Brazil Hesitates as U.S. Pushes Rare Earths Partnership
Seeking to reduce its reliance on China, the United States is pushing for a critical minerals deal with Brazil. The South American country is less eager.
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The United States has been pressing Brazil to enter an agreement between the two nations to produce millions of tons of critical minerals to help power the economies and battlefields of the future, according to U.S. and Brazilian officials.
Brazil, home to one of the world’s largest strategic minerals reserves, needs help realizing its critical minerals potential and turning reserves into exports, according to experts.
But it appears resistant to a deal, according to to the officials, because Brazil wants to control its resources and be able to sell them to various countries beside the United States.
In February, U.S. officials sent a proposal to Brazil for a bilateral agreement on critical minerals, but have received no response, according to four Brazilian and U.S. officials familiar with the plan, who requested anonymity to speak about confidential policy.
The United States this week hosted a major critical minerals forum in São Paulo, hoping to broker deals between the U.S. government and Brazilian mining companies. The United States wants to invest billions of dollars in Brazilian critical minerals, a U.S. embassy spokesman said, and has identified at least 50 potential projects.
The spokesman said the United States had extended an invitation to the forum to Brazil’s government, but never heard back.
The Brazilian government, in fact, was not at the event, U.S. and Brazilian officials said. The office of the president, Luiz Inácio Lula da Silva, declined to respond to questions about the absence.
But a top official close to Mr. Lula said his government sees the U.S. push on critical minerals as a heavy-handed bid to shape Brazil’s critical minerals policy. The official said he was not authorized to speak publicly about a sensitive matter.
Just before the event, the top U.S. diplomat in Brazil signed a memorandum of understanding with the governor of Goiás, a state rich in critical mineral reserves, according to a statement from the U.S. mission in Brazil.
Still, to advance its plans, the United States needs Brazil. By law, minerals found in Brazil’s soil belong to the government, and companies need permission from federal authorities, not state ones, to explore reserves buried in land they buy.
Brazil and the United States have been in quiet talks for years over an alliance on critical minerals. But now the United States is making a far more forceful bid for access.
Brazil and the United States both seek to reduce their reliance on China, which controls much of the extraction and processing of elements like rare earths, lithium and cobalt.
Publicly, Brazil’s president has been clear: his country is looking to strike deals, but it won’t simply turn over its critical minerals to foreign companies. “They’ve already taken all our silver, our gold, our diamonds, our iron ore,” Mr. Lula said during a state visit to South Africa this month, speaking about foreign interest in Brazil’s critical minerals. “What else do they want to take?”
Brazil is believed to hold between 19 and 23 percent of global reserves of rare earths, second only to China. This group of 17 elements is needed to make powerful magnets for many defense and green technology products, including guided missiles and electric cars.
The country also controls virtually all of the world’s niobium, used in the high-strength and low-weight steel needed for gas pipelines or jet engines. It also has large supplies of other important minerals like lithium and cobalt.
Brazil, long seen as a raw commodities exporter, is seeking to build a supply chain in which critical minerals are mined, processed and turned into magnets domestically before being shipped abroad.
While the U.S. government wants to invest in developing a Brazilian supply chain, it opposes any measure that would make it mandatory for these minerals to be processed in Brazil, according to one of the U.S. officials.
In exchange for its investment dollars, the United States wants priority over China on purchasing Brazil’s critical minerals, according to the U.S. and Brazilian officials. But Brazil, whose foreign policy prioritizes having a diverse array of trading partners, is hesitant to sign an exclusive agreement, one of the Brazilian officials said.
With vast reserves of strategic elements like rare earths and lithium, South America has become a nexus of the global power struggle between China and the United States.
Brazil also worries, the Brazilian official added, about how a deal with the United States would fit into its other trade relationships, including a major agreement between the South American trading bloc Mercosur and the European Union that includes critical minerals. Last month, Brazil also promised to partner with India on critical minerals and rare earths.
The impasse between the United States and Brazil comes as diplomatic relations between the two nations appear to again be strained.
This week’s critical minerals event was swept up in controversy, when a top U.S. envoy who was supposed to attend had his visa revoked after Brazil’s government discovered that he planned to visit former President Jair Bolsonaro in jail and meet his son, who will run as the right-wing candidate in lieu of his father in a presidential election this year.
Last year, The New York Times reported how years of negotiations over a critical minerals alliance between Brazil and the United States were derailed when President Trump imposed punishing tariffs on Brazil with the aim of helping Mr. Bolsonaro, a right-wing ally, avoid a prison sentence for trying to cling to power after losing the 2022 elections.
When Mr. Bolsonaro was nonetheless sentenced to 27 years in prison, Mr. Trump abruptly dropped those tariffs.
When asked about the American proposal, the Brazilian officials said the government was not opposed to a partnership, but Mr. Lula wanted to discuss it with Mr. Trump during his White House visit. The Brazilian leader was supposed to meet the American president this month, but the trip was postponed because of the Iran war.
Experts say both countries stand to gain from a partnership that could loosen China’s tight grip on these strategic materials.
American capital and expertise could help Brazil become a global powerhouse in the extraction and processing of the critical minerals. And Brazil’s reserves could reduce American dependence on China, which has withheld exports of such minerals during trade battles.
For now, just one Brazilian mine, backed by American investors, is producing small quantities of minerals, which have to be shipped to China for processing.
But, late last year, that mine suddenly cut short its 10-year contracts with Chinese processors. The contracts will now expire this year, opening the door for Western companies.
Then, last month, the U.S. International Development Finance Corporation, an investor in the mine, poured an additional $565 million into the project, citing plans to build secure and transparent supply chains.
Lis Moriconi contributed reporting from Rio de Janeiro.
Ana Ionova is a contributor to The Times based in Rio de Janeiro, covering Brazil and neighboring countries.
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