A national strategy for Brazilian rare earths

Donald Trump's recent offensive against the Brazilian economy has sparked a debate that goes far beyond its initial pretext. The rhetoric of punitive tariffs, justified by the judiciary's actions in Bolsonaro's trial and alleged "unfair trade relations," ultimately revealed a deeper issue: US interest in Brazil's rare earth reserves and the establishment of data centers there.

It's no coincidence that these issues are currently at the center of discussions between Brasília and Washington, as Vice President Geraldo Alckmin, Finance Minister Fernando Haddad, and US Chargé d'Affaires Gabriel Escobar recently admitted. Behind Trump's erratic rhetoric lies a rationale shared by Democrats and Republicans: maintaining America's technological, financial, and military hegemony. Biden was no stranger to this, just as Trump certainly can't be.

Rare earths and data infrastructure form the strategic core of the new sectors of the global economy. These are activities that define patterns of production and accumulation, around which all other sectors are organized and, to a greater or lesser extent, subordinated. Those who control this core concentrate extraordinary profits and, naturally, economic, political and military power.

Today, this core is based on two blocks: data technologies (with Artificial Intelligence as the most sophisticated expression) and renewable energy (production, storage and new materials).

These two blocs of radical innovation are already reshaping the international division of labor, creating new centers of power and reinforcing peripheries. Brazil, with its mineral reserves, cannot imagine itself outside this framework.

The weight of rare earths

Little known until recently, rare earths—17 chemical elements—have become a recurring topic in interviews and news reports. Along with other critical minerals such as lithium, cobalt, graphite, copper, and germanium, they are the foundation of strategic value chains: wind turbines, solar energy, electric vehicles, semiconductors, and defense technologies. They are the basic nutrients for new technological standards.

According to data from the U.S. Geological Survey (USGS), China holds almost half of the world's mapped reserves (48%, approximately 44 million tons), followed by Brazil with 23% (21 million tons). Next come India, Australia, Russia, Vietnam, the United States, and Greenland, with much smaller percentages.

The geopolitical weight of these figures is clear: the US, seeking alternatives to its dependence on China, sees Brazil as a fundamental point of opposition. This is especially true because China dominates not only reserves, but also production (70% of the total in 2024), refining (91%), and virtually the entire market for permanent magnets—a key component for electric vehicles, turbines, and aircraft. The US, by comparison, is a supporting player: 11% of production and refining, a negligible share of magnets. Brazil, despite having the world's second-largest reserves, produced only 0.005% of the global total in 2024. This represents virtually untapped extraction potential.

What to do with this potential?

Brazil's privileged position in the dispute over these minerals—which, we reiterate, comprise the strategic core of new technologies—is clear. The United States' fragility in this field also justifies the move. The central question for us Brazilians is what to do with this enormous potential. Handing over the exploration of rare earths to foreign companies as a bargaining chip in tariff negotiations with Washington would be a serious mistake—and exactly the opposite of what the major powers have been doing.

As is customary in strategic and emerging sectors, national control is the rule in rare earths; a sector that is also characterized by high technical complexity and low rates of return compared to other minerals.

In China, the sector is controlled by national or provincial state-owned companies with direct ties to the state, such as Northern Rare Earth and China Rare Earth Group. The recent establishment of rare earth export quotas demonstrates how the country, led by Xi Jinping, is clearly aware of the strategic importance of controlling these minerals.

In July of this year, the US followed a similar path: the Department of Defense invested $400 million in MP Materials—the country's largest rare earth mining and refining company—becoming its largest shareholder. It also provided loans and guaranteed the purchase of 70% of future magnet production for civilian and military purposes. France and South Korea are also moving toward stronger state control of the supply chain.

In this context, for Brazil, simply giving up this potential to multinationals or large national private groups would mean repeating the old pattern: intensive mining, export of raw materials without added value, quick profits for a few, and environmental losses for all. It would deepen technological dependence and reinforce the primary focus of the economy—a "neo-extractivism" disguised as modernity.

As mentioned, the rare earths value chain is extremely complex: the first stage, mining, requires at least 50 processes to transform rare earth clays or sands into viable raw materials. These applications, in turn, involve cutting-edge knowledge and technology that Brazil, plagued by nearly 30 years of productive and technological decline in the industry, lacks.

A national strategy

The opposite approach would be the creation of a state-owned rare earth company, with a monopoly on the extraction and refining of the main deposits. Mining companies currently controlled by foreign funds, such as Serra Verde, should be transferred to the state. The 1990s are long gone, and those who still bristle at claiming state ownership of their own country's strategic resources must accept that the world is no longer the same. Only a state-owned company could regulate the pace of exploration according to national interests and direct part of the mineral revenue to public universities and research centers, building their own high-tech capabilities.

Private capital would not be excluded from the arrangement proposed here: national companies could supply machinery, equipment, services, and inputs, with support from BNDES and FINEP for financing aimed at building national capacity, including state equity or venture capital when necessary. A public procurement system could integrate this network with national objectives.

As for the more complex stages—the production of permanent magnets, special alloys, and aerospace components—partnerships with foreign companies may be inevitable in the short term, provided they include mandatory technology transfer and coordination with local production chains, such as the Brazilian aerospace sector. A state monopoly on raw materials would be key to ensuring adequate bargaining power in the negotiations.

In this scenario, China emerges as a natural partner: it dominates the entire rare earths value chain, is part of the BRICS with Brazil, and has an interest in limiting US access to new suppliers. However, it would be necessary to test the extent to which Beijing would accept partnerships that go beyond commodity supply and truly include technology transfer. To date, even Chinese manufacturing investment in Brazil has created few connections with domestic suppliers.

Expanding the discussion to the Latin American sphere could further increase bargaining power. In addition to Brazil's rare earths, the region holds strategic reserves of copper (Chile and Peru), lithium (Argentina, Bolivia, and Chile), nickel, cobalt, and graphite. A Latin American partnership, perhaps via CELAC, could not only strengthen each country but also renew the regional integration project with a concrete goal: the sovereign use of critical minerals to compete for a place in the economy of the future.