Washington Eyes Brazil’s Rare Earths in Early Trade Talks

Brazil’s vast but underdeveloped rare earths resources are emerging as a focal point in renewed talks with the US, as both countries explore ways to bolster ex-China supply chains.

Washington has been quietly sounding out Brazil on a potential rare earths partnership following a tentative diplomatic thaw between President Donald Trump and Brazilian President Luiz Inácio Lula da Silva.

Brazil holds the world’s second largest reserves of rare earth elements, according to the US Geological Survey, yet produces only a fraction of global supply and has limited processing capacity.

Currently, China controls about 60 percent of global rare earths mining and over 90 percent of 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 efforts to secure alternative sources, striking critical minerals agreements with countries including Australia and the Democratic Republic of Congo.

“There’s nothing but opportunity here,” one official familiar with the discussions told the Financial Times. “Brazil’s government is open to a deal on critical minerals.”

Talks remain at an early stage, but engagement has intensified over the past year.

Gabriel Escobar, the US chargé d’affaires in Brazil, has discussed rare earths with Ibram, Brazil’s mining association, and companies active in the sector, people with knowledge of the meetings said. In addition, officials from the US Department of Commerce and Brazil’s trade ministry have held preliminary discussions on critical minerals cooperation.

Momentum has also been reinforced by growing competition for Brazil’s attention as well.

In Rio de Janeiro last week, European Commission President Ursula von der Leyen said the EU was in talks with Brazil on a critical raw materials deal covering lithium, nickel and rare earths, framing the issue as key to strategic autonomy.

Despite the country’s abundance of the resource, Brazil’s rare earth ambitions are constrained by familiar hurdles. Projects have struggled with financing, regulatory delays and a lack of geological mapping.

For instance, Serra Verde, Brazil’s only operating rare earths mine, took 15 years to reach production. The mine received a US$465 million loan from the US International Development Finance Corporation in August last year.

Political risk consultants see conditions aligning for a future agreement.

Christopher Garman of Eurasia Group said he expects progress soon. “We’ve got like a 75 percent odds of some kind of a deal occurring by Q1,” the expert told the Financial Times.

Brazilian policymakers see rare earths as both an economic opportunity and a diplomatic lever.

The country has been seeking to rebalance relations with Washington after tensions flared last year over US trade tariffs and sanctions linked to the prosecution of former President Jair Bolsonaro. Since then, the US has rolled back some measures, including tariffs on Brazilian food products, and reopened broader trade talks.

Commercial interest is already building around this policy shift. Australia-listed developer Viridis Mining and Minerals (ASX:VMM,OTCPL:VMMNF) is in talks with potential rare earths buyers in the US and Europe for material from its proposed Colossus project in Minas Gerais, as noted in a Bloomberg report.

Klaus Petersen, Viridis’ Brazil country manager, said the company aims to sign multiple offtake agreements as western customers look to diversify away from China.

Still, potential friction points remain, including Brazil’s condemnation of recent US actions in Venezuela. While analysts say those tensions could slow negotiations, they are unlikely to derail them entirely.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.