The European Union has proposed a “more beneficial” partnership with Brazil on critical minerals, aiming to strengthen cooperation in rare earths while reducing reliance on Chinese supply chains. Jozef Síkela, the European Commissioner for International Partnerships, outlined the EU’s approach during a visit to Brazil this week, which included a stop at a rare earth research and processing center operated by Australian miner Viridis Mining and Minerals in Minas Gerais.

Síkela emphasized that the EU’s offer focuses on sustainability and local processing of rare earth minerals, aligning with the Brazilian government’s intention to promote the export of value-added processed minerals rather than raw ore. He described Brazil as the EU’s most strategic partner in Latin America and suggested the bloc could meet its mineral needs via offtake agreements as Brazil develops its refining capacity and moves up the supply chain.

Brazil holds the world’s second-largest rare earth reserves and has established domestic processing as a prerequisite for foreign companies accessing its deposits. President Luiz Inacio Lula da Silva framed this policy as an assertion of national sovereignty during a meeting with then-US President Donald Trump in May, stating that Brazil’s reserves were available to any nation willing to mine and process the minerals on Brazilian soil. Lula reiterated Brazil’s goal to avoid repeating historical patterns of exporting raw materials without capturing industrial value domestically.

China currently dominates the rare earths sector, controlling approximately 91% of global rare earth separation and refining capacity and producing 94% of permanent magnets, according to the International Energy Agency. Brazil aims to challenge this dominance by investing around US$360 million to establish a commercial plant expected to produce 15,000 tonnes of mixed rare earth carbonate annually from 2028. A pilot facility, capable of processing 100 kilograms of ore per hour, was inaugurated in May.

Síkela highlighted a recent non-binding letter of intent between Viridis and Belgian chemical company Solvay to supply rare earth carbonate, which could lead to a broader partnership involving processing technology. Viridis CEO Rafael Moreno indicated that a formal agreement with Solvay might be finalized by the end of July and noted ongoing talks with the EU regarding support for the project.

Brazilian officials also underscored the benefits of working with the EU. Ana Paula Bittencourt, national secretary for geology, mining, and mineral processing, pointed to Brazil’s highly renewable electricity grid as an asset that could help accelerate the development of its mineral value chain in partnership with the EU.

However, Moreno cautioned that building a complete rare earth supply chain—encompassing mining, separation, refining, and processing—would require patience and sustained effort. He noted that China took roughly two decades to develop its dominant position and that Brazil must prioritize mining to attract downstream industries like magnet manufacturing and separation plants.

Viridis is currently engaged in advanced discussions with potential buyers in Europe and the United States and stated it is not pursuing customers in China. The company’s strategy reflects Brazil’s broader ambition to become a global leader in the rare earth sector by advancing its domestic processing capacity and integrating into international supply chains beyond traditional extractive roles.