Western companies are accelerating investments in Brazil’s rare-earth industry, seeking to build an alternative supply chain to China’s dominant processing and magnet production network, according to mining executives, government officials and industry analysts.
Brazil holds the world’s second-largest rare-earth reserves, approximately 21 million metric tons, roughly one-quarter of the global total, according to U.S. Geological Survey data. More than 3,000 applications for rare-earth research permits have been filed in Brazil since the start of 2023, compared with 476 over the previous 45 years, the National Mining Agency reported.
Australian-listed miner Viridis opened a pilot plant in Poços de Caldas, a city built in the caldera of an extinct volcano in southeastern Brazil, in May and plans to begin commercial production in 2028. The company’s $360 million Colossus project will include scarcer heavy rare earths essential for high-temperature magnets used in electric vehicles and jet fighters.
“This is world-class geology,” Viridis Chief Executive Rafael Moreno said in an interview. “Brazil is now positioned to play an increasingly strategic part in supplying critical raw minerals to Western economies.”
In April, USA Rare Earth, backed by U.S. government financing, agreed to pay $2.8 billion to acquire Serra Verde, the only large-scale producer outside Asia extracting rare earths from clay deposits. Canada’s Aclara is developing a project in Goiás state, and Australian miner Meteoric is advancing a neighboring deposit in Poços de Caldas.
Unlike the hard-rock deposits common in Australia, many of Brazil’s rare-earth reserves are found in clay, which executives said is cheaper and easier to process. Low labor costs, cheap hydropower and proximity to U.S. markets have further attracted investment.
The push to develop Brazil’s rare-earth processing capacity gained urgency in 2025 after China imposed export controls on several rare-earth elements and magnets amid escalating trade tensions with Washington, exposing Western dependence on Chinese supply chains.
Under President Donald Trump, the U.S. has backed the industry with financing, purchase agreements and price guarantees designed to prevent China from driving competitors out of business by flooding the market. The U.S. International Development Finance Corp. has held discussions with Viridis and other miners.
But Brazil has resisted pressure to join a U.S.-led critical-minerals bloc, insisting it will accept investment from any country that respects its sovereignty. President Luiz Inácio Lula da Silva said last month after meeting Trump in Washington that Brazil “wouldn’t favor one nationality over another,” according to the Wall Street Journal.
Mines and Energy Minister Alexandre Silveira said Brazil is in talks with “the U.S., the European Union, China and others.” The government is completing legislation governing strategic minerals, and Lula’s reluctance to back plans for a state-backed rare-earth company reassured some investors, the Journal reported.
Analysts said the biggest challenge for Washington is Brazil’s determination to remain neutral.
“There’s a huge opportunity here for Brazil,” said Reg Spencer, an analyst at Canaccord. “But the complicating factor is their decision not to pick sides.”