Washington has quietly sounded out Brasilia about a potential partnership in rare earths after a cautious diplomatic thaw between President Donald Trump and Brazilian President Luiz Inácio Lula da Silva, according to reports a report from the Financial Times.
According to the US Geological Survey, Brazil has the second largest reserves of rare earth elements in the world (USGS)but produces only a fraction of the global supply and has limited processing capacity.
Currently, China controls about 60 percent of global rare earth mining and more than 90 percent of its processing, a dominance that has come into sharper focus after Beijing imposed export restrictions in response to Trump’s trade tariffs.
Since then, the US has accelerated its efforts to secure alternative sources, reaching major mineral agreements with countries such as Australia and the Democratic Republic of Congo.
“There are only opportunities here,” an official familiar with the discussions told the Financial Times. “The Brazilian government is open to an agreement on crucial minerals.”
Discussions are still at an early stage, but involvement has intensified over the past year.
Gabriel Escobar, the American chargé d’affaires in Brazil, has done so rare earth elements discussed with Brazilian mining association Ibram and companies active in the sector, people with knowledge of the meetings said.
Officials from the US Department of Commerce and the Brazilian Ministry of Commerce have also held preliminary talks on cooperation on critical minerals.
The momentum has also been boosted by increasing competition for Brazil’s attention. Last week, European Commission President Ursula von der Leyen said in Rio de Janeiro that the EU was in discussions with Brazil about a critical raw materials agreement relating to lithium, nickel and rare earth metals, with this issue being central to strategic autonomy.
Despite the country’s abundance of resources, Brazil’s rare earth ambitions are limited by known obstacles. Projects have suffered from financing, regulatory delays and a lack of geological mapping.
For example, it took fifteen years for Serra Verde, the only operating rare earth mine in Brazil, to come into production. The mine received one Loan of $465 million from the US International Development Finance Corporation in August last year.
Political risk advisors see the terms for a future deal aligning. Christopher Garman of Eurasia Group said he expects progress soon. “We have a 75 percent chance that a deal will happen in the first quarter,” he said.
Brazilian policymakers see rare earths as both an economic opportunity and diplomatic leverage. The country is trying to rebalance relations with Washington after tensions flared last year over US trade tariffs and sanctions over the prosecution of former President Jair Bolsonaro.
Since then, the US has rolled back a number of measures, including tariffs on Brazilian food products, and reopened broader trade negotiations.
Commercial interest is already emerging around this policy change. Australian-listed developer Viridis Mining and Minerals (ASX:VMM) is in talks with potential rare earth buyers in the US and Europe for material from the proposed Colossus project in Minas Gerais, as noted in a Bloomberg report.
Klaus Petersen, Viridis Country Manager for Brazil, said the company aims to sign multiple offtake agreements as Western customers look to diversify outside of China.
Yet potential points of friction remain, too Brazil’s condemnation of recent US actions in Venezuela. While analysts say these tensions could delay negotiations, they are unlikely to derail them completely given the strategic importance of minerals.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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