By Brazil Stock Guide – Brazil’s push to expand rare-earth production in Minas Gerais is running into simultaneous environmental and regulatory hurdles. The Federal Prosecution Service, or MPF, has urged state authorities to freeze the licensing of two new projects in the Poços de Caldas volcanic plateau, while the National Mining Agency, ANM, is reassessing whether to reclaim dozens of areas previously controlled by Companhia Brasileira de Alumínio (CBAV3).
According to the original reports, the MPF asked the state environmental agency to pull the Colossus project, operated by Viridis Mineração, and the Caldeira project, developed by Meteoric Resources, from the agenda of Minas Gerais’ environmental council. Both ventures plan to mine and chemically process 5 million tons of clay annually using acid leaching, a method the MPF says requires additional analysis due to the region’s Category 6 classification — the highest level of potential environmental impact.
The Caldeira site sits near the Caldas Decommissioning Unit, operated by state-owned Indústrias Nucleares do Brasil (INB), which stores radioactive waste. Although the nuclear area lies outside the directly impacted zone, it remains within the broader socioeconomic influence area, less than three kilometers from two emergency-level tailings dams. Prosecutors requested that the state obtain safety assessments from INB and the National Nuclear Safety Authority.
Concerns over water security dominate the Colossus evaluation. The project is planned in the recharge zone of the Poços de Caldas alkaline aquifer, an area already under scarcity pressure. The MPF says the mine would eliminate 98 springs and could lower groundwater levels. It also flagged the absence of studies ruling out nitrate contamination from the leaching process and called for pilot plants to prove that 99% of ammonium sulfate can be removed from residues.
The regulatory landscape is becoming more complex as the ANM considers recovering 44 mineral areas in southern Minas Gerais and along the São Paulo border that were previously relinquished by CBA after local bauxite reserves were exhausted in 2022. Following new studies indicating rare-earth potential, CBA reversed its decision and asked the agency to review the renunciation.
Representing the aluminum producer, attorney Frederico Bedran argued during the board meeting that the shift reflects the strategic relevance of rare-earth elements. “This case deserves attention due to the public interest in the economic use of rare earths, a critical mineral,” he said. Bedran estimated that research activities would require about R$50 million, while developing a full project could demand a capital expenditure of US$400 million to US$500 million. “In the eventual implementation of a project like this, we are talking about an average Capex of US$400 million to US$500 million,” he said.
ANM’s director-general, Mauro Henrique Sousa, rejected the company’s request, saying the renunciation extinguished the mining title and that the area must be made available again. His position was backed by directors Tasso Mendonça Júnior and Roger Cabral, though the final decision has been delayed by a request for further review from director José Fernando Gomes.