Rare Earths - Brazil's Big Bet Faces 3 Major Hurdles

Rare Earths - Brazil’s Big Bet Faces 3 Major Hurdles

Brazil holds the world’s third-largest rare earth reserves but turning that geological wealth into a functioning supply chain remains a far harder problem than digging the minerals out of the ground.

What to know

• Brazil holds an estimated 21 million tonnes of rare earth oxide reserves, trailing only China and Vietnam, yet produces less than 1% of global supply.

• China still controls roughly 60-70% of rare earth mining and over 85% of processing, making diversification a strategic priority for Western economies.

• Rare earth demand is projected to double or triple by 2035, driven by EV motors, wind turbines, and defense applications - raising the stakes for alternative suppliers.

Why is Brazil back in the rare earth conversation?

Brazil sits on roughly 21 million tonnes of rare earth reserves, ranking third globally behind China and Vietnam. The country’s re-emergence as a potential supplier follows intensified efforts to diversify critical mineral supply chains away from China through 2025 and into 2026. Gold’s 9% monthly climb to above $5,000/oz has drawn fresh capital into the broader mining complex. Rare earths, while not precious metals in the traditional sense, respond to the same geopolitical pressures driving gold’s rally: supply chain fragmentation, resource nationalism, and strategic autonomy.

What’s actually standing in Brazil’s way?

Three obstacles stand out, and none of them are geological.

Processing infrastructure is the most critical gap. Mining rare earth ore is only the first step. Separating and refining those minerals into usable oxides and metals requires specialized facilities that Brazil largely lacks. China spent decades and billions of dollars building this midstream capacity. Brazil would need to replicate at least a portion of that chain - a capital-intensive, environmentally complex undertaking that takes years, not quarters.

Regulatory and environmental permitting adds another layer. Brazil’s environmental licensing process is notoriously slow, particularly for mining projects in ecologically sensitive regions. The Amazon and cerrado biomes overlap with significant rare earth deposits, creating tension between development ambitions and conservation commitments. Permitting timelines of five to ten years are not uncommon for large-scale mining projects.

Technical workforce and R&D capacity round out the challenge. Rare earth processing demands specialized metallurgical expertise that Brazil’s mining sector - historically focused on iron ore, bauxite, and gold - hasn’t needed to develop at scale.

Why should precious metals investors care?

Rare earths and precious metals don’t compete directly, but they share supply chain DNA. The same geopolitical dynamics pushing gold to $5,046/oz are fueling the rare earth diversification push. When Western governments talk about “critical minerals security,” they’re describing a world where resource access is increasingly weaponized - and that’s structurally bullish for hard assets across the board.

Mining companies operating in Brazil may redirect investment toward rare earth projects if incentives materialize, potentially slowing expansion in gold and platinum group metals. With platinum at $2,077/oz and palladium at $1,703/oz - both down modestly this week - any supply-side shifts in PGM-producing regions bear watching.

What does the competitive landscape look like?

Australia, Canada, and the United States have all accelerated rare earth projects over the past three years, with mixed results. MP Materials in California and Lynas in Australia remain the only non-Chinese producers operating at meaningful scale. Brazil would be entering a crowded field of aspirants, though its reserve base gives it a longer runway than most.

Rare earth consumption is on track to double by the mid-2030s, driven primarily by permanent magnets in EV motors and wind turbines. Whether Brazil can move faster than demand grows remains unclear.

What are we watching?

Two signals matter. First, whether Brazil’s government introduces targeted fiscal incentives or streamlined permitting for rare earth projects - talk is cheap, but policy changes would signal genuine commitment. Second, whether any major Western mining company announces a joint venture or offtake agreement for Brazilian rare earths, which would validate commercial viability that’s still largely theoretical. This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.