Dynamic Definition of Critical and Strategic Minerals and Transition Effects

The bill adopts the logic of defining critical and strategic minerals through lists to be established and periodically updated by the Executive Branch, under the authority of Cimce. Although this approach allows regulatory flexibility and alignment with economic, technological, and geopolitical changes, it also introduces significant regulatory uncertainties for economic agents which operate minerals that may be included in these lists in the future.

The subsequent inclusion of a given mineral substance may subject ongoing projects to new legal regimes and additional obligations — such as compulsory contributions to the FGAM and submission to screening mechanisms, detailed below — without the legal text specifying clear transition rules. This dynamic may require prior organization and coordination among productive agents, financiers, suppliers, and third parties with significant exposure to the industry, especially in contexts where long-term contracts and financial structures are already established.

Corporate Control and Foreign Investment Screening

The bill provides for the creation of the so-called Foreign Direct Investment Screening Mechanism. Changes in direct or indirect corporate control of holders of mining rights over substances deemed critical or strategic will now require approval by Cimce.

The mechanism also covers the approval of international supply contracts, access to strategic geological information, significant participation by foreign legal entities, and the transfer and encumbrance of mining rights.

Export and Domestic Processing

The bill authorizes the Executive Branch to establish, by regulation, conditions for the export of minerals in raw form, including commitments to add value within national territory and obligations to provide information on volume, destination, ultimate beneficiary, and degree of processing of exported minerals.

As a consequence, exporting companies will need to reassess the potential impacts of these future conditions on offtake contracts already executed or under negotiation.

The legal text also encourages the execution of long-term purchase and sale contracts, with a minimum term of five years, with companies qualified under the PFMCE, providing for the extension to these contracting parties of the tax credit granted by the program, under terms and limits to be defined by regulation.

Financing and Incentives

The bill also provides for a package of incentives for private investment in the sector, combining public guarantees, tax benefits, and facilitated access to credit, among which the following stand out:

• FGAM (Mining Activity Guarantee Fund): a private fund with segregated assets; the Federal Government as a unitholder up to R$ 2 billion; revenues exempt from Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL).
• Incentivized debentures: extension of the regime under Laws 12,431/11 and 14,801/24 to mineral processing, mineral transformation, and urban mining projects; issuances limited to capital expenditures; eligibility for issuers with annual revenue of up to R$ 5 billion.
• REIDI (Special Incentive Regime for Infrastructure Development): suspension of PIS/Pasep and Cofins on the acquisition of goods and services linked to mining, processing, and mineral transformation projects (Law 11,488/07).
• PFMCE (Federal Program for Processing and Transformation of Critical and Strategic Minerals): tax credit of up to 20% of expenditures, limited to R$ 1 billion/year (2030–2034), with restitution as a CSLL credit; access conditioned on qualification by Cimce.
• PPI and FNMC: sector projects are part of the Investment Partnerships Program (Law 13,334/16), with priority treatment for licenses; BNDES (National Bank for Economic and Social Development) authorized to allocate resources from the National Climate Change Fund for reimbursable financing.

Although Bill 2780/24 provides for a relevant set of instruments to promote private investment — including public guarantees, tax incentives, and facilitated access to credit — significant uncertainties remain regarding their impacts on the financing of the mineral exploration phase, historically recognized as one of the main bankability bottlenecks in the Brazilian mineral sector. In particular, the current drafting of the bill authorizes the creation of the Mining Activity Guarantee Fund (FGAM) with the express purpose of providing guarantees to enterprises and activities linked to the production of critical and strategic minerals.

However, there is no explicit mention of coverage for risks associated with mineral exploration operations, which allows the interpretation that the fund's scope is predominantly directed at the mining, processing, and mineral transformation phases. This limitation may impact the attractiveness of early-stage projects, especially those conducted by junior companies, whose capital structure depends on more comprehensive risk mitigation instruments. The comparative experience from mature mining jurisdictions indicates that the mineral exploration phase presents technical and financial risk that is structurally incompatible with traditional guarantee or credit instruments, requiring specific mechanisms for risk absorption and informational signaling. In this context, the absence of express mention of mineral exploration within the scope of the FGAM reinforces the uncertainty regarding the effectiveness of the new framework in addressing this bottleneck.

Compulsory Contribution to the FGAM and Fund Attributions

The bill introduces a legal obligation for compulsory allocation of a portion of gross operating revenue from companies operating with critical or strategic minerals. For an initial period of six years from regulation, a minimum application of 0.3% is required in research, development, and technological innovation projects, combined with a minimum subscription of 0.2% in FGAM units. After this period, the obligation becomes exclusively 0.5% in R&D projects.

The FGAM, of a private nature and with segregated assets, may grant guarantees for credit risk coverage and adopt other risk mitigation instruments, including under co-investment arrangements with public or private financial institutions, sovereign wealth funds, and multilateral organizations. The fund's governance will be exercised by a unitholders' assembly, a management committee, and an administering institution, with the management committee responsible for establishing guidelines, criteria, and conditions for granting guarantees. The concrete operationalization of these attributions remains conditioned on the issuance of regulations and approval of the fund's bylaws.

While the FGAM and incentivized debentures operate in phases already associated with production or economic viability, exploratory financing in international experiences depends predominantly on equity, partnerships, and pre-productive royalty or streaming instruments, structured to absorb geological risk and mitigate informational asymmetries at stages where credit is not functional. From this perspective, the bill focuses on guarantee and debt mechanisms applicable to more mature stages of the mineral cycle, without incorporating instruments aimed at absorbing exploratory risk in the early phases of the mineral cycle.

Private Royalty and Streaming Contracts: Progress with Caveats

The text approved by the Chamber of Deputies authorizes the registration with the ANM of private streaming and mining royalty contracts, which would produce erga omnes effects, allow specific performance, and serve as collateral in credit operations. Although this represents a significant advance for sector financing, the focus was on operations with initial disbursement of financial resources, which raises uncertainty about the adequacy of the proposed framework for other types of royalty operations common in the market. It is also worth mentioning that a restriction on the assignment of mining rights is also proposed, yet to be regulated.

Exploration Authorization for Critical and Strategic Minerals

The bill significantly alters the exploration authorization regime applicable to areas bearing critical or strategic minerals. Article 35 establishes that the exploration authorization shall have a maximum and non-extendable term of 10 years, counted from the publication of the permit in the Federal Official Gazette, with no extensions, suspensions, or interruptions admitted, except only for the period demonstrably spent obtaining the operating license. Upon expiration of this term without submission of the Final Exploration Report to the ANM, the mining right shall be extinguished by forfeiture.

Once forfeiture is declared, the area shall be considered unencumbered and, if it remains available for more than two years, it shall be considered a free area for purposes of applying the mineral priority regime. This new temporal framework tends to impact the technical, environmental, and financial planning of more complex exploratory projects.

Entities and Instruments Provided for in the Bill

In addition to Cimce, the bill provides for the creation of the following entities and instruments: (i) the Mining Activity Guarantee Fund (FGAM); (ii) the Federal Program for Processing and Transformation of Critical and Strategic Minerals (PFMCE); (iii) the Low Carbon Mineral Certificate (CMBC); (iv) the National Registry of Critical and Strategic Mineral Projects (CNPMCE), with mandatory registration and integration with Sigmine; (v) the National Network for Research, Technological Development, and Professional Training in Critical and Strategic Minerals (RNMCE); (vi) the production chain traceability system; and (vii) the regime for Private Streaming and Mining Royalty Contracts registrable with the ANM.

Pending Regulation

The practical effectiveness of several provisions of the bill remains conditioned on the issuance of specific regulations by the Executive Branch. Among the main points pending regulation are: (i) the regulation of the National Policy on Critical and Strategic Minerals (PNMCE); (ii) the installation, composition, operation, and detailed attributions of Cimce; (iii) the criteria and procedures of the foreign investment screening mechanism; (iv) the bylaws, governance, and operational criteria of the FGAM; (v) the qualification rules and competitive procedure of the PFMCE; (vi) the technical parameters and implementation timelines for the traceability system; and (vii) the criteria for definition, updating, and any transition rules related to the list of critical and strategic minerals.

In other words, there remains uncertainty regarding a series of rules potentially relevant to industry agents. Beyond the definition of financial instruments and guarantees, international experience suggests that the standardization and credibility of technical information play a central role in enabling exploratory financing (e.g., NI 43-101, JORC, CRIRSCO) — an aspect that is not yet presented as an explicit structuring axis of the model proposed by the bill. Until these instruments are fully regulated, the absence of clear operational parameters tends to hinder risk pricing by financiers and investors, especially in capital- and information-intensive exploratory projects.

Conclusion

The approval of Bill 2780/24 in the Chamber of Deputies signals a significant shift in the federal agenda for critical and strategic minerals, with the creation of new instruments and bodies — such as Cimce, FGAM, PFMCE, CMBC, CNPMCE, RNMCE, and the traceability system — capable of influencing everything from project qualification and access to incentives to corporate reorganization and the export of minerals in raw form.

At the same time, the practical reach of the new framework will depend to a large extent on regulations still pending and on whether these actually bring more clarity than new uncertainties and obstacles to the sector's development. The swift and transparent issuance of these regulations, should the text be approved by the Senate and duly enacted, will be essential for reassessment by investors in the Brazilian mineral market.

In practice, M&A operations involving these assets would require regulatory planning, with impacts on closing timelines and conditions precedent. Additionally, international supply contracts for critical and strategic minerals, when entered into under conditions that may affect the country's economic or geopolitical security, would also be subject to approval by Cimce, which may impact the structuring and negotiation of these instruments.

In the field of financing, although the bill expressly acknowledges the relevance of mineral exploration and introduces risk mitigation instruments and economic incentives, uncertainties still persist regarding the practical extent of these mechanisms, especially with respect to the coverage of exploratory operations. The manner in which the FGAM and other instruments are regulated will be determinative for assessing their effective impact on the bankability of mineral projects at different stages of maturity.

These elements reinforce that the concrete reach of the new regulatory framework will depend not only on legislative approval, but above all on the quality, predictability, and consistency of subsequent regulations, which will fully define its effects on investments, contractual structures, and financing strategies in the Brazilian mineral sector.

The Mining team at Machado Meyer is following the proceedings in the Senate and the regulatory process and is available to clarify the impacts on operations underway or being structured.