Brazil is aiming to establish itself as a significant player in the rare earths industry, driven by the increasing global demand for these metals in green energy and defense applications. This push comes as Western economies seek to diversify their supply chains and reduce dependency on China, which currently dominates the rare earths market.
Strategic Advantages
Brazil boasts several advantages in this endeavor, including low labor costs, clean energy resources, established regulatory frameworks, and proximity to end markets. The country is home to Latin America’s first magnet plant, providing a ready market for domestically produced rare earths.
Challenges and Market Dynamics
Despite these strengths, Brazil faces considerable hurdles. Low rare earth prices, technical challenges, and cautious lenders present significant obstacles. Rare earths prices have plummeted by 70% over the past two years, complicating efforts to secure funding for mining and processing projects.
Industry Potential
Brazil possesses the world’s third-largest rare earth reserves, and its first rare earth mine, Serra Verde, commenced commercial production this year. With production expected to ramp up to 5,000 tons, doubling by 2030, industry experts are optimistic about Brazil’s potential. Western government incentives are also accelerating the development of the global rare earths refining and processing industry.
“Brazil as a source of potential rare earths is a very exciting proposition because there have been some very meaningful discoveries made in the past couple of years,” said Daniel Morgan of Barrenjoey investment bank.
Global Supply Chain Ambitions
The U.S. and its allies, heavily reliant on China for rare earths, aim to establish an independent supply chain by 2027. China produced 240,000 metric tons of rare earths last year, processing 90% of the global supply into essential components for wind turbines, electric vehicles, and defense systems.
For countries like Brazil, progress is gradual. Serra Verde took 15 years to reach production. Analysts predict Brazil could have two or three additional rare earth mines by 2030, potentially surpassing Australia’s current output.
Government and Private Sector Initiatives
The Brazilian government is actively supporting the industry, launching a 1 billion reais ($194.53 million) fund in February for strategic minerals projects. The government aims to build a domestic industry for transforming rare earth minerals into alloys for batteries, wind turbines, and electric motors.
Brazil is also exploring rare earth recycling technologies and has initiated discussions with companies like Australia’s Ionic Rare Earths, which is collaborating with Brazilian developer Viridis Mining and Minerals.
Outlook
While Brazil’s low operating costs offer a competitive edge, the technical complexities of rare earth production remain a significant challenge. The country is building a magnet factory set to start operations later this year, signaling a commitment to developing the necessary infrastructure.
“Our objective is to be a developer, a multiplier of this technology,” said Flavio Roscoe, president of Minas Gerais’ state Federation of Industries.
As Brazil navigates these challenges, its progress will serve as a critical indicator of the West’s ability to build a new, advanced rare earths industry and reduce dependence on China.
