Rare Earths: The New Oil of the Digital Age
How 17 chemical elements became Beijing's most powerful geopolitical weapon and why Brazil is a key piece on the chessboard of the energy transition.
Francisco Behr (Junior at GN Poli)
In recent years, the term “rare earths” has been gaining space in the headlines, especially in discussions involving the technological and geopolitical rivalry between China and the United States. They are a group of 17 chemical elements that, despite their name, are not exactly rare; many are even more abundant than gold. The challenge lies in extracting and processing them in an economically viable and environmentally safe way, which makes them expensive, strategic and highly concentrated in a few countries.
These minerals are key pieces of the modern economy, essential for wind turbines, electric vehicles, smartphones, medical equipment and defense systems. In other words, they are the invisible foundation of the energy transition and cutting-edge technology, underpinning sectors that are shaping the future of the global economy.
To understand this dependence, it is necessary to explain the “why”. The key lies in the unique magnetic and catalytic properties of these elements. Neodymium and Praseodymium are the main components of permanent magnets, the most powerful in the world. These magnets are the heart of electric vehicle motors and wind turbines. Without them, motors would be larger, heavier and drastically less efficient. Heavy elements such as Terbium and Dysprosium, in turn, are added so that these magnets retain their properties at high temperatures, something indispensable for defense applications (missiles, drones) and high-performance motors.
Although the rare earths market is relatively modest in size, estimated at US$3.74 billion in 2024, its strategic importance far exceeds its monetary value. The reason is simple: whoever controls the supply of these elements controls production chains that are critical to innovation, clean energy and national defense. To understand why this topic has been gaining so much relevance, we need to look back and understand how the world came to depend so heavily on these resources and on those who control them.
Since the late twentieth century, China has invested aggressively in the extraction and refining of these materials, establishing itself today as the world's largest producer and refiner of rare earths, accounting for about 60% of global production and 85% of global refining. This near-absolute dominance creates a worrying situation for highly dependent countries, such as the United States, Japan and members of the European Union, which have been trying to diversify their sources of supply and reduce their strategic vulnerability to Beijing.
The topic returned to the center of political and trade discussions during Donald Trump's administration, when tensions with China intensified at the height of the trade war between the two powers. Amid mutual tariffs and sanctions, Beijing went as far as signaling possible restrictions on rare earth exports, a move that could paralyze key sectors of the U.S. economy. In response, Washington reclassified rare earths as an input critical to national security, launching programs to encourage domestic mining and seeking partnerships with strategic allies such as Australia and Canada.
This “race” away from China already has its protagonists. In the United States, MP Materials reactivated the historic Mountain Pass mine in California and is working on a billion-dollar effort to build its own refining and separation capacity on American soil, vertically integrating the chain. In Australia, Lynas Rare Earths, the only major processor outside China, has become a geopolitical asset, receiving funding from the U.S. Department of Defense to build a processing plant in Texas. These production moves among allied countries show that the financial markets and Western governments have already priced in the geopolitical risk.
An especially relevant point in this discussion is Brazil's position. The country holds the second-largest rare earth reserves in the world, with about 25% of known reserves, second only to China. Despite this significant potential, Brazil's challenge is immense. The country still lacks the essentials: the technology, infrastructure and industrial scale for refining. Without the ability to separate and purify the elements, Brazil remains at the bottom of the chain, extracting little direct economic value from this strategic asset and, in practice, exporting geological knowledge more than high-value-added products.
Largest Rare Earth Reserves, in Millions of Tons (Source: USGS):
However, international interest in Brazil's potential has been growing, especially as the United States, Europe and Japan seek to reduce their dependence on China. In this context, Brazil is taking on a relevant geopolitical role. Brazil's competitive edge may lie precisely where few are looking: in synergies with existing mining operations. In places such as Araxá (MG), rare earths are found as a “co-product” of niobium extraction, a sector in which Brazil already has technological mastery.
Looking ahead, the race for rare earths is not about the value of the ore, but about who will hold the key to the energy transition and technological sovereignty. If the twentieth century was defined by control over oil, the twenty-first century will be shaped by control over these 17 elements. For Brazil, the window of opportunity is open. The country can choose to remain an exporter of geological potential, or it can make the strategic investment in refining technology to become a pillar of a new global supply chain, a decision that will define its relevance in the economy of the coming decades.
