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By Lucas Silva Amorim*
Brazil has long viewed the exploitation of its mineral wealth as a promise of development. From the early days of the nearly continuous extraction of deposits in Minas Gerais to the issue of oil along Brazil’s equatorial margin—and including the “The Oil Is Ours” campaign and the debate over the pre-salt layer—the prospect of economic (and, indeed, geopolitical) ascent through extractivism remains deeply embedded in the national imagination. In the era of smartphones and the mass construction of data centers, another chapter of this story appears to be unfolding. This time, it concerns a new category of minerals known as “rare earths.” These elements—which include the lanthanide series (atomic numbers 57 through 71), as well as yttrium and scandium—have broad industrial applications. Their uses range from hydraulic fracturing (fracking) in oil extraction to—most significantly over the last decade—high-tech industries (batteries, superconductors, magnets, and components for wind turbines, hybrid cars, and electric vehicles), all essential to the energy and technological transition. During the first two decades of this century, these minerals remained of limited geostrategic importance to Brazil. The landscape changed drastically in the 2020s. In 2024, the United States Geological Survey estimated total global rare earth reserves at over 90 million tons. Of this total, 21 million are located in Brazil—a volume that places the country behind only China, which holds 44 million. Brazil’s new role as one of the largest holders of rare earth reserves has not yet translated into a corresponding position within global production chains. Since 2007, the country has remained a net importer of these ores and their derivative products. The recognition that this situation—characterized by the underutilization of Brazilian deposits—needed to change materialized in Bill No. 2780/2024, which establishes a legal framework for exploring strategic minerals. The Chamber of Deputies approved the proposal by voice vote, with the federal government’s support. The creation of a state-owned company for the monopolistic exploration of these minerals—modeled after Petrobras as it existed before the 1990s and tentatively named “Terrabrás”—was considered in a separate bill sponsored by Workers’ Party (PT) lawmakers but was rejected by the full chamber. Conversely, the text currently under debate in Congress bases Brazil’s exploration model on attracting international capital. It combines protection and guarantee mechanisms for foreign investors—often involving public funds—with limited regulatory oversight of rare-earth investment, extraction, processing, and export. Understanding Brazil’s role in this sector requires considering the country’s four-way relationship with the United States, China, and the European Union, as well as each party's specific interests. Washington aims to spearhead the adoption of a legal and geoeconomic framework designed to supply itself and its allies with these strategic resources, reduce the sector’s exposure to Chinese capital, and restrict China’s access to Western markets. This policy has the undeclared objective of maintaining the Western bloc’s supremacy within the new geoeconomic world order, even as it faces relative decline vis-à-vis a rising China. Brazil has adopted a cautious stance toward the United States, particularly given Trump’s open hostility toward the Lula administration. The Brazilian government is under intense pressure from the United States—manifested through the imposition of tariffs, the designation of criminal organizations as terrorist groups, election interference, and even attempts to negotiate (blatantly unconstitutional) agreements with state governments—such as that of Goiás, led by Ronaldo Caiado (PSD), who has already been confirmed as a candidate in this year’s presidential race—without Brasília’s involvement. The Brazilian president resists granting Washington all the concessions that might be obtained under, for example, a government led by the Bolsonarista camp, which advocates for automatic and total alignment with Trumpism. In this context, the Lula administration appears open to negotiations with the United States and to expanding cooperation with American companies in exploring national reserves, subject to Congress approving the relevant legal framework. The Trump administration does not appear to be reciprocating Brazil’s goodwill in the negotiations. The Office of the United States Trade Representative (USTR) confirmed the threat to impose tariffs under the dreaded Section 301 in July 2026. According to a document obtained by journalist Jamil Chade, meeting Washington’s exorbitant demands did not even guarantee cancellation of the extra 25% tariff, only its reduction to a rate yet to be defined. Regarding critical minerals, Trump demanded limits on sector investments by “non-market- oriented actors”—US government jargon for China. The file also reveals that the US government seeks to reverse the acquisition of British conglomerate Anglo American’s nickel operations by a company controlled by the Chinese state-owned enterprise China Minmetals. An attempt to diversify potential buyers and investors in the sector is taking shape through the Mercosur-European Union agreement. Europe depends heavily on imports of these minerals, and access to a supplier other than Washington or Beijing is seen as a major advantage of the deal. This factor may have helped overcome long-standing European protectionism. Brussels has proven to be a more reliable partner. At the same time, it is part of the Western geostrategic mineral framework devised under Trump’s leadership, while maintaining some autonomy from the United States. China, the world’s largest producer of rare earths, appears to be the most comfortable player in this arena, given its vast reserves and the financial, technological, and industrial capacity for their extraction. Beijing has little incentive to bankroll the industrialization process the Brazilian government seeks. President Lula himself has complained that China is “obsessed” with being the only country possessing knowledge regarding rare earths. The Asian power dominates the market and possesses the technology to process these strategic minerals at lower costs than Brazil. For this reason, it tends to prefer that its South American partner remain a mere primary commodity exporter—as is already the case with soybeans, meat, and iron ore. Brazil’s position regarding rare earth elements presents a mix of opportunity and risk. It is an opportunity because it could break a (near) monopoly that is not only highly profitable but also strategically vital for China. This could unlock a new sector to drive the Brazilian economy, provided the version of the legal framework approved by the Senate corrects flaws in the text passed by the Chamber of Deputies. It must be noted, however, that the consolidation of this legal framework and the sustainability of “neo-industrialization” depend on the delicate balance among the legislative, executive, and judicial branches. Furthermore, given Brazil’s geopolitical ambitions, controlling resources crucial to the energy and technological transition could raise the country’s international profile, putting it in a stronger position for negotiations in other sectors. This is risky because it involves dealing with powerful, self-interested actors. If an industrialization process along the lines of Brazil’s proposal does not suit China, the United States could benefit greatly from an alternative supplier like Brazil. As we have previously shown, however, that is not how Trump and his allies view the game. And, as with the Iran crisis, Washington may be overestimating its hand in this geopolitical poker match. According to Nobel laureate economist Paul Krugman, the assault on Brazil’s economic sovereignty could backfire. He argues that the trade diversion caused by Trump’s initial wave of tariffs transformed Brazil into an “export powerhouse”. Diversifying partners and reducing trade dependency amid the U.S. trade offensive strengthened Brazil’s negotiating position. In this context, the U.S. government’s reaction reveals a diminished willingness to tolerate Brazil’s moves toward greater autonomy, thereby narrowing the room for maneuver in negotiations. Even so, given China’s virtual monopoly in a landscape where geoeconomics appears to have superseded the liberal logic of free trade, Brazil—with its vast reserves—seems indispensable to the industries of the future. Betting on the universalist vocation of Brazilian diplomacy and diversifying trade partnerships seems a more prudent path than exclusive dependence on, and alignment with, just one major power, whether China or the United States.
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