Brazil’s rare earths boom – a new frontier for global supply chains

As Bloomberg informs, the global demand for rare earth elements surges, Brazil is stepping into the spotlight with nearly $1 billion in funding to support strategic mineral projects. With the world’s second-largest reserves after China, the nation is positioning itself as a key player in diversifying the rare earth supply chain, an industry critical to magnets, batteries, and cutting-edge technology.

New projects

Brazil will shortly unveil a shortlist of projects eligible for financial backing from BNDES (its development bank) and Finep, the government’s innovation agency. These organizations have reviewed 124 proposals worth $15 billion, many focused on rare earths.

Why now? With China leveraging its dominance in rare earths for trade negotiations, nations like the US are scrambling for stable, alternative sources. Brazil, with 23% of global reserves, offers an opportunity to meet this growing demand while advancing environmentally friendly extraction methods.

Future benefits

Notable players in this space include Aclara Resources., Viridis Mining and Minerals Limited, and Meteoric Resources . These companies are working on early-stage projects that could benefit from state funding and potentially partnerships with international institutions like the Japan International Cooperation Agency or private investors.

“The world has realized it can’t rely on just one country” said José Luis Gordon, Director of Development, Foreign Trade, and Innovation at BNDES.

Industrial chain still needs to be structured

While challenges remain, such as competing with China’s processing capabilities and creating transparent price benchmarks Brazil’s approach is drawing attention. Firms like Aclara aim to mine and refine locally, while Viridis is engaging financiers globally to reduce risks and boost flexibility.

According to Bloomberg’s Wood Mackenzie estimates that prices would have to double to encourage ex-China guaranteed supply. Johann Schmid, head of metals consulting at Wood Mackenzie, stated: “Investors are not willing to run all that risk, so there is a need for incentives, most likely from governments, that help them de-risk”.

Klaus Petersen Viridis’ country manager in Brazil added: „The entire industrial chain still needs to be structured”.

The rare earths spotlight isn’t just a passing trend. With China’s export restrictions and the US forging resource deals globally, this is a pivotal moment for Brazil to turn its geological promise into industrial reality.

As Aclara CEO Ramon Barua Costa put it: “The difference is we’re doing it in a super environmentally friendly way.”

In 2010, rare earth metals were also in the spotlight. Molycorp and Lynas Rare Earths Ltd. were interested in deposits until the market crashed.