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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Brazil Looks To Challenge China’s Dominance in Rare Earth Minerals

  • Brazil is estimated to hold the world’s third-largest reserves of rare earths.
  • Brazil’s rare earths industry is being developed by Brazilian and Australian firms.
  • Brazil’s rare earths mining industry has just started despite the country being a major mining destination for decades.
Brazil flag

Brazil is estimated to hold the world’s third-largest reserves of rare earths, the critical minerals vital for modern technology and the energy transition.

Brazil’s rare earths mining industry has just started despite the country being a major mining destination for decades.  

Established mining industry regulations and lower labor costs compared to Australia or the U.S. could give Brazil a competitive advantage in the race to challenge China’s oversized dominance in rare earths production and processing.  

Brazil’s rare earths industry is being developed by Brazilian and Australian firms, with U.S. financial backing for some projects. However, the slump in rare earths prices is holding back investments and companies are struggling to obtain funding.

Nevertheless, Brazilian companies persevered and launched early this year a rare earths production project in the country. The Brazilian government is also looking to support the industry in the hope that Brazil could successfully tap its vast resources and become a top producer of rare earth elements (REE) globally.

Huge Resource, Low Costs

Brazil is estimated to hold 21 million tons of rare-earth-oxide (REO) equivalent, according to the U.S. Geological Survey. That’s the third-largest deposits in the world, behind China’s 44 million tons and Vietnam’s 22 million tons of REO equivalent. By 2023, Brazil’s production of rare earth elements was a negligible 80 tons, compared to China’s 240,000 tons and the U.S.’s 43,000 tons last year.

Related: Russia Reclaims Its Position as Europe’s Top Gas Supplier

Brazilian and Australian companies, one with U.S. financial support, look to boost production in Brazil in the coming years.

Lower costs and clear regulations about mining have helped Brazil attract foreign companies looking to invest in its REE industry.

Local developers are also looking for a spot in the race to challenge China’s dominance in the sector.

“I do think outside of China, Brazil’s projects are the most economic greenfield projects available,” Daniel Morgan of Barrenjoey investment bank in Sydney has recently told Reuters.

Labor costs in Brazil are much lower than in Australia or the U.S., while the country has decades of experience in regulating a mining industry.

Efforts of the past year yielded results at the beginning of 2024 when Serra Verde began commercial production of Mixed Rare Earth Concentrate from Phase I of its Pela Ema deposit in Minaçu. Once it has ramped up to full production, Serra Verde is expected to produce at least 5,000 tons per year of rare earth oxide used in the manufacture of high-efficiency permanent magnets required for electric vehicle motors and wind turbine generators.

“We are now the only company outside Asia to produce at scale all four critical rare earths used in the production of permanent magnets,” Serra Verde CEO Thras Moraitis said in January.

Serra Verde already has offtake deals with processing companies for a large part of planned production. The project also boasts lower environmental impact – the electricity supply is entirely sourced from renewable sources and the operation is in an established mining district with access to technical skills and developed road and port infrastructure.

Legacy industrial mining regions, skilled and lower-cost workforce, and access to hydropower for operations make Brazil an attractive destination for REE miners.

Australia’s mining magnate and richest woman, Gina Rinehart, is a shareholder in Brazilian Rare Earths, which has just completed a $53-million (AUS$80 million) placement to accelerate exploration and development at the Monte Alto, Sulista, and Pelé rare earth projects.

Australia’s Meteoric Resources plans the Caldeira REE project in Brazil, with the goal to begin rare earth production in 2027. The company is in discussions for a $250 million financing from the Export/Import Bank of the United States for the project.

Meteoric Resources CEO Nick Holthouse said in March, when the company announced the potential U.S. financing, 

“In recent years, there has been increased awareness of the deficiencies in the Western Supply chains for Rare Earth mining and downstream processing. Meteoric, through the Caldeira Project and support from the EXIM Bank, intends to play a part in re-building an independent and vertically integrated rare earth supply chain of scale.”

Long Way to Diversification from China

Despite the upsurge in project plans, financing for investments is not easily available.

“Getting money at the moment is tough,” Meteoric’s Holthouse told Reuters.

The recent fall in the price of critical minerals and rare earth elements has affected investments in new supply, the International Energy Agency (IEA) said in its Global Critical Minerals Outlook 2024 last month.

While lower prices for critical minerals in the past year have been good news for consumers and affordability, they have also provided a headwind for new investment, whose growth slowed in 2023 compared to 2022, the IEA noted.

“Falling prices also make spending to ensure reliable and diversified supply less appealing to investors,” the agency advocating for a fast energy transition acknowledges.

The IEA also said that progress in diversifying supply has been limited, with China dominating rare earths production and processing, as it does many other critical minerals.

“These high levels of supply concentration represent a risk for the speed of energy transitions, as it makes supply chains and routes more vulnerable to disruption, whether from extreme weather, trade disputes or geopolitics,” IEA said.

Brazil has all the premises to be a major rare earths supplier, but companies planning projects there still need to ensure financing for their ventures.

By Tsvetana Paraskova for Oilprice.com

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