Australian miners turn to Brazil’s critical minerals potential

For decades, Brazil and Australia have been fierce competitors in the global iron ore market. Their respective mining giants – Vale and Rio Tinto – have vied for dominance in supplying steelmakers across Asia and beyond. Their rivalry shapes pricing dynamics, infrastructure investments and trade flows.

But as the world pivots toward clean energy and digital technologies, a new chapter is unfolding, one where Australian miners are no longer rivals but increasingly strategic investors in Brazil’s critical minerals sector.

The global race to secure critical minerals – essential for electric vehicles, wind turbines and semiconductors – has triggered a wave of critical minerals investment in Brazil. With China tightening its grip on rare earth exports, countries across the globe are seeking alternative sources and partnerships. Brazil, with its vast and underexplored mineral wealth, has emerged as a compelling destination.

"Brazil, like Australia, has always been a very large mining jurisdiction and mining forms the backbone of the economy," according to Andrew Reid, managing director of Perth-based Brazilian Critical Minerals. He added that the “phenomenal amount of minerals” make Brazil almost second to none in terms of opportunities.

Indeed, with the ongoing COP30 taking place in Belém, the host country hopes to use the summit as a way to position itself as a sustainable and strategic global partner in critical minerals, seeking to showcase its green power resources and its vast reserves to attract investment.

Brazil is already a leader in production of many key critical minerals, including niobium, with the country holding over 94% of global reserves; graphite, of which it has 26% of global reserves and nickel of which it holds 12% of reserves. The country has also emerged as a leading lithium producer and has become the world’s fifth largest producer, with companies like Sigma Lithium producing green lithium, with 100% green energy, zero tailings and recycled water.

Against the backdrop of rising geopolitical tensions, investors are now turning out in force to develop the country’s largely untapped rare earth elements (REE) reserves.Brazil has the world's second-largest REE mineral reserves, behind China, with around 21m tonnes (approximately 23% of global reserves and resources), according to the US Geological Survey.

Australian firms are thus racing to bring new Brazilian REE projects online to meet growing global demand. Last year, mining company Serra Verde’s Pela Ema project (partially funded by an Australian investment bank) in Goiás state became the first large-scale rare earth mine outside of Asia. The mine is expected to supply 5% of global demand by 2027, with a projected output of 4,800 to 6,500 tonnes of rare earth oxides.  Brazilian Critical Minerals also began developing its project in Amazonas state last year.

In addition to the country’s sizeable mining reserves, Reid highlights the positive business environment in Brazil, adding that it has a “functioning democracy, a good set of regulations, very attractive taxation rates,” as well as “the skillset and knowledge of the people to get these sort of projects up and running".

Other Australian juniors are also expanding their footprint, including Viridis Mining’s flagship Colossus project in Minas Gerais, which focuses on ionic clay deposits known for their high-grade rare earth elements and low radioactive content. The project was recently awarded a letter of support from the French Government’s Garantie de Prêt Stratégique financing programme, which will guarantee up to half of the project’s long-term financing needs. The support from the French government comes just months after Brazilian Development Bank (BNDES) and the country’s project finance agency selected the project to receive financial support from a new critical minerals initiative. The company aims to begin production by 2028 and has pledged to work closely with local communities and regulators.

Meteoric Resources is also advancing its Caldeira project in Poços de Caldas in Minas Gerais state. The project has shown promising results in early drilling, with the firm pursuing a vertically integrated supply chain to reduce reliance on Chinese processing.

A handful of other Australian companies including Axel REE, St George Mining, Perpetual Resources, Equinox Resources, Summit Minerals, OzAurum Resources and Alvo Minerals are all assessing projects in Brazil, reflecting a broad and deepening Australian presence in the sector.

In addition to the frenzy of exploratory activity in Brazil's rare earths sector, companies are also seeking to move beyond commodities production into processing, which has emerged as the Achilles heel of global supply chains.

Australia’s Brazilian Rare Earths is leading the pack, with plans to build an integrated rare earths separation refinery at the Camaçari Petrochemical Complex in Bahia state. The facility will use raw materials from the flagship Monte Alto Rare Earth Project, which in addition to its high grade, heavy rare earth-rich reserves, also has world class NdPr, niobium, scandium, tantalum and uranium deposits.

Camaçari is already a leading industrial centre of Brazil, which makes it the ideal location to process the company’s REE production. Likewise, Chinese electric vehicle manufacturer BYD recently began operating its factory in Camaçari, underscoring the regions new-found vocation for next-generation manufacturing.

Brazilian Rare Earths has partnered with France’s Carester – one of the few companies in the world with expertise in designing sustainable rare earth processing technology – for the Camaçari project. In a deal signed in October, Brazilian Rare Earths has a 10-year offtake agreement with Carester, which will provide the technology for the processing plant.

“This is a great location for a processing plant because it is already a designated industrial area,” Brazilian Rare Earths CEO Bernardo da Vega said.

The processing plant has the potential to attract additional industries, including magnet manufacturing and battery manufacturing.

“We see the potential for Camaçari to become an important hub for critical minerals,” he said, adding that a whole new ecosystem of industries can emerge once you have the key building blocks for these industries to emerge.

Brazil also has other positive attributes needed for critical minerals production, including cheap, abundant renewable power and a skilled labor force. “Because of Brazil’s long mining history, the country has a deep talent pool, which is not the case in many emerging mining regions,” da Vega said.

Brazilian Rare Earth’s goals are very much in line with the Brazilian government’s efforts to expand critical minerals and attract investments to help reindustrialise Brazil.  The Brazilian government launched its new Brazilian Industry Plan in early 2024, with the goal of modernising the country’s industrial sector by promoting sustainability, digital transformation and increased competitiveness. The plan emphasises decarbonisation of industry, promoting the use of renewable energy and supporting the development of green technologies, increasing theiruse in global value chains.

The government is now working on a specific plan for critical minerals, which aims to position the country as a global supplier for the energy transition. The plan aims to help the development of the sector by streamlining licensing and permitting processes for strategic minerals. It also plans to create incentives for foreign investment in local processing of critical minerals.

In addition to the proposed legislation, the Brazilian development bank BNDES and project financing agency FINEP have also announced a series of initiatives to support Brazil's critical minerals sector. This includes both grants and subsidized financing to support exploration, processing, and innovation.This year, they jointly launched a BRL 5 billion (about USD 824 million) initiative that aims to build Brazil’s capacity not only in mineral extraction but also in downstream processing, fostering technological innovation and boosting competitiveness.

Beyond this, BNDES has created a dedicated critical minerals fund expected to mobilize around $200 million for companies working on exploration and mining projects in these key minerals. Supported projects include high-tech advances such as graphene production and permanent magnets from rare earth minerals. With this coordinated approach, BNDES and FINEP seek to leverage Brazil’s rich mineral reserves to establish a value-added critical minerals supply chain that can contribute significantly to creating a robust global supply of critical minerals.

With Australian firms at the forefront and a new policy framework in place, Brazil may finally unlock its critical mineral potential – transforming old rivalries into new alliances amid a global realignment of strategic supply chains.