Seeking independence from Chinese exports, Brazil enters bid to explore rare earths

Powdered rare earth minerals. Image from Wikimedia Commons, license: public domain.

For the past decades, China has undoubtedly dominated the rare earth marketplace. The country sits atop the world's biggest reserve of these minerals, considered essential components in many technological industries that are at the forefront of the green energy transition. China dominated the exploration and the supply chain, becoming a key supplier for global markets. But that could soon be changing as other countries, including Brazil, toss their hats into the ring, hoping to gain independence from Chinese exports.

China currently supplies between 85–90 percent of the world's rare earth material, according to a report by China Water Risk. This near-monopoly gives the country huge leverage in controlling the flows of rare earth elements throughout the world. Rare earths are a group of chemical elements found in nature together with minerals. The name “rare” comes from the difficulty in extracting these elements, which have particular characteristics like intense magnetism and light absorption, making them prime materials for the technological industry.

Chinese President Xi Jinping touring a rare earth processing plant in Jiangxi province, China. Screenshot from YouTube.

The country has not been shy about exercising this power. In November 2023, Beijing announced stricter export controls, under which it would require rare-earth exporters to report the type of metal they were exporting and the final destinations. In December of that same year, China banned the export of rare earth processing technologies, a move that effectively hindered other countries’ chances of developing their own industries and becoming less reliant on Chinese supplies.

An excerpt from the comic strip referenced in the text. Image from Wechat.

China has also demonstrated some concern over foreign interests in its own reserves of rare earths. This past January, the Chinese Ministry of State Security published a comic strip on its WeChat channel in which it depicts a fictional mine where undercover security guards bust foreign spies who were pretending to be real estate developers, insinuating that the foreigners were trying to steal their minerals and technology.

The strip does not name countries or companies, but in a piece that followed it, the Global Times, a state-backed publication linked to the Chinese Communist Party (CCP), quoted an expert saying that countries such as the United States, Japan and in the European Union “coveted” China's rare earth resources and have “resorted to infiltration, bribery, and espionage to achieve their goals.” No evidence was provided to back up these claims.

Fearful that China might decide to restrict its rare earth exports, which has the potential of disrupting a number of key industries globally, countries in the West are looking to diversify their supply by developing rare earth extraction in other countries. One of them is Brazil, which has the world's third-largest reserves of rare earth. The Brazilian government estimates that the country could become one of the top five global producers in the coming years. The first mining project, Serra Verde, in Goiás state, began production this past January and aims to extract 5,000 tonnes annually by the time it reaches full capacity.

More than a business play, Brazil's entry into this arena is a need, as it comes at a crucial moment. In order to reach net zero emissions by 2050, delivering on the 2016 Paris Agreement, the market for critical minerals, including rare earth metals, is expected to grow almost sevenfold in the next half-decade, according to the International Energy Agency.

A rare earth processing plant in Serra Verde, Brazil. Screenshot from YouTube

A more sustainable industrial development requires this group of 15 elements present in the periodic table, as they are key components in many technological industries that are at the forefront of the energetic transition, including electric vehicles and wind power. These materials are enablers for industries who are seeking to lower emissions and reduce energy consumption.

But while rare earths are a crucial component to ensure industries become more sustainable, their extraction can be quite harmful for the environment, resulting in what experts have called the “rare earth paradox.”

Xianbin Yao, professorial lecturer of International Studies in De LaSalle University, in Manila, and former special senior advisor of the Pacific Department at the Asian Development Bank (ADB), said in an interview with Global Voices:

On the one hand, many rare earth elements are used in products that are essential components of our clean, smart, low-carbon and climate-resilient future. On the other hand, rare earth elements come with a pollution tag.

Consequences of rare earth extraction and production

One example of the footprint of rare earth mining can be seen in the Bayan Obo mine, in the west of Inner Mongolia, a Chinese autonomous region, which accounted, alone, for 45 percent of rare earth production in 2019. A 2023 report by Science News deemed it “one of the most polluted places on earth.” Mine waste containing heavy metals has been dumped into nearby rivers, the air is heavy with fumes and toxic dust, the vegetation in the site has been removed to allow for mining and the local population have reported symptoms of intoxication by heavy metals.

Smog in Inner Mongolia, which has been named “one of the most polluted places on earth” because of the excessive industry, including rare earth extraction and processing. Screenshot from YouTube.

But after mining, transforming the raw ore into something viable for the industry — the step known as processing — also has a footprint of its own. It consumes large amounts of water and produces ample waste.

In 2022, Sky News visited a tailings pond in Baotou, where Bayan Obo is located, which accumulates the toxic byproducts of mining activities in the region. They interviewed two villagers who had just finished watering their fields with water that did not “meet the standards for human or animal drinking,” according to them. The men told the reporter of a nearby village where at least 35 percent of the villagers had been diagnosed with cancer. The government moved them out and banned farming on those lands. The following video depicts toxic waste from rare earth processing being dumped in Baotou:

Brazil's path forward

Bayan Obo is only one example, but many others exist. So far, with production limited to China, the environmental toll has fallen on Chinese communities alone. But as Brazil and other countries enter the rare earths market, they are being afforded the opportunity to follow a different path from China by avoiding the same mistakes and minimizing the environmental cost of exploring these minerals.

This is a relevant concern for a country like Brazil, which has a history of two recent large-scale tragedies in mining. In 2015, a tailings dam for iron ore collapsed in Mariana, in Minas Gerais, killing 19 people. In January 2019, another tailings dam from an iron ore mine ruptured in Brumadinho, a town in the same state, leaving 270 people dead. Many attribute the tragedies to weak regulations and lax enforcement.

There is one additional factor for concern in Brazil, alerts José Gomes Landgraf, professor at the Polytechnical School at the University of São Paulo. “One thing we should combat is the possibility of out-of-control mining in areas of Brazil whe§re we have ionic clay [one of the rare earth minerals],” he said, explaining that this was a problem for China in the 1990s and 2000s. It wouldn't be the first time illegal minerals feed the tech supply chain: in 2022, Repórter Brasil revealed how Apple, Google, Microsoft and Amazon used gold that had been illegally mined in Brazil.

A village flattened by the Mariana dam collapse in Minas Gerais, Brazil. Image from Wikimedia Commons, license CC BY 3.0 BR

According to Yao, from De LaSalle University, erasing all environmental threats is difficult. “What is critical is to ensure in place, first, a clearly established set of environmental regulations, and second, a society wide effort to enforce the regulations and third-party monitoring. So, transparency and participation is the key,” he explained to Global Voices via email.

Yao points out that, as a result of extensive field investigations in two major rare earth sites (one in the North and another in the South), China has tightened environmental regulations and their enforcement using a set of tools such as levies and quota systems. And, as it has matured its industry, the country has learnt how to make the processes more sustainable, he said.

He makes the case that, despite seeking to gain independence from China, countries should consider cooperating with China, which would save them the “unnecessary effort of ‘reinventing the wheel’” in developing their rare earth industries. Yao also said countries may consider attracting Chinese direct investment with technological transfer. “Both parties will mutually benefit from these cooperating opportunities,” he told Global Voices.

Perhaps this is the inevitable outcome for all those who attempt to establish themselves as players independently of China. In Canada, such a cooperation is already taking place, according to a report by CBC News from December 2023. The Nechalacho mine project, which for years had been sold as a way for Canada to gain independence from Chinese rare earth supply, received a 9.9 percent stake from Chinese company Shenghe Resources.

In Brazil, there is so far no news of Chinese investment in rare earth operations, but there is opportunity. In a 2023 report about Brazil's minerals, the Xinshijie Industry Research Center said that Chinese companies have a promising prospect laid out for them in Brazil due to “the relatively backward mining technology and the lack of attention from the government.”

This past June, a group of industry representatives from Minas Gerais went on a technical mission to China to establish strategic partnerships for the production of rare earth magnets. The objective of the visit, which had the support of the Brazilian embassy in China, was to find potential suppliers of the raw materials for production in Brazil.

But on the federal front, there are no signs of cooperation so far. Neither the Brazilian federal government nor the Chinese Ministry on Foreign Affairs have published on any news or information about partnerships regarding rare earth its websites. Brazilian officials also chose not to touch upon this topic in recent visits to China.

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