Brazil After The Election: Lula’s Fourth Term And The Road Ahead

Brazil’s October 25 presidential election produced a result few expected just three weeks earlier. President Luiz Inácio Lula da Silva defeated Senator Flávio Bolsonaro with 51.79% of valid votes, becoming the first candidate in Brazil’s presidential runoff history to overcome a first-round deficit. He is also the first Brazilian elected president four times.

That is a remarkable political comeback. But for investors and foreign governments, the more important question is what Lula can accomplish from January 2027 onward.

A Historic Victory, a Difficult Congress

Lula’s victory interrupts a series of rightward electoral shifts in Latin America, but it does not mean Brazilian polarization has disappeared. Bolsonaro Jr. received 48.21% of valid votes, and conservative lawmakers will hold considerable power in both chambers of Congress. The Liberal Party and its allies can frustrate legislation, influence budget negotiations, and intensify disputes with the Supreme Federal Court.

The defeated candidate has contested the electoral process. Meanwhile, allegations concerning digital platforms and political interference remain disputed. Washington officially attributed its suspension of consular services before the first round was to security concerns, not an electoral strategy. Distinguishing documented decisions from allegations will be essential if Brazil is to reduce its institutional tensions.

The economic numbers also limit Lula’s freedom. Public debt exceeds 82% of GDP, borrowing costs remain high, and growth is expected to slow in 2027. His government will have to reconcile social spending, a commitment to higher real wages, and industrial investment with fiscal consolidation. This is not an easy equation for an 80-year-old president facing an assertive Congress.

Two Relationships With Washington

The next challenge comes from the United States, where the relationship has become unusually personal and unusually contradictory.

Lula and Donald Trump have developed a surprisingly workable rapport despite major ideological disagreements. Trump has publicly expressed personal warmth toward his Brazilian counterpart. Yet on October 26, he also suggested, without presenting evidence, that the Brazilian election had been rigged. Personal chemistry, evidently, is not the same as political alignment.

The more persistent friction involves Secretary of State Marco Rubio and the State Department. Rubio’s harder line on Cuba, Venezuela, and the Western Hemisphere conflicts with Lula’s emphasis on diplomatic autonomy, multilateralism and dialogue. American sanctions against Brazilian judicial figures, tariff measures, and disputes over digital regulation have exposed deeper divisions that meetings between presidents cannot automatically resolve.

Brazil also faces pressure over U.S. trade barriers, organized crime, and Washington’s effort to diversify strategic supply chains away from China. Lula’s likely response is not to abandon the United States, but to negotiate with it while preserving ties with Beijing, the BRICS, and European Union partners. That balancing act will define much of Brazil’s foreign policy.

Rare Earths Move From Campaign Promise to Industrial Policy

One subject links all these tensions: critical minerals.

As I argued during the campaign, Brazil has enormous rare-earth reserves but captures a comparatively small share of the value created by processing them. Its problem is not geological scarcity. It is the gap between mineral resources and industrial capacity.

Lula’s new government program addresses that gap directly. His program proposes a dedicated policy for critical minerals and rare earths, regional geological mapping, local beneficiation, and greater domestic value addition. It explicitly seeks to avoid exporting strategic raw materials without developing the industries that use them. The objective connects mining to reindustrialization, advanced manufacturing, clean energy, and technological sovereignty.

This is no longer only a campaign commitment. Law 15,506, enacted during the campaign in September 2026, established a national critical minerals policy and a council empowered to scrutinize changes of control involving strategic mining rights.

The legislation also prioritizes processing, technology development, environmental safeguards, and investment incentives. Foreign investors should not read this automatically as hostility to international capital. They should read it as a demand for a more substantial Brazilian role in the value chain, as in other cases, like oil, iron and aluminum.

The Lynas–Meteoric Test

That brings us to the proposed acquisition of Australian company Meteoric Resources by Lynas Rare Earths, announced on October 1. The all-stock transaction carries an indicative equity value of approximately A$968 million and would give Lynas control of Meteoric’s Caldeira rare-earth project in Minas Gerais, one of the most significant ionic-clay resources outside China, and the most important in Brazil.

Crucially, the takeover has not yet closed. It requires shareholder, court, and Brazilian regulatory approvals, with completion currently anticipated in March 2027. The new minerals council may therefore face a high-profile test just as Lula begins his fourth term. Regulatory scrutiny is not equivalent to a veto, but the review could establish an important precedent for subsequent deals.

For Lynas, Caldeira offers access to substantial resources and an opportunity to strengthen a rare-earth supply chain outside China. For Brasília, however, the central question is different: will the project produce only minerals for processing abroad, or will it also build processing expertise, skilled employment, and industrial capacity inside Brazil?

Lynas has identified potential downstream processing in Brazil alongside links to its existing facilities abroad. Caldeira’s potential supply of magnet-related rare earths is strategically important, but a resource estimate does not automatically translate into commercial output or locally manufactured magnets.

That creates room for negotiation rather than an inevitable confrontation. Still, any proposed local-processing commitments will need financing, technical feasibility, environmental licensing, and measurable implementation milestones.

The Fourth-Term Investment Question

Brazil’s foreign policy program promises closer South American integration, stronger Mercosur ties, diversified trade relationships, and a renewed defense of multilateral institutions. Those objectives coexist with competition among Washington, Beijing, Moscow, and Brussels for strategic resources.

Brazil will also have to manage the Mercosur–European Union trade agenda, its climate commitments, and disagreements over international conflicts without becoming captive to any one geopolitical bloc.

For investors, the decisive indicators will not be presidential speeches. Watch how the Lynas–Meteoric transaction is reviewed, whether domestic processing becomes commercially viable, how tariff negotiations with Washington evolve, and whether Brasília can provide predictable rules without abandoning its industrial ambitions.

Lula won a historic fourth term. Now he must demonstrate that political resilience can become economic capacity. Brazil’s rare earths may reveal whether the country intends merely to supply the next technological revolution, or to participate in building it.

Dr. Roberto Rodolfo Georg Uebel is an economist and geographer and a Professor of International Relations at ESPM University in São Paulo, Brazil.