The US and others turn to Brazil for rare earths, raising environmental concerns

In a global quest for rare earths crucial for modern technologies, Brazil is stepping in to fill the gap left by China's dominance, particularly for the United States and Australia, according to an analysis of mining permits conducted by The Associated Press and Reporter Brasil. The United States and Australia are both seeking alternatives due to China's recent restrictions on rare earth exports in response to U.S. tariffs.

This has driven foreign capital into Brazil, with nearly half of the 2,727 overall rare earth exploration applications coming from subsidiaries of foreign mining companies or firms with foreign ownership stakes. Eleven of the top 20 companies with the most applications are backed by foreign investment, primarily from Australia, the U.S., and Canada.

While Brazil holds the second-largest reserves of rare earths globally, the environmental implications of mining in these areas, especially near the Amazon rainforest, pose significant concerns. Indigenous communities are raising alarms about potential environmental damage, and there are also questions about the dynamics between the U.S., Brazil, and China.

Robert Muggah, co-founder of the Igarape Institute, highlights that Brazil's rare earths are significant not only due to their size but also because they sit at the intersection of resource nationalism, energy transition demands, Western supply-chain diversification, and competition with China's rare earth dominance.

The International Energy Agency predicts a threefold increase in rare earth demand by 2040, driven by their use in electronics, magnets, batteries, wind turbines, and electric vehicle motors. Demand for rare earths is expected to surge due to the global shift away from fossil fuels to combat climate change. The analysis reveals a surge in U.S. investment after China's export restrictions, which put pressure on U.S. companies, leading to renewed negotiations with Beijing.

The U.S. government's stake in Brazil's sole commercial rare earth producer, Serra Verde, further illustrates this shift. However, the rush to mine these resources also brings environmental risks, as projects within certain buffer zones could lead to toxic chemical releases, radioactive waste, deforestation, air pollution, noise pollution, and contaminated water supplies.