As a mining giant, Brazil is ambitiously building its rare earth industry, as Western economies strive to ensure the supply of metals needed for green energy and defense magnets, and to break China's dominance in the supply chain.
Brazil's advantages include low labor costs, clean energy, robust regulations, and proximity to end markets, including Latin America's first magnet factory, which will become a major buyer of rare earth metals.
However, the hope of Brazil entering the top five global rare earth producers faces challenges due to low rare earth prices, technical hurdles, and cautious lenders.
The pace of progress in Brazil's rare earth projects will test the success of the West in building a new advanced industry from scratch to break China's monopoly.
Brazil holds the third-largest rare earth reserves in the world. The country's first rare earth mine, Serra Verde, began commercial production this year.
Analysts, mining company CEOs, and investors say that production is expected to grow, spurred by incentives from Western governments, which also accelerate the global refining and processing of rare earths.
"Brazil as a potential source of rare earths is a very exciting prospect because some very significant deposits have been discovered in the past few years," said Daniel Morgan of Sydney investment bank Barrenjoey.
"I do believe that outside of China, Brazil's projects are the most economically viable greenfield projects."
The United States and its allies, which are almost entirely dependent on China's rare earth metals and magnets, plan to establish an independent supply chain by 2027 after supply disruptions during the early years of the COVID-19 pandemic.
