Brazil’s Rare Earth Race: US, EU, and China Compete for Critical Minerals as Tensions Rise

Beneath Brazil’s red earth lies a geopolitical powder keg that few Americans are paying attention to. While Washington obsesses over microchip factories and supply chain resilience, a more fundamental struggle is unfolding in South America—one that will determine whether the United States can credibly compete in the clean energy economy it claims to champion.

The prize is rare earth elements, the unglamorous but indispensable minerals that power everything from the iPhone in your pocket to the guidance systems in Patriot missiles. And in this contest for Brazil’s largely untapped reserves, America is discovering an uncomfortable truth: when it comes to securing the resources that will define the 21st century, we’re arriving late, spending reluctantly, and competing against a Chinese government that planned for this moment decades ago while we were distracted by other priorities.

The competition reached a new inflection point in recent months as diplomatic tensions, investment pledges, and competing visions for resource development collided in Brasília. What’s at stake extends far beyond mining rights: control over rare earths means control over the technologies that will define the 21st century, from wind turbines and electric vehicles to advanced weapons systems and renewable energy infrastructure.

Brazil’s Hidden Wealth: A Strategic Asset in Plain Sight

Brazil sits atop approximately 21 million tons of rare earth reserves, making it the world’s second-largest holder of these critical minerals after China’s commanding 44 million tons, according to data compiled by industry analysts. Yet despite this geological fortune, Brazil produces less than one percent of the world’s rare earths—a stark disconnect that has captured the attention of global powers seeking to reduce their dependence on Chinese supply chains.

The irony is not lost on Brazilian officials. “We have the resources beneath our feet that the world desperately needs,” remarked one mining industry executive in Minas Gerais, speaking on condition of anonymity. “The question is whether we can develop them fast enough, and with which partners.”

China currently controls approximately 70 percent of global rare earth mining and a staggering 90 percent of processing capacity, giving Beijing enormous leverage over supply chains that underpin everything from consumer electronics to military hardware. This dominance has prompted what analysts describe as the most significant rush for mineral security since the Cold War scramble for uranium.

America’s Belated Awakening

Washington’s engagement with Brazil rare earth deposits represents a dramatic strategic shift. For years, US policymakers largely ignored the vulnerabilities inherent in relying on Chinese-controlled rare earth supply chains. That complacency evaporated as tensions with Beijing escalated and the pandemic exposed the fragility of global supply networks.

The US has pledged between $465 million and $565 million to support Brazilian rare earth projects, with a particular focus on the Serra Verde operation in Goiás state—one of the largest undeveloped rare earth deposits outside China. This US investment in Brazil rare earths comes through a combination of Export-Import Bank financing, Development Finance Corporation support, and private sector partnerships facilitated by recent diplomatic engagement.

The timing is noteworthy. Relations between former President Trump and Brazilian President Luiz Inácio Lula da Silva were, to put it charitably, frosty. But as geopolitical realities shifted and both nations recognized their mutual interests in rare earth supply chain diversification, pragmatism has prevailed. Recent bilateral meetings have produced agreements on critical minerals cooperation, technology transfer, and environmental standards—though skeptics note that implementation remains uncertain.

“The Americans arrived late to the party,” observed a São Paulo-based geopolitical analyst, “but they’re trying to make up for lost time with checkbooks and promises of technological partnership.”

Europe’s Frustrations and China’s Long Game

The European Union, meanwhile, has found itself repeatedly outmaneuvered in what officials privately describe as a frustrating contest for Brazilian partnerships. Despite early interest and exploratory missions, EU China competition Brazil minerals has tilted toward Washington and Beijing, who have proven more willing to make concrete financial commitments and accept Brazil’s environmental conditions.

European representatives have complained, according to sources familiar with diplomatic exchanges, that US preemption of key deals has left the bloc scrambling for secondary opportunities. The EU’s Critical Raw Materials Act, announced with fanfare in 2023, aimed to secure diverse supply sources—but translating policy into projects has proven challenging when competitors move faster with larger financial packages.

China, for its part, has pursued what analysts call a “patient capital” strategy. Unlike the US with its recent surge of interest, Chinese companies have maintained a presence in Brazilian mining for over a decade. They’ve built relationships, navigated local politics, and positioned themselves as reliable partners unconcerned with the geopolitical lectures that sometimes accompany Western investment.

A recent report by the Center for Strategic and International Studies highlighted China’s methodical approach: securing minority stakes in multiple projects, offering processing technology that Brazil lacks, and coupling mineral investments with broader infrastructure development. “Beijing understands that influence is built through sustained engagement, not just one-off deals,” the report noted.

Brazil’s Delicate Balancing Act

Caught between competing suitors, Brazil has adopted what observers describe as a “multi-alignment strategy”—accepting investments from all sides while committing exclusively to none. President Lula’s administration has signaled openness to partnerships with the US, EU, and China, calculating that competition among external powers serves Brazilian interests by driving up investment and allowing Brasília to set terms.

This approach carries risks. Some Brazilian mining executives worry that trying to please everyone might result in regulatory gridlock or competing standards that slow development. Environmental groups, meanwhile, fear that the rush for Brazil critical minerals will override the country’s forest protection commitments and indigenous rights—concerns that have already slowed permitting for several projects.

Brazil’s Environmental Ministry has imposed stringent requirements on rare earth mining operations, including detailed impact assessments and community consultations. While these safeguards align with international best practices, they’ve frustrated investors accustomed to faster timelines. “Every month of delay is a month China extends its dominance,” warned one American executive working on rare earth supply chain diversification.

Yet Brazil’s cautious approach may prove prescient. The rare earth industry carries significant environmental risks—processing generates radioactive waste and toxic runoff. Moving too quickly could trigger the kind of ecological disasters that have plagued Chinese rare earth operations, undermining both local support and international partnerships.

The Economic and Security Stakes

The implications of this three-way competition extend well beyond quarterly earnings reports. Rare earth elements are essential for manufacturing permanent magnets used in electric vehicle motors, wind turbine generators, and a host of consumer electronics. They’re equally critical for defense applications: precision-guided missiles, jet engines, satellite communications, and radar systems all depend on rare earth components.

A comparison of global rare earth positions illustrates the challenge:

This table, based on industry data compiled by Bloomberg and specialist mining analysts, reveals the enormous gap between potential and production. Brazil possesses roughly half of China’s reserves but produces a fraction of one percent of global output—a disparity that both represents opportunity and highlights the scale of investment required.

For the United States and European Union, reducing dependence on China rare earth dominance Brazil represents more than economic efficiency—it’s a national security imperative. Trade tensions between Washington and Beijing have already produced tariff wars, technology export controls, and sanctions that have rattled global markets. The prospect of China restricting rare earth exports as leverage, as it did briefly in 2010 during a territorial dispute with Japan, haunts Western defense planners.

“Imagine a scenario where conflict erupts over Taiwan,” suggested a retired Pentagon official now consulting on critical minerals strategy. “Within days, China could choke off rare earth supplies to the West. Our weapons systems would face severe component shortages within months. Brazil offers a partial solution—if we can help them develop production capacity quickly.”

Challenges on the Ground

Yet transforming Brazil’s geological potential into actual production faces formidable obstacles. Infrastructure remains inadequate in many mining regions, with poor roads and limited power supplies complicating operations. Brazil lacks the processing technology that China has refined over decades, meaning raw materials often need to be shipped abroad for refinement—defeating much of the supply chain diversification purpose.

Labor and expertise shortages present another challenge. Rare earth mining and processing require specialized skills that Brazil’s workforce currently lacks in sufficient numbers. Training programs and technology transfers are part of the US and EU investment packages, but developing expertise takes time.

Then there’s the question of market economics. China’s dominance has allowed it to control pricing, occasionally flooding markets to make competing projects financially unviable. Brazilian operations, with higher startup costs and smaller initial scales, could struggle to compete if Beijing decides to undercut prices strategically.

Environmental regulations, while crucial for sustainable development, add complexity and delay. The Serra Verde project, despite significant US backing, has faced repeated permitting challenges as regulators assess water usage impacts and community displacement concerns. Indigenous groups have filed legal challenges to several proposed mining operations, arguing that consultation processes were inadequate.

Looking Ahead: A Multipolar Mineral Future?

As trade tensions loom and the competition for Brazil’s rare earths intensifies, the ultimate outcome remains uncertain. The most likely scenario, according to geopolitical analysts at the Eurasia Group, involves all three powers maintaining some presence in Brazil’s rare earth sector, with different companies and projects aligned with different external partners.

This multipolar arrangement could serve Brazil’s interests by maximizing investment and limiting any single power’s leverage. But it could also create coordination challenges, competing standards, and political complications as global tensions ebb and flow.

What’s clear is that the quiet race for Brazil’s underground wealth has only just begun. As one Brazilian mining ministry official put it, leaning back in his Brasília office: “The world spent the last decade waking up to the rare earth problem. Now they’re all knocking on our door at once. We intend to answer carefully—but we will answer.”

For the United States, European Union, and China, Brazil represents a crucial test of their respective models for resource diplomacy. Washington offers financial muscle and security partnerships. Brussels promises regulatory alignment and technology standards. Beijing provides patient capital and no-questions-asked engagement.

Brazil, blessed with geological fortune and cursed with the attention it brings, must choose its partners wisely. The decisions made in Brasília over the coming years won’t just determine who extracts minerals from Brazilian soil—they’ll help shape the balance of power for decades to come.