Brazil now sits on the world’s second-largest rare earth reserves and is drawing a surge of Australian and North American capital into ionic clay deposits that feed electric vehicles, wind turbines and AI infrastructure.
Brazil’s Ionic Clays Draw Foreign Capital
Geologist Andrew Tunks, chief executive of Australian miner Meteoric Resources, argues that “the next big rare earth projects in the world will be in Brazil” and expects the country to compete with China over time. Meteoric is betting on the Caldeira project in Minas Gerais, described as the world’s largest ionic clay rare earth deposit and a key source of medium and heavy elements such as dysprosium and terbium, used in high-performance permanent magnets for EV motors and wind turbines.
Those bets align with structural demand. The International Energy Agency estimates that demand for magnet rare earths — neodymium, praseodymium, dysprosium and terbium — has doubled since 2015 and could grow by another third by 2030 under current policies, driven by electrification, wind build-out and automation. The agency also links rising use of robotics, AI data centres and digital technologies to further growth in rare earth consumption.
Brazil holds an estimated 21 million tonnes of rare earth reserves, second only to China’s 44 million tonnes. This geological base is translating into an administrative rush. Brazil’s National Mining Agency now has 2,758 rare earth projects under consideration, after receiving 1,662 applications between 2023 and 2024, compared with just over 250 between 1975 and 2020. Share prices of junior miners with Brazilian exposure — including Meteoric, Canada’s Resouro Strategic Metals and Appia Rare Earths and Uranium, as well as USA Rare Earth — have risen sharply over the past year, reflecting investor anticipation of new supply.
Brazil also enjoys a geological edge. Around 73% of its rare earth occurrences are ionic clay deposits, according to the Brazilian Geological Society. These weathered formations are easier to mine and process because natural alteration has already partially broken down the original rock. Tunks notes that separation requires large amounts of electricity and water, and emphasises that Meteoric’s Brazilian operation uses only renewable power with relatively low electricity costs compared with Australia.
Testing China’s Dominance in Refining and Magnets
The strategic question is whether Brazil can turn these reserves into a competitive value chain rather than another source of unprocessed ore. For now, China still accounts for more than 90% of global rare earth refining capacity and about 95% of permanent magnet production, according to the IEA. That dominance became visible when Chinese export restrictions during a trade dispute with the United States led to supply tightness for electronics and advanced manufacturing.
One signal of change is coming from North America. In April, USA Rare Earth agreed to acquire Serra Verde’s Pela Ema mine in Goiás — Brazil’s only active producing rare earth operation — in a deal valued at US$2.8 billion. The buyer describes Pela Ema as a “one-of-a-kind asset” and the only producer outside Asia able to supply all four magnetic rare earth elements at scale, supported by a 15-year supply agreement with several US government agencies. The transaction aligns Brazil’s largest producing asset with a US-led effort to diversify supply chains for critical minerals away from China.
Policy interest is broadening beyond the United States. Germany’s government has signalled plans to deepen partnerships with Brazil on critical minerals, energy transition and green industry, although German companies remain only selectively involved in upstream extraction so far. Meanwhile, Brazil, alongside India, Vietnam, Sweden and Norway, has stated ambitions to build domestic rare earth value chains, including processing and manufacturing.
For now, Brazil’s role remains primarily extractive. Most rare earths leave the country as concentrates, with limited domestic refining or magnet production. Tunks expects Brazil to become competitive in mining relatively quickly, but sees manufacturing and advanced processing as a longer-term task. That gap frames both the risk and the opportunity.
For investors, Brazil rare earths now offer a leveraged play on diversification away from China at both the resource and geopolitical level. Equity exposure today is mainly through foreign-listed juniors and USA Rare Earth’s bet on Serra Verde, rather than a deep pool of B3-listed names. The next phase to watch is whether Brasília and private capital can co-ordinate investment in refining, separation and magnet manufacturing. If Brazil can move even part-way up the value chain while keeping its cost and renewable-energy advantages, it will not just challenge China in ore supply — it will start to matter in the higher-margin segments that anchor future clean-energy and AI supply chains.
Source: DW — Brazil is set to cut into China’s rare earths dominance
