge lies in separating them and finding deposits concentrated enough to mine economically.

According to the Geological Survey of Brazil, Brazil holds 94.1% of the world's niobium reserves, 25.5% of its graphite reserves and 23.3% of its rare earth reserves.

Vilmar Medeiros Simes, president of the Geological Survey of Brazil, said the country already has a "reasonably good" understanding of the potential of its main mineral provinces.

"Although we still face major challenges in advancing geological knowledge across vast areas of the country, our current level of knowledge already places Brazil prominently in the ranking of the world's largest reserves of critical minerals," he said.

Mesquita said Brazil must do more than extract strategic minerals. It must also process them domestically to keep more of the value chain in the country, thereby supporting industrial development and national sovereignty.

Guilherme Filardi, a partner at Sao Paulo-based DDSA Advogados, said Brazil has strong geology, abundant resources and potential for low-carbon production, "which makes it particularly attractive on the global stage." But he said the country trails other jurisdictions in regulatory speed, institutional coordination and coordination between mining, processing and industrial policy.

William Freire, founding attorney of the Brazilian Institute of Mining Law, said Brazil lacks a regulatory framework specifically for critical and strategic minerals. Instead, the sector is governed by the Constitution, the Mining Code and related laws, including environmental laws.

That means mineral resources belong to the federal government, which grants mining rights through the National Mining Agency and the Ministry of Mines and Energy and has sole authority over mining and geology legislation.

Environmental authority, however, is divided among different levels of government. The federal government, states and the Federal District share legislative power, while municipalities oversee local issues. Enforcement is shared by all levels of government.

Lucas Sampaio Santos, a partner at Sao Paulo-based Arruda Alvim & Thereza Alvim Advocacia e Consultoria Juridica, said the division of authority makes the regulatory environment more complex in practice than it appears on paper.

"The developer first obtains the mining title from the National Mining Agency, which evaluates only mining viability, not environmental viability," he said. "Then they go to the appropriate environmental body to seek a license. The problem is that they may get the title and never get the license."

The Constitution also requires congressional authorization and prior consultation with affected communities for mining on Indigenous lands, but the country has never passed a law that would regulate that provision. In February, the Supreme Court gave Congress 24 months to legislate.

All of those factors, Santos said, converge into a system in which the judiciary becomes the final regulator of Brazil's mining sector, especially when it comes to critical minerals.

"The Supreme Court rules on Indigenous lands. The Superior Court of Justice sets precedent on environmental liability. Local courts interfere in licensing. The public prosecutor's office files civil suits that halt projects," he said. "In a sector with maturation cycles of 10 to 20 years, the risk of a court decision during the construction or operation phase is just as relevant as geological risk."

Congress is trying to fill that void. In September 2025, Brazil's lower house approved fast-track status for Bill 2780/2024, which would establish a National Policy for Critical and Strategic Minerals.

The bill creates an interministerial committee to define which substances fall into that category and to set guidelines for the production chain. It also provides support for environmental licensing, project prioritization and incentives for research, mineral transformation and innovation.

Freire said that despite the bill's progress, there is still no timetable for those proposals to become law and be regulated. "I do not think anything effective will happen in 2026," he said.

In his view, the ideal scenario would be for countries to adopt a long-term state mineral policy that does not shift with changes in government or political party in power.

"The absence of a state mineral policy favors isolated initiatives driven by media exposure," he said.

In an interview with ICL Noticias on April 8, President Luiz Inacio Lula da Silva criticized Caiado and Flavio Bolsonaro. "If we are not careful, these people are going to sell Brazil, and we cannot allow that. This will be part of the political struggle," Lula said.

The issue is rising on Brazil's international economic agenda. Finance Minister Dario Durigan is expected to attend a G7 ministerial meeting on critical minerals in Washington this week as a guest to discuss the bloc's action plan.

Guedes said recent moves in Brasilia reflect an effort to make critical minerals part of an agenda focused on productive development, attracting investment and repositioning Brazil strategically on the global stage.

At the same time, she said, the debate centers on at least three concerns: avoiding a new form of external dependence, avoiding a model based on exporting raw resources without industrialization and ensuring the race for these minerals does not move ahead without coordination among federal, state and municipal governments and without adequate social and environmental safeguards.

The government, she said, is trying to take advantage of the reorganization of global supply chains, while also seeking to capture more value within the country and reduce the risk of repeating past mistakes.

"For Brazil, the issue is not only economic or diplomatic. It is also a dispute over what model of development the country wants to pursue," she said.

Courthouse News reporter Marilia Marasciulo is based in Brazil.

Source: Courthouse News Service