Lula's victory in Brazil's presidential runoff keeps in place a policy that gives the state more say over critical minerals. That matters for foreign miners and US supply plans, because Brazil has the world's second-largest rare earth reserves.
At a glance
- Brazil holds about 21 million tonnes of rare earth reserves, second only to China, according to the US Geological Survey.
- Foreign companies filed 42% of Brazil's 2,727 rare earth exploration applications through June.
- The new policy offers tax credits of up to 20% for companies that process minerals inside Brazil.
Background
Rare earths such as neodymium are used in the magnets inside electric vehicles, wind turbines and defence equipment, and China dominates their supply. The United States and its allies are trying to build other sources, and Brazil's deposits are among the most important targets. Brazil launched a critical minerals policy in September that lets the government review changes of ownership and foreign supply deals for strategic minerals.
What happened
Lula defeated far-right Senator Flávio Bolsonaro in Brazil's presidential runoff on Sunday, securing a fourth, non-consecutive term if electoral authorities confirm the result, MINING.COM reported. His new term begins on January 5, 2027.
"This country will not accept being anyone's backyard," Lula said in his victory speech. MINING.COM read it as a sign of continued resistance to US President Donald Trump, whose administration has raised tariffs on Brazilian goods.
Why it matters for rare earths
The result reinforces Brazil's critical minerals policy rather than changing course, said Juan Ignacio Guzmán, chief executive of GEM Mining Consulting. The policy lets the government scrutinise changes of control and international supply agreements for strategic minerals, which could complicate foreign takeovers.
Foreign interest is already high. Foreign-owned companies filed 42% of the country's 2,727 rare earth exploration applications through June, led by investors from Australia, the US and Canada. Brazil's only commercial rare earth producer, Serra Verde, has been bought by USA Rare Earth, in which the US government holds a stake.
What it means
Brazil wants more processing at home, not just exports of raw concentrate. It is offering tax credits of up to 20% for processing and refining spending, capped at 1 billion reais ($192 million) a year from 2030 to 2034.
Investors can accept government screening "as long it is predictable, applied with consistency and in timely fashion", said mining lawyer Adriano Drummond Trindade. Guzmán does not expect major damage to cooperation with Washington.
Our read
Outlook: neutral. The result keeps an existing policy in place, and Brazil's rare earth output is still small compared with China's.
What to watch
- The regulations that will put Brazil's critical minerals policy into practice.
- Any US agreement to fund rare earth processing and refining inside Brazil.
- Official confirmation of the runoff result by Brazil's electoral authorities.
For information only, not investment advice.
Neodymium price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-25: Lula wins Brazil's presidential runoff against Flávio Bolsonaro, subject to official confirmation.
- 2027-01-05: Lula's new presidential term is due to begin.
Government Policies
Brazil's critical minerals policy adds state review of foreign deals and rewards processing at home.
Geopolitical Risks
Tension between Lula and the Trump administration could slow US-backed rare earth projects in Brazil.
What could lift prices
- More state screening could slow foreign-funded rare earth projects in Brazil.
- China still dominates supply while new sources take years to develop.
What could weigh on prices
- Tax credits could speed up rare earth processing in Brazil from 2030.
- Strong foreign interest means many exploration projects are under way.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Brazil | High | The election keeps a policy of more state control and local processing for its rare earths. |
| United States | Medium | Washington is seeking Brazilian rare earths to reduce reliance on China. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Critical Minerals Mining | Neutral | Foreign miners face more screening but also tax credits for local processing. |
Who gains, who loses
- Companies that process minerals inside Brazil: They can claim tax credits of up to 20% on eligible spending.
- Foreign buyers of Brazilian mining assets: Changes of control can now face government review.
Other ways this could play out
- If the new rules prove predictable, foreign rare earth investment in Brazil could keep growing.
- If screening is slow or unclear, investors may shift to other countries.
Price risks
- Rare earth prices depend mostly on Chinese supply and export policy.
- Brazilian production is too small today to move global prices.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
Brazil
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