The ongoing geopolitical landscape has spotlighted Brazil’s rare earth resources, which hold considerable potential for enhancing the U.S. supply chain despite being underutilized. As the U.S. aims to diversify its sources of critical minerals, discussions with Brazil have gained momentum, especially following a thaw in relations between the two nations.
Historically, Brazil has been somewhat overshadowed in the rare earth sector. According to the U.S. Geological Survey, the nation possesses the second-largest reserves of rare earth elements globally.
However, its production levels fall short compared to the vast output of China, which dominates approximately 60% of the world’s mining and an overwhelming 90% of processing capacities.
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Renewed diplomatic efforts
Recent diplomatic overtures between the U.S. and Brazil, particularly between President Donald Trump and President Luiz Inácio Lula da Silva, have rekindled interest in potential collaboration on rare earths. This shift responds to China’s stringent export restrictions, which have underscored the vulnerability of current supply chains heavily reliant on Chinese minerals. In light of these restrictions, the U.S. has proactively sought alternative sources, forming critical mineral agreements with countries such as Australia and the Democratic Republic of Congo.
The opportunity for collaboration
Insights from officials involved in the discussions reveal a strong sentiment about the opportunities ahead. One official commented, “The prospects here are vast,” indicating Brazil’s openness to negotiations regarding its critical mineral resources. While talks remain in the preliminary stages, the U.S. chargé d’affaires in Brazil, Gabriel Escobar, has actively engaged with Brazil’s mining association and relevant companies to explore possibilities.
Furthermore, the U.S. Department of Commerce has initiated discussions with Brazil’s trade ministry, focusing on forming cooperative ventures around critical minerals. This reflects a growing recognition of Brazil’s strategic importance in the global rare earth landscape.
Competition and challenges
As the U.S. increases its focus on Brazil, other global players are also vying for the nation’s attention. During a recent visit to Rio de Janeiro, European Commission President Ursula von der Leyen announced ongoing negotiations with Brazil regarding a critical raw materials agreement encompassing lithium, nickel, and rare earths. This multi-faceted competition emphasizes the need for Brazil to navigate its partnerships carefully.
Obstacles in the path to production
Despite its rich deposits, Brazil faces several challenges in advancing its rare earth ambitions. Factors such as financing difficulties, regulatory hurdles, and insufficient geological mapping have hampered progress. A notable example is the Serra Verde mine, which took an extensive 15 years to reach operational status. Recently, this mine received a substantial loan of US$465 million from the U.S. International Development Finance Corporation, highlighting the critical financial support needed to kickstart Brazil’s rare earth industry.
Political risk analysts suggest that conditions are favorable for a future agreement between the U.S. and Brazil. Christopher Garman from the Eurasia Group expressed optimism, estimating a 75% chance of a deal materializing by the first quarter of the upcoming year. This sentiment is echoed by Brazilian policymakers, who view the development of rare earth resources as both an economic opportunity and a strategic diplomatic tool.
Rebalancing international relations
In recent months, Brazil has sought to recalibrate its diplomatic relations with the U.S. after tensions arose over trade tariffs and sanctions related to former President Jair Bolsonaro’s administration. The U.S. has responded by easing some tariffs on Brazilian food products and reviving broader trade dialogues, setting the stage for renewed cooperation.
As this policy shift unfolds, commercial interest in Brazil’s rare earths is on the rise. Companies like Viridis Mining and Minerals are exploring potential buyers in the U.S. and Europe, aiming to establish agreements for their Colossus project in Minas Gerais. The Brazil country manager for Viridis, Klaus Petersen, noted that their goal is to secure multiple offtake agreements as clients seek to reduce their reliance on Chinese suppliers.
Historically, Brazil has been somewhat overshadowed in the rare earth sector. According to the U.S. Geological Survey, the nation possesses the second-largest reserves of rare earth elements globally. However, its production levels fall short compared to the vast output of China, which dominates approximately 60% of the world’s mining and an overwhelming 90% of processing capacities.0
