Highlights

• Brazil holds the world's second-largest rare earth reserves but operates only one commercial mine, creating a strategic opportunity for US-Brazil cooperation to counter China's 60% mining and 90% processing dominance.
• The $465m DFC loan to Serra Verde is significant, but Brazil's lack of downstream processing capacity means near-term 'superpower' status is aspirational—rare earth value is captured in separation, metals, and magnets, not raw materials.
• Brazil faces asymmetric dependencies:
  • China absorbs 30%+ of exports (commodities)
  • The US provides systemic financial and technological infrastructure, forcing Brasília to hedge between commercial ties with Beijing and strategic alignment with Washington.

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A new Financial Times report highlights renewed U.S.–Brazil discussions (opens in a new tab) on rare earth cooperation, framing Brazil’s vast deposits as both a diplomatic bargaining chip and a strategic hedge against Chinese dominance. The premise is sound: Brazil holds the world’s second-largest rare earth reserves, yet operates just one commercial mine—Serra Verde. The gap between endowment and output is where geopolitics now enters the frame.

What the Story Gets Right — The Gravity Well

The article correctly anchors rare earths in national security and industrial policy. China’s control of ~60% of global mining and >90% of processing capacity is the central structural fact shaping U.S. behavior. Washington’s search for non-Chinese supply—via Australia, the DRC, and now Brazil—is consistent with recent DFC and Export-Import Bank activity. The $465m DFC loan to Serra Verde is real, material, and notable, especially as its early China-linked offtake expires.

The Magnet Gap — Where Optimism Outruns Reality

Where the FT leans optimistic is on timelines and leverage. Brazil’s resources are real; its capacity is not. Rare earth value is captured downstream—separation, metals, alloys, magnets—not in the ground. Brazil lacks scaled processing, long permitting timelines persist, and capital intensity remains high. Calling Brazil a near-term “rare earth superpower” is aspirational, not operational.

But there are somegood moves on the ground such as Brazilian Rare Earths (opens in a new tab) (BRE.XA) partnership with privately held ex-China rare earth refining expert Carester (opens in a new tab) and other deals. The South American nation is most certainly critical.

Europe, the U.S., and the Bidding War Narrative

The article fairly notes EU interest, but competition rhetoric can mislead. Brussels and Washington share a core constraint: neither wants raw material without downstream control. Deals that simply redirect Brazilian concentrate to Western buyers without building processing redundancy repeat the China playbook, not replace it.

What’s Missing — Processing Is the Prize

The most important omission is emphasis on heavy rare earth separation and magnet manufacturing. Projects like Aclara Resources matter precisely because they target cleaner separation pathways and Western customers. Without that layer, diplomacy risks becoming symbolism.

Bottom Line for Investors

Brazil matters—but only if capital, permitting reform, and processing scale align. Mines alone do not break dependency; industrial systems do.

Brazil Trading—USA and China

Brazil’s economy is more dependent on China than on the United States in trade terms, but more embedded in the U.S.-led financial and institutional system. China absorbs roughly 30%+ of Brazilian exports, overwhelmingly commodities such as soybeans, iron ore, and crude oil—giving Beijing outsized leverage over Brazil’s export revenues and termsof trade.

The U.S., by contrast, accounts for a smaller share of exports (~15%) but exerts deeper influence through capital markets, dollar financing, technology, legal frameworks, and defense cooperation. The relationship is therefore asymmetric: China is Brazil’s buyer, while the U.S. remains Brazil’s system anchor. This dual dependence explains Brasília’s hedging behavior—courting Chinese demand while cautiously re-engaging Washington on strategic minerals like rare earths.

Brazil Dependency & Leverage Scorecard

Dimension	China	United States	Who Matters More
Share of Brazil’s Exports	~30–32% (largest partner)	~14–16%	China
Export Composition	Highly concentrated (commodities)	More diversified (manufacturing, services)	China (riskier)
Trade Balance Impact	Large Brazilian surplus	Smaller surplus / near balance	China
Foreign Direct Investment	Infrastructure, energy, mining	Finance, Tech, Services	Mixed
Financial System Influence	Limited (RMB not dominant)	Dominant (USD, capital markets)	United States
Technology & IP Access	Selective, state-driven	Broad, private-sector led	United States
Geopolitical Leverage	High via demand substitution	High via sanctions, finance	Different tools
Overall Dependency	Export-revenue dependent	Systemically Embedded	China (short term) / U.S. (structural)

Bottom line

Brazil is commercially dependent on China but structurally tied to the United States—a tension that now defines its rare earths diplomacy and broader industrial strategy.