Brazil’s Rare Earth Challenges as Nation Grapples with How to Compete on Global Stage

Highlights

• Brazil holds the world’s second-largest rare earth reserves.
• Struggles with domestic financing limitations for mining projects.
• Strict lending policies and lack of investment mechanisms are forcing Brazilian rare earth companies to seek international funding.
• Without policy reforms, Brazil risks becoming a raw material exporter instead of developing a strategic, high-value rare earth supply chain.

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According to some sources, Brazil has the second-largest rare earth reserves in the world, yet it struggles to finance projects that could help it compete with China and establish a domestic supply chain for these critical minerals. According to a Bloomberg report (opens in a new tab), Australian miner Meteoric Resources is finding it difficult to secure local financing for its $420-million rare earth project, forcing the company to look abroad for investment. Rare Earth Exchanges has covered Brazil, specifically the activity in the State of Minas Gerais, and the nascent rare earth complex in that resource-rich state. Yet a dearth of state funding remains a challenge.

This financing gap is not unique to Meteoric—other firms like Viridis Mining and Minerals and Serra Verde Group are also navigating Brazil’s strict lending rules, which limit their ability to use mining rights or future production as collateral for loans. Without urgent changes, Brazil’s rare earth ambitions could be undermined by policies that drive production away from domestic supply chains and toward foreign buyers.

A Missed Opportunity for Brazil’s Strategic Goals?

Brazil’s rare earth reserves could be a game-changer for global supply chains, especially as Western nations seek alternatives to China’s dominance. However, the inability to access local funding is forcing companies like Meteoric to secure financing from international institutions, such as the Export-Import Bank of the United States and the US International Development Finance Corp. This raises a crucial question: If Brazil doesn’t step up, will foreign investors dictate where the country’s rare earth output ultimately goes? Meteoric has already indicated that, if necessary, it will send production abroad as part of financing agreements, potentially limiting Brazil’s ability to develop domestic processing and downstream industries.

What Can Brazil Do to Compete?

To unlock its rare earth potential, Brazil must rethink its financing structure for mining projects. Here are some critical steps the country could take:

• Revise Collateral Policies: Allow mining rights and future output to be used as collateral, aligning with international practices in the rare earth sector.
• Expand Development Bank Support: Banco Nacional de Desenvolvimento Econômico e Social (BNDES) (opens in a new tab) and Finep should create more flexible financing mechanisms tailored for critical minerals projects.
• Encourage Private Investment: Offer tax incentives or risk-sharing agreements to attract domestic and foreign capital while keeping production in Brazil.
• Invest in Processing and Refining: Without domestic refining capabilities, Brazil will remain a raw material exporter rather than a high-value supplier—limiting economic benefits. Rare Earth Exchanges has shared how Ionic Technologies has set up to start refining, but it’s early days.
• Strengthen Public-Private Partnerships: Collaborate with mining firms, research institutions, and technology companies to create a full rare earth supply chain within the country.

Will Brazil Rise to the Challenge?

Brazil’s rich, rare earth resources offer immense strategic value, but bureaucratic barriers and lack of local funding are holding the sector back. If the country fails to act, it risks remaining a mere supplier of raw materials for foreign industries rather than developing a self-sufficient rare earth sector. As the global demand for these critical minerals grows, Brazil must decide whether it wants to be a leader or a bystander in the rare earth race. The time for policy reform is now—otherwise, Brazil’s rare earth wealth may benefit other nations more than its own economy.