The United States is signalling a willingness to help develop Brazil’s critical minerals processing industry as Washington seeks access to the country’s vast resources while reducing reliance on China.
US embassy sources told MINING.COM that American representatives have stressed in meetings with Brazilian counterparts that they are open to commitments that add value locally, including support for processing and refining. The message comes as mining companies with US ties increasingly consider moving beyond extraction in Brazil.
“We have not excluded the possibility of building further downstream capabilities in Brazil,” a USA Rare Earth spokesperson told MINING.COM.
Washington’s approach reflects a recognition that securing Brazilian minerals may require backing industrial development rather than simply shipping raw materials overseas. Brazil has made domestic processing a central part of its minerals strategy, raising the stakes for foreign investors seeking access to one of the world’s most prospective critical-minerals jurisdictions.
Downstream push
Caleb Orr, then-assistant secretary of state for economic, energy and business affairs, said in February that Brazil was a natural next step for investment in mineral processing.
Former US chargé d’affaires Gabriel Escobar said in March that American investment in Brazilian critical minerals projects had already exceeded $600 million, with potential for billions more.
Washington took a more concrete diplomatic step that month by signing a non-binding critical minerals agreement with Goiás, a Brazilian state hosting several rare earth projects, including Serra Verde. The memorandum envisages cooperation across the supply chain, from mining and separation to metal alloys and permanent magnets. The Goiás government has said attracting investment and technology to add value locally is a goal of the agreement.
USA Rare Earth (Nasdaq: USAR), which completed its roughly $2.8-billion acquisition of Serra Verde in early September, has not ruled out expanding downstream operations in Brazil. The deal combined Serra Verde’s producing rare earth operation in Goiás with USA Rare Earth’s processing, metallization and magnet-making capabilities.
The company is developing technology to turn mixed rare earth carbonate, or MREC, produced at Serra Verde’s Pela Ema operation into separated rare earth products. It said the technology is not yet commercially available outside Asia at scale.
The acquisition had raised concerns within President Luiz Inácio Lula da Silva’s administration. Some officials advocated intervention, arguing that control of Brazil’s only commercial-scale rare earth producer carried strategic implications. The prevailing government position, however, was that blocking the transaction could undermine legal certainty.
Rare Earths Americas, which is developing projects in Brazil and the United States, also sees potential to expand processing in Brazil, although investment would depend on commercial conditions.
Francisco Tomazoni, the company’s Brazil country manager, said developing value-added operations close to mineral production aligns with broader industry trends. The company would consider moving further into processing if Brazil offered adequate infrastructure, competitive energy, access to capital and regulatory certainty.
Rare Earths Americas has already said it is evaluating higher-value stages of the Brazilian supply chain, including separation and potentially rare earth magnet manufacturing.
Other developers are pursuing similar opportunities. Australia’s St George Mining (ASX: SGQ) signed an agreement in August to study a 2-billion-real ($385-million) rare earth processing and separation centre in Minas Gerais. The proposed facility could supply refined materials for downstream magnet manufacturing, although construction remains subject to technical and economic studies.
Federal friction
The emerging corporate interest contrasts with Washington’s difficulties in securing a federal critical minerals agreement with Brazil.
The Trump administration presented proposals earlier this year that Brazilian officials considered too generic. One provision also raised concerns in Brasília because officials interpreted it as giving the US preferential access to some mineral projects, potentially constraining investment from countries including China.
US officials rejected that interpretation, saying the provision would give American investors preferential access to certain projects without preventing Brazil from striking deals with other countries. The proposal also included support for refining and technology transfer in Brazil.
The negotiations have unfolded against a difficult political relationship between Lula and US President Donald Trump.
Brazilian officials see potential benefits in a well-structured minerals agreement, but closer cooperation with Washington remains politically sensitive ahead of October’s presidential election. Lula has repeatedly criticized Trump and emphasized national sovereignty, while his main rival, Senator Flávio Bolsonaro, has advocated closer ties with the United States, including strategic cooperation on critical minerals.
A Quaest poll released Sept. 21 put Flávio Bolsonaro at 42% and Lula at 41% in a hypothetical second-round contest, a statistical tie within the poll’s two-percentage-point margin of error. The survey questioned 2,004 voters from Sept. 17 to 20.
Brazil, meanwhile, is strengthening government oversight of the sector while offering incentives for domestic processing.
A law enacted Sept. 16 created the National Council for the Industrialization of Critical and Strategic Minerals, giving it authority to approve changes in control of companies holding strategic mineral rights and review certain international supply agreements. A decree issued the same day set out the council’s structure and powers.
The legislation also allows tax credits of up to 20% for eligible mineral processing, transformation and urban-mining expenditures, capped at 1 billion reais ($192 million) annually from 2030 through 2034. Projects must receive council approval to qualify.
“The government is working to create a favourable environment for the establishment and expansion of beneficiation, separation, processing, refining and advanced materials manufacturing in Brazil,” Brazil’s Ministry of Mines and Energy told MINING.COM in a written statement.
For investors, the test is how much American capital and corporate ambition ultimately moves into those higher-value activities. Mining investment and supply agreements are advancing, but much of Brazil’s proposed separation, refining and magnet supply chain remains on the drawing board.
* Gabriel García is a journalist at CNN Brazil, based in Brasília, covering mining, infrastructure and economic policy. He specializes in critical minerals, mining regulation and the geopolitics of global supply chains.
Source: https://www.mining.com/us-warms-to-building-brazil-critical-minerals-chain/
