How Brazil's Rare Earths Are Reshaping Global Trade Dynamics

As Washington and Beijing’s trade tensions intensify, attention is turning toward an unexpected player in the critical minerals competition: Brazil. The South American nation, which holds the world’s second-largest reserves of rare earth elements according to the US Geological Survey, is emerging as a strategic asset in efforts to reshape global supply chains away from Chinese dominance. Early discussions between the US and Brazil on rare earth partnerships reflect a broader shift in how Western powers are approaching resource security.

China’s Grip on Global Supply Chains

The urgency behind these trade talks stems from a fundamental market reality: China controls approximately 60 percent of global rare earths mining and more than 90 percent of processing operations. This overwhelming concentration became a critical vulnerability when Beijing imposed export restrictions in response to recent trade tariffs, prompting Western governments to accelerate their search for alternative sources.

The US has already moved swiftly to secure critical minerals agreements with countries including Australia and the Democratic Republic of Congo. Yet Brazil represents a particularly promising opportunity due to its vast untapped reserves, despite the country’s limited current production and processing infrastructure.

Washington and Brussels Race for Brazil’s Strategic Resources

The diplomatic temperature around Brazil’s rare earths has risen considerably in recent months. Following an improving relationship between US President Donald Trump and Brazilian President Luiz Inácio Lula da Silva, Washington has begun quietly assessing potential cooperation frameworks. Gabriel Escobar, the US chargé d’affaires in Brazil, has engaged directly with Ibram, the country’s mining association, and sector participants on possible rare earths collaboration. Meanwhile, officials from the US Department of Commerce and Brazil’s trade ministry have launched preliminary discussions on critical minerals cooperation.

Brussels is not sitting idle either. During a recent visit to Rio de Janeiro, European Commission President Ursula von der Leyen announced that the EU is pursuing a critical raw materials agreement with Brazil covering lithium, nickel, and rare earths—a move framed explicitly as essential to European strategic autonomy in response to US-China tensions.

Political analysts view the conditions as favorable for progress. Christopher Garman of Eurasia Group projects approximately 75 percent probability of some form of agreement materializing by the first quarter of the year, signaling that multiple actors see Brazil as central to their trade strategies.

From Aspiration to Reality: The Obstacles Facing Brazil

Despite its resource wealth, Brazil’s rare earth sector faces significant hurdles that could complicate these ambitious trade negotiations. Serra Verde, currently Brazil’s only operating rare earths mine, required 15 years to reach commercial production—a timeline that underscores the sector’s complexity. The mine received a US$465 million financing package from the US International Development Finance Corporation in August last year, illustrating both the capital intensity and the willingness of Western institutions to support projects.

Beyond financing, Brazilian developers contend with regulatory delays, insufficient geological mapping, and permitting obstacles that have historically slowed project development. These structural challenges mean that even with political commitment to expanded rare earth trade, delivering volumes at competitive timescales will remain difficult.

Commercial Momentum Builds Amid Diplomatic Shifts

Despite these constraints, commercial interest is accelerating around the potential policy shift. Australia-listed developer Viridis Mining and Minerals is actively pursuing offtake agreements with potential customers in the US and Europe for material from its proposed Colossus project in Brazil’s Minas Gerais state. Klaus Petersen, the company’s Brazil country manager, has stated that the strategy centers on securing multiple long-term supply commitments as Western buyers seek to diversify away from Chinese sourcing.

Brazilian policymakers increasingly view rare earths as both an economic opportunity and a tool for recalibrating diplomatic relationships with Washington. Tensions over US trade tariffs and sanctions related to the prosecution of former Brazilian President Jair Bolsonaro had strained ties, though recent rollbacks of tariffs on Brazilian food products and the reopening of broader trade talks suggest improving conditions.

Navigating Geopolitical Complexities

A notable complication remains Brazil’s public criticism of recent US actions in Venezuela, an issue that could theoretically slow negotiations. However, most analysts assess that such friction points, while potentially contentious, are unlikely to derail the broader trade dialogue given the mutual strategic interest in challenging Chinese market control of critical minerals.

The convergence of US-Brazil trade initiatives, European competition, and commercial readiness suggests that rare earth cooperation may become a defining feature of 2026’s geopolitical and economic landscape. For Brazil, the challenge lies in translating diplomatic interest into operational capacity—and for Western governments, the test will be whether strategic diversification can actually reduce their dependence on Beijing’s critical minerals infrastructure.