Highlights

• Brazilian government study finds China dominates 90% of global rare earth processing.
• Brazil, despite holding 19% of world reserves, captures under 1% of global trade due to lack of refining capacity.
• The research spanning 2002-2023 proves strategic power lies in processing refined metals and oxides, not mining raw ores.
• The study explains why mineral-rich nations remain economically dependent suppliers.
• Study warns U.S., EU, and Brazil that building non-Chinese refining capacity requires deliberate industrial policy.
• Recycling rates remain below 1%, and substitution alone cannot resolve supply concentration risks.

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A major new study (opens in a new tab) led by Rafael da Silveira Soares Leão (opens in a new tab) of Brazil’s Institute for Applied Economic Research (Ipea), in collaboration with Mariano Laio de Oliveira (opens in a new tab) of Brazil’s National Mining Agency (opens in a new tab) (ANM) and researcher Danúbia Rodrigues da Cunha, delivers a sobering message for countries betting on rare earths: large mineral reserves do not translate into global power unless a nation controls processing and refining.

The 73-page, government-backed analysis finds that while Brazil holds some of the world’s largest rare earth and critical mineral reserves, it remains marginal in global trade, while China continues to dominate the most valuable links of the supply chain, especially processing, shaping prices, investment flows, and geopolitics.

How the Study Was Conducted

The researchers analyzed global reserves, production, international trade, and investment data for a broad basket of critical minerals—including rare earth elements, lithium, graphite, nickel, manganese, cobalt, and copper—covering the period from 2002 to 2023, with projections extending to 2050. The study draws on authoritative sources such as USGS Mineral Commodity Summaries, World Mining Data, World Bank trade statistics (WITS), and International Energy Agency (IEA) forecasts.

Crucially, the analysis distinguishes between two stages of the supply chain:

1. Mining of raw ores and concentrates, and
2. Processing into refined metals, oxides, and chemical compounds, where value, pricing power, and strategic leverage multiply.

What the Study Found

The results are stark. China dominates the processing stage of nearly every critical mineral analyzed. By 2024, China accounted for roughly 90% of global rare-earth refining capacity and commanded shares of graphite, manganese, lithium, and cobalt processing. This dominance is the result of decades of deliberate vertical integration—securing raw materials globally while concentrating refining, chemical processing, and manufacturing at home.

Brazil illustrates the opposite trajectory. Despite holding around 19% of the world’s known rare earth reserves, second only to China, Brazil’s rare earth production has declined in recent years, and its share of global trade remains below 1%. Where exports occur, they are largely raw or minimally processed, leaving downstream value—and geopolitical influence—elsewhere.

Why China’s Processing Monopoly Matters

For non-specialists, the key takeaway is simple: the money, jobs, and power in rare earths sit in processing, not mining. Refined rare earths feed into magnets, batteries, wind turbines, EV motors, electronics, and defense systems. China’s position as the world’s largest buyer of raw minerals gives it leverage over supply, while its control of refining allows it to export higher-value products to the rest of the world.

This structure helps explain why many mineral-rich countries remain economically dependent. Even nations with vast reserves—Brazil included—function primarily as feedstock suppliers to China’s industrial ecosystem rather than competitors.

Implications for Brazil—and the World

The study argues that Brazil’s post-2020 uptick in exploration investment—particularly in lithium, nickel, zinc, and rare earths—could mark the start of a new cycle. However, without sustained capital, regulatory stability, environmental licensing reform, and a deliberate push into refining and chemical processing, Brazil is unlikely to escape its current role.

Globally, the findings reinforce why the U.S., EU, Japan, and others are racing to build non-Chinese refining capacity. The research implicitly supports policies such as export restrictions on raw ores and public financing for midstream projects, but warns these strategies require time, scale, and institutional discipline.

Limitations and Contested Ground

The authors acknowledge that the analysis relies on data through 2023, preceding the most recent wave of export controls and national security interventions. The study also focuses on economic structure, not social or environmental conflict, which can derail projects regardless of geology.

More controversially, the research challenges optimistic claims that recycling or substitution alone can resolve supply risks. With global rare earth recycling rates still below 1%, the authors argue that primary supply and processing capacity will remain decisive for decades, a conclusion likely to provoke debate among sustainability advocates.

REExTake

Rare Earth Exchanges™ views this study as a clear-eyed warning. The global rare earth challenge is not scarcity—it is concentration. China’s dominance was built deliberately, and dismantling it will require equally deliberate industrial policy, as this media has reiterated since our launch in October 2024.  For Brazil and other mineral-rich nations, the message is blunt: without mastering processing, reserves alone confer little strategic advantage.

Source: Leão, R. da S. S.; Oliveira, M. L. de; Cunha, D. R. Qual a importância do Brasil na cadeia global de minerais críticos da transição energética? Instituto de Pesquisa Econômica Aplicada (Ipea), Texto para Discussão nº 3174, 2025.

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