Brazil possesses the world’s second-largest reserves of rare earth elements (REEs), positioning it as a potential leader in the global market. These minerals are critical for high-tech industries, renewable energy, and defense applications. Despite this advantage, Brazil has struggled to develop its rare earth sector into a major global force. Financial constraints, market competition, and structural challenges have prevented the country from capitalizing on its vast resources.
One of the most significant barriers to Brazil’s rare earth industry is the country’s restrictive financial environment. Unlike in other mining-heavy economies, Brazilian banks and financial institutions do not allow mining rights or future output to be used as collateral for loans. This limits the ability of companies to secure local financing, forcing firms to look abroad for investment.
Companies like Meteoric Resources NL, which is developing a $420 million rare earth project in Brazil, have been unable to secure necessary funding within the country. As a result, they have sought financial backing from foreign institutions, including a $250 million support letter from the U.S. Export-Import Bank. When companies obtain financing from international sources, production is often tied to offtake agreements, meaning that the mined rare earth elements are committed to foreign markets rather than being used to develop Brazil’s domestic supply chain. This dependency on external financing undermines the country’s ability to build a self-sustaining rare earth industry.
The Brazilian government has made some efforts to address this issue. Institutions like the National Bank for Economic and Social Development (BNDES) and Finep have offered financing programs for strategic minerals. However, these programs remain difficult to access due to strict regulations, leaving most rare earth mining firms with few options other than foreign investment.
Even if Brazil were to overcome its financing hurdles, it would still face stiff competition from China, which has controlled over 90 percent of global rare earth production in recent years. This dominance is not just due to resource availability but also to China’s decades-long investment in refining, processing, and supply chain integration.
Rare earth mining is only the first step in the production process. To be useful in high-tech applications, rare earth elements must be refined and processed into specialized materials, such as high-performance magnets used in electric vehicles, wind turbines, and defense systems. China has built a vertically integrated industry that handles every stage of the supply chain, giving it significant control over pricing, production, and global supply.
Brazil, by contrast, has not yet developed large-scale refining or processing capabilities. While Meteoric Resources has plans to produce a refined mixed rare earth carbonate and eventually separate oxides within Brazil, these efforts are still in early stages. Without processing infrastructure, Brazil will remain dependent on exporting raw materials rather than capturing the higher economic value associated with refined rare earth products.
Beyond financing and competition, Brazil faces internal challenges related to policy coordination and industry organization. While the country recognizes the strategic value of rare earths, there is no unified national plan to support their development.
The Brazilian Rare Earths Company’s recent presentation highlighted the country’s ambition to become a key supplier of REEs for green technologies and electric vehicles. However, individual companies and government agencies operate independently, and there is no clear roadmap for integrating exploration, production, processing, and end-use manufacturing within Brazil.
Other countries, such as the United States and Australia, have implemented national strategies to reduce dependence on China and develop their own rare earth industries. Brazil has yet to take similar decisive steps. Without strong government leadership, investment incentives, and regulatory support, Brazil’s rare earth sector will struggle to compete on a global scale.
For Brazilian mining executives, there is an ongoing challenge in balancing shareholder interests with the country’s long-term industrial development. Companies need to ensure profitability, which often means prioritizing short-term financial security over long-term national benefits.
Marcelo Carvalho, Executive Director of Meteoric Resources, has openly stated that while he supports developing Brazil’s domestic rare earth supply chain, his primary responsibility is making the project profitable for shareholders. This reflects a broader issue: without financial incentives and government-backed infrastructure investment, private companies will continue to seek international funding and export raw materials instead of focusing on domestic processing and industrial growth.
Brazil has all the natural resources necessary to become a major player in the global rare earth industry, yet it remains sidelined due to financial constraints, a lack of processing infrastructure, and weak policy coordination. If Brazil wants to move beyond being a supplier of raw materials and become a rare earth powerhouse, it must address these structural challenges.
Reforming financing policies to allow mining rights or future production as collateral would help companies secure local funding, reducing dependence on foreign-backed offtake agreements. Investments in refining and processing infrastructure would allow Brazil to capture more economic value from its rare earth resources. Additionally, a coordinated national strategy similar to those adopted by the U.S. and Australia could provide a clear roadmap for industry growth.
Until these changes are made, Brazil will continue to watch its rare earth resources fuel the industries of other countries while missing the opportunity to establish itself as a leader in the global rare earth market.