This Q&A is part of the Brazil Program’s ongoing efforts to examine the evolving geopolitical and economic dynamics shaping Brazil’s role in global supply chains, particularly in the context of critical minerals, strategic competition, and Brazil’s relations with the United States and China.
As governments around the world seek to secure access to the minerals needed for the energy transition and advanced technologies, Brazil has emerged as a key strategic actor. The country holds some of the world’s largest reserves of rare earths and other critical minerals, attracting growing attention from both Beijing and Washington.
In this Q&A, the Brazil Program spoke with South China Morning Post correspondent Igor Patrick about China’s expanding presence in Brazil’s critical minerals sector, Brazil’s potential to move up the value chain, the implications of growing U.S.-China competition in Latin America, and how recent U.S. tariffs may reshape the region’s strategic and economic partnerships.
How would you characterize China’s current presence in Brazil’s critical minerals sector? What are Beijing’s main strategic interests in the country?
Igor Patrick (IP): China’s presence has changed in nature over the past three years. Beijing was once mostly a buyer of Brazilian ore, but it is now increasingly an owner of Brazilian assets. Chinese investment in Brazil reached US$6.1 billion in 2025, the highest volume anywhere in the world, and this figure is spread across a record 52 projects in which mining, electric mobility, technology, and clean energy led the way.
Meanwhile, China’s minerals footprint has been assembled quietly and deliberately. CMOC has operated niobium and phosphate assets in Goiás since 2016, China Nonferrous Metal Mining Group acquired Taboca in the Amazon in 2024 (gaining tin alongside associated reserves of niobium, tantalum, and hafnium), Baiyin Group bought a copper plant in Alagoas in 2025, Chinese buyers took over Anglo American’s nickel operations, and BYD secured lithium mineral rights in the Jequitinhonha Valley. There are also active talks between the Lula administration and CATL to start producing batteries locally.
This is why I believe one should look at Beijing’s strategic interests on three different levels. The first is supply security. China’s battery, electric vehicle, and wind industries consume more lithium, niobium, copper, and rare earth feedstock than its own geology can provide, and Brazil is one of the few jurisdictions that can supply several of these at scale with political stability and existing infrastructure.
The second is the preservation of its position in the middle of the value chain. As long as Brazilian output flows to Chinese refiners and processors, the country will remain locked into the upstream role, and China keeps the leverage that comes with separation, metallization, and magnet-making.
And finally, we need to look at Washington actively trying to build supply chains that bypass China, with Brazil as the most credible piece of that puzzle. Acquiring or contracting the best Brazilian deposits now is a way of preempting that effort.
Brazil holds the world’s second-largest rare earth reserves and is increasingly seen as one of the few countries with the potential to help reduce global dependence on China. Yet Beijing still dominates the processing, refining, and production of permanent magnets. How realistic is Brazil’s potential to challenge China’s dominance, and how could this reshape Brazil’s geopolitical position in the competition between Washington and Beijing?
IP: Brazil’s potential is real, but it needs to be described more accurately. The U.S. Geological Survey (USGS) puts Brazilian rare earth reserves at roughly 11 million tonnes, second only to China, but reserves mean very little without actual processing and refining power (areas where the Chinese excel). China still accounts for around 70 percent of mined rare earth output and close to 90 percent of refining and its grip is tightest exactly in the separation of heavy rare earths and in the manufacturing of permanent magnets. Brazil today can mine and produce concentrate, but it has no commercial-scale separation, metallization or magnet plant. Until that midstream gap is closed, Brazilian rare earths will continue to pass through someone else’s industrial system on their way to a motor or a missile.
That said, the past two years have shifted the conversation. Serra Verde’s Pela Ema mine in Goiás, for example, became the only operation outside Asia producing all four magnet rare earths at scale, which is why USA Rare Earth agreed in April 2026 to buy it for about US$2.8 billion. The deal was expected to close in the third quarter of 2026, but it is now under scrutiny from Brazilian regulators and the Supreme Court.
And yet, this might be the clearest sign that Brazil has become the central piece in any credible non-Chinese heavy rare earth chain. It comes with a genuine pipeline, from Brazilian Rare Earths in Bahia with a planned mine and a separation plant in Camaçari, to Meteoric, Viridis, and Aclara.
Brasília is not simply watching the situation unfold. The Chamber of Deputies (the Brazilian equivalent of the U.S. House of Representatives) approved a bill in May creating a National Policy for Critical and Strategic Minerals, with export limits on unprocessed minerals, progressive tax incentives for domestic processing, and a government-led council empowered to screen corporate transactions.
So how realistic is the challenge to China? Within a decade, Brazil can plausibly become the most important non-Chinese source of magnet rare earths and anchor a parallel supply chain. But it will certainly not displace Chinese dominance in processing because that dominance rests on thirty years of accumulated industrial capability, tolerance for thin margins, and state subsidy.
In the meantime, it can leverage this advantage to lure and negotiate with Washington and Beijing, which are both treating Brazil as a country to be courted rather than taken for granted.
The risk is repeating the oldest pattern in the country’s economic history, exporting raw materials cycle after cycle while the value is added elsewhere. The dispute over who processes Brazilian rare earths, not who digs them, will define whether this moment becomes strategic autonomy or just another commodity boom.
China already plays a dominant role in Latin America’s mining sector and critical mineral supply chains. Looking ahead, do you expect Beijing to deepen its economic presence in the region, or will growing geopolitical tensions make that strategy increasingly difficult?
IP: I expect Beijing to deepen its presence, but the shape of that presence will change. The era of giant state-to-state loans is over and what we see now is corporate capital making targeted acquisitions, smaller in individual size, more diversified across sectors, and harder to track politically.
The existing base is, of course, already formidable, with Chinese companies controlling or holding major stakes in mining companies in Peru, Chile, Argentina, Bolivia, and Brazil. Critical minerals sit at the center of all of it because they feed the industries where China intends to remain dominant.
But I’d argue that the headwinds are very real. Washington has poured more than US$1 billion into critical minerals across the region since January 2025 through the U.S. International Development Finance Corporation (DFC), the Inter-American Development Bank (IDB), and related instruments, and it applies sustained diplomatic pressure on governments over Chinese port, telecom, and mining projects.
Host countries themselves are raising the bar in terms of investment screening, while social and environmental conflicts around lithium and copper add friction that no amount of capital removes. So far, they have been very skillful in adapting rather than retreating, forming joint ventures, promising downstream investment, and framing themselves as partners of the Global South rather than as a geopolitical bloc.
My expectation is that China’s absolute presence in the region’s mining sector will keep growing through the end of the decade, but each new deal will be slower, more contested, and more politicized than the last. Latin American governments, for their part, will keep hedging, as they show no interest in choosing a side.
Beyond trade, what signal do the recent U.S. tariffs on Brazil send about Washington’s broader strategy toward Latin America? Do measures like these ultimately strengthen China’s position in the region by pushing countries to diversify their economic and strategic partnerships?
IP: Tariffs tell us that Washington currently approaches Latin America through an instrument of coercion rather than an affirmative economic agenda. The 25 percent Section 301 tariff that took effect last week resulted from a yearlong investigation into six areas of Brazilian practices, from digital trade and payment services to ethanol access and deforestation. This is trade policy being used to discipline another country’s domestic regulatory choices and it lands on a country with which the United States runs a trade surplus.
Do measures like these strengthen China? Structurally, yes, but not automatically. Brazilian exporters may redirect volumes, the government has been accelerating its diversification agenda, and standing up to Washington proved politically advantageous for Lula. But the U.S. has something that China does not: its supply chain is deeply intertwined with Brazilian industries, as it imports most of Brazil’s value-added products.
So, we will continue to see Brazilian exports to China surging while U.S.-bound sales fall, but China cannot replace the United States in finance, technology, or security, and Latin American governments know it.
What the tariffs really accelerate is hedging. Countries deepen ties with China precisely to reduce exposure to Washington’s mood swings. And hedging is a game Beijing wins by default because China does not need Latin America to choose sides; it only needs the region not to choose the United States exclusively, and U.S. policy keeps delivering that outcome free of charge.
