Wall Street Journal: The battle to break China’s dominance in rare earths moves to Brazil | economy

Brazil is turning into a new front in the battle to break China’s dominance of rare earths, with Western companies pouring money into mining and processing projects aimed at building an alternative supply chain for materials that go into electric cars, wind turbines and advanced weapons.

The American newspaper “The Wall Street Journal” says that Western companies are pumping money into the rare earths sector in Brazil, hoping to help the country ease China’s grip on supply chains. Brazil has the second largest global reserve of these minerals after China, but the new bet does not stop at extracting the raw materials, but rather extends to building factories for separation, processing, and the production of metals and magnets.

The importance of this shift lies in the fact that real control over rare metals is not linked to reserves alone, as China owns about half of the global reserves, but it dominates more than 90% of the processing and production of magnets, according to the Wall Street Journal, while the International Energy Agency confirms that the concentration of refining chains for vital metals increased between 2020 and 2024, and that China was the largest supplier of growth in supplies of cobalt, graphite, and other rare metals.

Brazilian ambition

Washington places rare earths at the heart of a broader conflict with Beijing, because they are involved in industries that the United States considers related to national security, energy, and technology. The US Department of Energy says that these elements are used in magnets, batteries, catalysts, and sectors including transportation, electricity generation, and consumer electronics.

But Brazil does not want to be just an appendage of a supply chain led by Washington. Brazilian Mines and Energy Minister Alexander Silveira says that his country is open to investments from any country that respects its sovereignty, and that it has held talks with the United States, the European Union, China and other parties.

Brazil has an estimated 21 million tons of rare metal reserves, compared to 44 million tons in China, according to US Geological Survey data for the year 2025. These numbers make Brazil the second largest owner of reserves in the world, but they do not automatically make it an industrial power in this market unless it moves from drilling and extraction to separation, processing and manufacturing.

The Wall Street Journal says that more than 3,000 applications for research permits related to rare metals have been submitted in Brazil since the beginning of 2023, compared to only 476 applications between 1975 and 2020, in an indication of a rapid investment desire in a sector that has been away from public attention for years.

Minerals in clay

Australian, Canadian, and American companies are progressing in various projects within Brazil in the field of rare metals, including Veridis and Metoric in the state of Pocos de Caldas (south-eastern Brazil), and the Aclara company in the state of Goiás (central), while the American company USA Rare Earth agreed in April to acquire the Brazilian company Serra Verde for $2.8 billion.

The appeal of some Brazilian deposits is that they are located within clay, which companies say may make them less expensive and easier to process than the hard rock deposits common in Australia and other regions. Relatively cheap hydroelectric electricity, low labor costs, and proximity to the American market add additional attractions for investors to the rare earths market in Brazil.

According to the American newspaper, the Australian company Veridis plans to begin production in 2028 after opening a pilot plant in the Pocos de Caldas region. The production will include less abundant heavy rare metals that help magnets maintain their strength at high temperatures, a crucial property in applications ranging from electric cars to military aircraft.

Western interest in investing in the rare metals sector increased after China tightened its restrictions on the export of a number of rare metal elements and magnets in 2025, as the Chinese Ministry of Commerce announced in April 2025 amendments to the control list for exports of dual-use materials, in a move that revealed the fragility of Western companies’ reliance on processing rings for these vital metals controlled by Beijing.

Attracting investments

Brazilian President Lula da Silva wants rare metals to be transformed into a local, value-added industry, not into a new cycle of exporting raw materials. The Wall Street Journal quotes President da Silva as saying that he does not want his country to be satisfied with the role of the primary supplier (exporting raw materials), but rather to attract investments that build higher-value jobs and localize technology at home.

However, the path of Brazil, which has the largest economy in South America, to a complete supply chain is still long, as most companies initially plan to export intermediate products to separation plants outside Brazil, and “Viridis” intends to send the production of the Colossus project, which costs $360 million, to a separation plant run by the French-Belgian company “Solvay”, before later seeking to separate part of its production inside Brazil and recycle the magnet waste.

Sector executives warn of a delicate equation that Brasilia faces: strict local conditions may alienate investors, while lax rules may make the country merely an exporter of crude, at a time when the Brazilian parliament is still completing legislation for strategic minerals.

The biggest problem for Washington is that Brazil does not seem ready to choose a side between the United States and China. Beijing continues to invest in the Brazilian mining sector, and companies such as the Chinese BYD bring to the country the kind of industrial investment that Brasilia has been seeking for years, which opens the door to the possibility of Brazil becoming a power in rare earths without necessarily turning into part of a supply chain affiliated with the West.