Brazil Has the World’s Second-Largest Rare Earth Reserves but No Strategy for What to Do With Them

President Luiz Inácio Lula da Silva arrives in New Delhi on February 18 for a state visit that will include bilateral talks with Prime Minister Narendra Modi and the signing of roughly 14 agreements. Among them is a memorandum of understanding on critical minerals and rare earths — materials essential for batteries, chips, and the broader energy transition.

The MOU is meant as an umbrella framework, not a binding deal. Officials described it as the opening of a dialogue — in part because Brazil itself has not decided what it wants. An unresolved debate within the executive branch over how much access to grant foreign partners has stalled any coherent strategy. One faction argues Brazil should avoid exclusivity with any power, preserving leverage as the holder of the world’s second-largest rare earth reserves. This group sees Washington’s newly launched FORGE alliance — a 54-country initiative to build supply chains outside Chinese control — as a geopolitical straitjacket. Brazil sent only a low-ranking diplomat to the U.S. ministerial this month, a deliberate signal of distance.

Brazil’s Critical Minerals Paradox

The deeper problem is the gap between aspiration and reality. Brazil insists it will not be reduced to a raw-material supplier. But a December 2025 study by the Institute for Applied Economic Research reveals an uncomfortable truth: production is negligible relative to both reserves and global output. Brazil holds 22% of the world’s graphite reserves yet saw production shrink 8.4% annually between 2017 and 2023, while global output grew roughly 10%. Its share of world supply fell from 10% to 3.4%. The pattern repeats across nearly every critical mineral, with lithium the sole exception.

There are glimmers of change. Mining investment hit a record in 2023. The U.S. Development Finance Corporation finalized a $565 million loan to Serra Verde, Brazil’s only producing rare earth mine, and Washington said this week it sees Brazil as a promising partner for both extraction and processing. The Senate approved a bill in December creating a National Policy for Critical Minerals, including domestic processing zones.

But the India deal illustrates Brazil’s broader approach: talking to New Delhi, Washington, Beijing, and Brussels simultaneously, committing fully to none. It prizes flexibility. Whether it also risks paralysis while competitors move fast is the question Brasília has yet to answer.