It took some time for the world to wake up to the dangers of China’s dominance of the critical and strategic minerals value chain. Including the United States, Europe and Brazil. The sleepiness continued until April, when Beijing adopted restrictions on its exports of rare earth compounds, metals and magnets to the US market in response to tough tariffs on their products imposed by Washington.
From the trade war between the leaders of the global economy, a new geopolitical aspect has emerged. Countries able to act as alternatives to Beijing in this market in the future will have an impact on technological transformation, energy chains, defense and food security. These are the foundations of the twenty-first century economy – with the desire for such inputs growing.
“The market for critical and strategic minerals will guide the global economy for decades. The need to limit the dominance of China, which has demonstrated its ability to use it as a political and economic weapon,” summed up Silvio Cascione, Brazil Director at Eurasia Group.
“The global conflict today is about the capacity to process these minerals and ensuring access to them,” says Frederico Viana Rodriguez, partner at Siscon Barrio, a mining company.
Even with the lurking threat of production line disruptions around the world, China’s power will not overwhelm its own for years, perhaps decades, according to Tulio Carrillo, research director at the Brazil-China Business Council (CEBC). International Energy Agency (IEA) data classifies the country as a leader in refining 20 essential minerals to manufacture final goods for the energy transition. Global demand for these inputs is expected to quadruple by mid-century, compared to 2022, according to the International Energy Agency.
The time it takes for China to plan to consolidate its leadership is nothing like the time it takes for countries it intends to overtake, such as Brazil. Ottaviano Canuto, former president of the World Bank and a senior member of the New South Policy Center, recalls that Chinese leader Deng Xiaoping (1904-1997) outlined the country’s plans for rare earths in the 1980s, when he said: “The Middle East has the oil. China has the rare earths.”
“China’s potential competitors will have to climb the same ladder, without Beijing’s planning structure,” Canuto says.
Beyond exploring deposits, what is important now is the ability to add value to these minerals – a leap beyond the export of raw inputs and at least one step up in economic competitiveness. Competition for technology, investments in exploration, processing and financing is driving European countries, the United States, Canada, Australia, Indonesia, Brazil and others.
With China being a common target, such a dispute does not obscure the possibility of an alliance. “Partnerships could be the way for countries with mineral reserves to provide products with greater added value and to become players in this geopolitics,” Carrillo says. “This applies to Brazil.”
In principle, a potential partnership could emerge from Brazil’s negotiations with the United States regarding US tariffs on Brazilian products. The issue was not discussed during the meeting between Presidents Luiz Inacio Lula da Silva and Donald Trump, from the United States of America, last October in Kuala Lumpur, Malaysia. But it is part of the ongoing bilateral talks.
As Cascione points out, there is at least one starting point. The National Bank for Economic and Social Development (BNDES) and the International Development Finance Corporation (DFC) from the United States of America signed a framework agreement for co-investment cooperation in 2024 covering the mining, battery and semiconductor sectors for electric vehicles. Under the Trump administration, the agreement remains in effect.
The country’s wisdom when it comes to tariffs, strictly speaking, should also contribute to this dialogue. The Brazilian government rejected the hypothesis of revenge from the beginning, even with American resistance to respond to its authorities for months. “If he had not proposed possible restrictions on the export of niobium, the US aviation industry would have collapsed,” Rodriguez said, referring to the fact that Brazil accounts for 90% of global sales of this mineral and, therefore, has bargaining power in this sector.
In this case, it is certain that confidence in Brazil’s supplies of niobium and other minerals will be destroyed in various parts of the world, just like its confidence in China. The possibility of easing tariffs will be lost, rather than developing into an appeasement agreement, as Beijing and Washington are about to sign it for a second time.
“Brazil’s agreement with the United States in this area makes sense, as well as with Europe,” says Cascioni. “It will lead to gains, bilateral rapprochement, and move the country away from Chinese dependency.”
On the other hand, a partnership with China on key topics, such as transferring the technology needed to separate rare earth elements and refine other minerals, would be a surprise. What is most likely is an increase in the flow of Chinese investments in the Brazilian mining sector, with the aim of providing raw inputs to its market.
“If China is willing to enter into an agreement with Brazil, it will need counterparts and it will cause some embarrassment,” Ambassador José Alfredo Graça Lima said. “The fact that Brazil has reserves does not mean that it will benefit from them. The country will have to make choices.”
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