For decades, China has been the undisputed leader in the rare earth market, holding the largest reserves of these minerals essential for various technological industries driving the green energy transition. With a grip on exploration and the supply chain, China has positioned itself as a crucial supplier for global markets. However, this dynamic may soon shift as other countries, such as Brazil, seek to reduce their reliance on Chinese exports.
Currently, China supplies approximately 85-90% of the world’s rare earth materials, according to a report by China Water Risk. This near-monopoly gives the country significant leverage over the global flow of these critical elements. Rare earths, a group of 15 chemical elements, are prized for their unique properties—such as strong magnetism and light absorption—making them vital for the tech industry. China has not hesitated to wield this power; in November 2023, it announced stricter export controls, requiring exporters to disclose the types of metals being shipped and their destinations. By December, China banned the export of processing technologies for rare earths, effectively stifling other nations’ efforts to establish independent industries.
Additionally, China has expressed concerns about foreign interests eyeing its rare earth reserves. In January, the Ministry of State Security released a comic on WeChat portraying a fictional mine where undercover guards catch foreign spies posing as real estate developers, insinuating a plot to steal minerals and technology. While the comic refrained from naming specific countries or companies, the state-run Global Times later echoed these sentiments, claiming that nations like the U.S., Japan, and those in the EU have resorted to espionage to covet China’s resources, albeit without providing evidence.
In response to fears of potential Chinese export restrictions—capable of disrupting numerous key global industries—Western nations are actively seeking to diversify their rare earth supply chains. Brazil, boasting the world’s third-largest reserves of rare earth elements, is positioning itself as a significant player. The Brazilian government forecasts that the country could become one of the top five producers within years, with the Serra Verde mining project in Goiás state having begun production in January, targeting an output of 5,000 tonnes annually at full capacity.
Brazil’s foray into rare earth extraction is not merely a business opportunity; it is a pressing necessity. To achieve net zero emissions by 2050 and fulfill commitments made in the 2016 Paris Agreement, demand for critical minerals, including rare earths, is projected to grow nearly sevenfold in the next five years, according to the International Energy Agency. These 15 elements are crucial for enabling sustainable industrial development, especially in technologies like electric vehicles and wind energy, which aim to lower emissions and decrease energy consumption.
Yet, the extraction of rare earths poses significant environmental risks, leading to what experts refer to as the “rare earth paradox.”
Xianbin Yao, a professorial lecturer of International Studies at De LaSalle University in Manila and former senior advisor at the Asian Development Bank, explained this duality:
“On one hand, many rare earth elements are essential for clean, smart, low-carbon technologies. On the other hand, their extraction is often linked to severe pollution.”
A stark example of the environmental footprint of rare earth mining can be found at the Bayan Obo mine in Inner Mongolia, which alone accounted for 45% of global rare earth production in 2019. A 2023 report by Science News described it as “one of the most polluted places on earth.” The mine’s waste, laden with heavy metals, has contaminated nearby rivers, while toxic fumes and dust have polluted the air. The local vegetation has been decimated to facilitate mining, and residents have reported health issues linked to heavy metal exposure.
