Highlights

• US-Brazil diplomatic talks officially focus on tariff disputes.
• A critical subtext is Washington's need for alternative rare earth sources due to China's export restrictions through licensing controls.
• Brazil holds the world's second-largest rare earth element (REE) reserves but lacks processing capacity.
• Lula's government is pushing for value chain sovereignty with local beneficiation requirements, which will influence any US partnership.
• Investors should monitor Brazilian REE projects as frameworks develop.
• Expect slow execution due to complex geopolitics; Beijing remains Brazil's top trading partner despite Washington's efforts.

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A high-stakes diplomatic pas de deux is unfolding between Brazil and the United States. As BNamericas reports (opens in a new tab), U.S.and Brazilian officials met this week to defuse a brewing tariff war—50% U.S. duties on Brazilian exports in return for Brasília’s 18% ethanol levy—and, tucked quietly into the agenda, the rare earths question. It’s the part of the conversation investors should actually care about, at least from the perspective of Rare Earth Exchanges (REEx).

While the headlines dwell on politics—Trump’s tariffs, Lula’s diplomacy, Bolsonaro’s shadow—the subtext is unmistakable: Washington needs alternative rare earth sources as China tightens its export controls. Brazil, with the world’s second-largest REE reserves and a leftist government newly attuned to “value chain sovereignty,” is emerging as the quiet prize.

Fact vs. Friction: What’s Real Here

The facts align with known supply-chain realities. Brazil’s deposits, notably in Minas Gerais, Goiás, and Bahia, are vast but underdeveloped. The bottleneck is not geology—it’s processing and refining capacity. Lula’s government has rightly elevated critical minerals through the new National Mineral Policy Council, signaling strategic intent to move up the value chain.

For Washington, this dovetails perfectly with efforts to diversify away from China after Beijing’s Announcement No. 62 on REE export licensing. The U.S. has processing plants under construction in Utah and Texas, but lacks sufficient feedstock diversity. A Brazil–U.S. pact could stabilize midstream inputs—if the politics don’t derail it.  REEx has floated the idea, for example, of processing located at Brazilian Rare Earth’s (opens in a new tab) significant deposits on the northeast Atlantic coast.   BRE recently inked a deal with France’s Carester (opens in a new tab) to bring the refining expertise to this part of the world. See REEx Brazil Rare Earth Gambit: A French Alliance Shakes up the Global Magnet Race—Is Separation Coming to BRE’s Camcari Petrochemical Complex?”

Between Realpolitik and Resource Nationalism

Here’s where BNamericas slips into cautious speculation. The notion that tariffs will melt away after a Lula–Trump handshake is optimistic. Brazil’s new assertiveness over local beneficiation means any rare earth deal will come with strings—local processing, revenue-sharing, and environmental oversight. Lula will not want to appear subservient to Washington’s industrial policy, especially with Beijing still Brazil’s top trading partner.

It bears noting that Beijing is rarely far from the negotiating table in Brazil. While several key Brazilian players may lean toward Washington in the current geopolitical standoff, capital—more than ideology—still does the talking. 

Investor’s Compass

For investors, the signal is clear: Brazil is positioning itself as a rare earth counterweight to China, and the U.S. is listening. Expect movement in companies holding advanced-stage REE projects in Brazil once concrete frameworks emerge. But beware the usual pitfall—grand rhetoric, slow execution.

Diplomacy may set the stage, but metallurgy and lots of investment, more than politics, will determine who wins the next chapter of the rare earth race.

Source: BNamericas (October 17, 2025)

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