Backed by West, Brazil Joins Race to Challenge China’s Dominance in Rare Earth Industry

Brazil has the world’s third-largest reserves of rare earth minerals.Backed by Western investment and expertise, Brazil has become the latest country to join the U.S.-led push to break China’s dominance in the global rare earth elements sector, opening up the first of several planned mines set to tap its rare earth element reserves.Coupled with expanded investment and cooperation in rare earth element exploration and development by countries such as Australia, the United States, Japan, Vietnam, and others, China observers say that the Chinese communist regime is losing its leverage in geopolitics and its competition with the West.In March, the Australian government announced an investment of 840 million Australian dollars (about $560 million) in the first combined rare earth element mine and refinery run by Arafura Rare Earths in northern Australia.Vietnam has planned to restart its biggest rare-earth mine by the end of 2024 in cooperation with Western companies, such as Australia’s Blackstone Minerals Ltd., to counter China’s dominance in the sector.In March 2023, Sojitz, a Japanese company, along with the Japan Organization for Metals and Energy Security announced an investment of 200 million Australian dollars in Australia’s Lynas Rare Earths to reduce its dependence on China.Brazil’s first rare earth element mine, Serra Verde, has begun production this year, joining the race and the West’s efforts to diversify the supply chain of the strategically important resource.Related StoriesRare earth elements are 17 elements used in batteries, computer chips, and electric vehicles. China is the world’s largest producer of the materials, the United States is second, and Burma, also known as Myanmar, is third.The third-largest reserves of rare earth elements are in Brazil, which is seeking to leverage its low labor costs, clean energy, established regulations, and proximity to buyers in the United States to build an influential rare earth elements industry. The country also plans to build Latin America’s first magnet plant to produce rare earth metals by the end of this year.It has taken 15 years for Serra Verde to start production, with investment and incentives from Western countries. It is expected to produce 5,000 tons this year and could double output by 2030, according to the company.“Serra Verde and Brazil have significant competitive advantages that could underpin the development of a globally significant rare earth industry over the long term,” Serra Verde CEO Thras Moraitis said. Those advantages include attractive geology, access to hydropower, established regulations, and a skilled workforce.“It is still a nascent sector which will require continued support to establish itself in a highly competitive market. Key processing technologies are controlled by a small number of players,” he said. Analysts in the industry predicted that Brazil could have two or three more rare earth element mines by 2030.China produced 240,000 tons of rare earth in 2023, more than five times the U.S. production, according to U.S. Geological Survey data.China also processes about 90 percent of the world’s rare earths into permanent magnets, which are used in a range of technological products, from wind turbines to electric cars and missiles.As tensions with the West rise, the ruling Chinese Communist Party (CCP) has been weaponizing rare earths as a tool for geopolitical competition. In July 2023, the CCP restricted exports of gallium and germanium used in making semiconductors in retaliation for the West’s chip sanctions on the regime.In response, the United States, the European Union, and Japan have begun to launch or update national critical mineral supply strategies over the past two years and develop extensive plans to invest in more diversified supply chains to reduce dependence on China.On June 18, the U.S. government announced the formation of the Select Committee’s Policy Working Group, which will focus on “countering the Chinese Communist Party’s control of critical mineral supply chains.”Meanwhile, more countries have joined the race to challenge China’s dominance in the field, accelerating rare earth element resource exploration and industrial development. A more diversified international supply pattern of rare earth elements has started to form with the joint efforts of the United States, Australia, Laos, Burma, Africa, and other regions and countries.In the past two years, rare earth element prices have plummeted by 70 percent.A bulldozer scoops soil containing rare earth elements for export by ship to Japan, at a port in Lianyungang, in east China's Jiangsu Province, on Sept. 5, 2010. (STR/AFP via Getty Images)China’s rare earth element industry has been suffering. According to financial data published on April 30, major listed Chinese rare earth element companies that made profits last year have seen deficits in the first quarter of this year because of falling rare earth element prices and the West’s efforts to

Backed by West, Brazil Joins Race to Challenge China’s Dominance in Rare Earth Industry

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Brazil has the world’s third-largest reserves of rare earth minerals.

Backed by Western investment and expertise, Brazil has become the latest country to join the U.S.-led push to break China’s dominance in the global rare earth elements sector, opening up the first of several planned mines set to tap its rare earth element reserves.

Coupled with expanded investment and cooperation in rare earth element exploration and development by countries such as Australia, the United States, Japan, Vietnam, and others, China observers say that the Chinese communist regime is losing its leverage in geopolitics and its competition with the West.

In March, the Australian government announced an investment of 840 million Australian dollars (about $560 million) in the first combined rare earth element mine and refinery run by Arafura Rare Earths in northern Australia.

Vietnam has planned to restart its biggest rare-earth mine by the end of 2024 in cooperation with Western companies, such as Australia’s Blackstone Minerals Ltd., to counter China’s dominance in the sector.

In March 2023, Sojitz, a Japanese company, along with the Japan Organization for Metals and Energy Security announced an investment of 200 million Australian dollars in Australia’s Lynas Rare Earths to reduce its dependence on China.

Brazil’s first rare earth element mine, Serra Verde, has begun production this year, joining the race and the West’s efforts to diversify the supply chain of the strategically important resource.

Rare earth elements are 17 elements used in batteries, computer chips, and electric vehicles. China is the world’s largest producer of the materials, the United States is second, and Burma, also known as Myanmar, is third.

The third-largest reserves of rare earth elements are in Brazil, which is seeking to leverage its low labor costs, clean energy, established regulations, and proximity to buyers in the United States to build an influential rare earth elements industry. The country also plans to build Latin America’s first magnet plant to produce rare earth metals by the end of this year.

It has taken 15 years for Serra Verde to start production, with investment and incentives from Western countries. It is expected to produce 5,000 tons this year and could double output by 2030, according to the company.

“Serra Verde and Brazil have significant competitive advantages that could underpin the development of a globally significant rare earth industry over the long term,” Serra Verde CEO Thras Moraitis said. Those advantages include attractive geology, access to hydropower, established regulations, and a skilled workforce.

“It is still a nascent sector which will require continued support to establish itself in a highly competitive market. Key processing technologies are controlled by a small number of players,” he said. Analysts in the industry predicted that Brazil could have two or three more rare earth element mines by 2030.

China produced 240,000 tons of rare earth in 2023, more than five times the U.S. production, according to U.S. Geological Survey data.

China also processes about 90 percent of the world’s rare earths into permanent magnets, which are used in a range of technological products, from wind turbines to electric cars and missiles.

As tensions with the West rise, the ruling Chinese Communist Party (CCP) has been weaponizing rare earths as a tool for geopolitical competition. In July 2023, the CCP restricted exports of gallium and germanium used in making semiconductors in retaliation for the West’s chip sanctions on the regime.

In response, the United States, the European Union, and Japan have begun to launch or update national critical mineral supply strategies over the past two years and develop extensive plans to invest in more diversified supply chains to reduce dependence on China.

On June 18, the U.S. government announced the formation of the Select Committee’s Policy Working Group, which will focus on “countering the Chinese Communist Party’s control of critical mineral supply chains.”

Meanwhile, more countries have joined the race to challenge China’s dominance in the field, accelerating rare earth element resource exploration and industrial development. A more diversified international supply pattern of rare earth elements has started to form with the joint efforts of the United States, Australia, Laos, Burma, Africa, and other regions and countries.

In the past two years, rare earth element prices have plummeted by 70 percent.

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A bulldozer scoops soil containing rare earth elements for export by ship to Japan, at a port in Lianyungang, in east China's Jiangsu Province, on Sept. 5, 2010. (STR/AFP via Getty Images)
A bulldozer scoops soil containing rare earth elements for export by ship to Japan, at a port in Lianyungang, in east China's Jiangsu Province, on Sept. 5, 2010. (STR/AFP via Getty Images)

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China’s rare earth element industry has been suffering. According to financial data published on April 30, major listed Chinese rare earth element companies that made profits last year have seen deficits in the first quarter of this year because of falling rare earth element prices and the West’s efforts to reduce dependence on China.

China Rare Earth lost about 289 million yuan (about $39.8 million), Guangsheng Nonferrous Metals lost 304 million yuan, and Shenghe Resources lost 216 million yuan. The only exception—Northern Rare Earth—made a small profit of 52.05 million yuan.

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Strategic Importance of Rare Earths

Su Tzu-yun, researcher and director of the Division of Defense Strategy and Resources at Taiwan’s Institute for National Defense and Security Research, told The Epoch Times on June 18 that “the making of an F-35 fighter jet requires 122 kilograms [about 269 pounds] of rare earth to produce materials used in radars, computers, engines, and fuselages.”
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A seaman walks past an F-35B Lightning multirole combat aircraft along the deck of the HMS Queen Elizabeth aircraft carrier while moored in Cyprus on July 1, 2021. (Roy Issa/AFP via Getty Images)
A seaman walks past an F-35B Lightning multirole combat aircraft along the deck of the HMS Queen Elizabeth aircraft carrier while moored in Cyprus on July 1, 2021. (Roy Issa/AFP via Getty Images)

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He said Beijing has been trying to use the domination of rare earth resources as a strategic leverage, and that “when the relationship with the West is intensified, Beijing deliberately bans exports of it.”

“Then, it certainly affects industrial production and the economy in the West, which has political ramifications,” he said. “That’s why many countries have tried to move away from this red supply chain.”

Sun Kuo-hsiang, professor of international affairs and business at Nanhua University in Taiwan, said Brazil’s rare earth element production “has a short-chain effect, which means that [the West] do not need to go to China to buy rare earths.”

“They can just import rare earths directly from Brazil,” he told The Epoch Times on June 18. “So we can see that Brazil’s rare earths production plays a role that can replace China amid the current geopolitical competition between Beijing and the West. In other words, if China still tries to use rare earths as a strategic tool for geopolitics and economy, it will no longer be able to do so.”

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Jars containing rare earth minerals from Australia's Lynas Corp are seen near Laverton, northeast of Perth, Australia, on Aug. 23, 2019. (Melanie Burton/File Photo/Reuters)
Jars containing rare earth minerals from Australia's Lynas Corp are seen near Laverton, northeast of Perth, Australia, on Aug. 23, 2019. (Melanie Burton/File Photo/Reuters)

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Mr. Sun said that because nations such as Brazil are developing countries, “if the mining companies in developed countries can invest in them, the results of diversified rare earth development may be achieved more quickly.”

“Then, we can see that democratic and free countries can start to avoid the threat of China based on the source of rare earths,” he said. “The strategic competition between the United States and China can be more extensive and sustained without being affected by the leverage that China has. It provides the United States with a fundamental basis for this kind of technological competition with Beijing and to carry out strategies like its plans in the Indo-Pacific.”

Luo Ya and Reuters contributed to this report.

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