Ambassador James (Jimmy) Story, former US. Ambassador for the Venezuela Affairs Unit and former Consul General in Rio de Janeiro Brazil.
Ricardo Zúniga, former Principal Deputy Assistant Secretary in the Bureau of Western Hemisphere Affairs, U.S. Department of State; and former Consul General in Sao Paulo, Brazil.
At the turn of the 20th century, Winston Churchill was First Lord of the Admiralty and made the fateful decision to move Britain’s famed naval fleet away from coal, of which Britain had plenty, to oil, of which it had none. It required a new set of international relationships to power the British fleet and maintain military superiority. Today every country in the world other than China faces the same set of circumstances when it comes to the rare earths and critical minerals that will power the 21st century. Unless other nations build the relationships and alternative supply chains that provide access to the raw materials and the capacity for refining them, China can choke off supplies necessary for the energy transition and defense modernization at any time. And China has recently shown itself willing to weaponize its near monopoly of these critical materials.
China churns out 69 percent of the world’s Rare Earth Elements (REEs), processes 90% of them, and is responsible for processing nearly 99% of the Heavy REEs, controlling the entire chain, from mining REEs, to refining them, to manufacturing magnets and other vital industrial goods, especially magnets which are critical in high-tech military technology.
China has used its dominant position to throttle competitors in the sector, and now as leverage in its trade dispute with the United States and other countries. Governments and lenders previously hesitated to finance competing projects given China’s wide lead in the sector and notoriously volatile REE prices. China may now have overplayed its hand and established a rationale for countries to make the strategic commitments necessary to secure stable supplies of REEs.
Total control by a single nation of such crucial materials is neither desirable nor sustainable. One country stands uniquely positioned to help the world diversify rare earth elements (REEs) and other critical mineral supply chains: Brazil. Possessing some of the largest reserves of rare earths, Brazil could emerge as the disruptor of decades of China-centered development of the REE sector. And it could do so not only by mining and exporting its ample REE resources but by moving up the value chain through domestic development and collaboration with investors from North America, Australia, Europe, Japan, and others.
Brazilian leadership in diversifying the REE supply chain would help stabilize the market for resources vital to the global energy transition and provide needed inputs to fast-evolving industrial and technological products. Brazil would likely add the benefit of more environmentally sound extraction and midstream production methods than those in China. EU nations, eager to diversify their trading relationships and supply chains through deals such as the trade agreement with Mercosur sent forward this month for member state approval, could prove excellent partners for Brazil’s REE development. So could U.S. companies as the Trump administration prioritizes diversified supply chains for critical minerals.
Two questions must be resolved before this vision can be realized: first, can Brazil overcome internal barriers to the rapid development of REEs in time to take advantage of its unique position; and second, will the Trump administration’s politically-driven tariffs on Brazil make collaboration on REEs impossible for the two countries?
Brazil starts from a privileged position having an estimated 22 million tons of REE reserves, compared to China’s 44 million tons. But Brazil is responsible for less than two percent of global REE production. The country’s first commercial REE operation, Serra Verde, took a decade to start production in 2024, slowed by licensing, permitting, and logistical hurdles, among others. Brazil’s famously difficult bureaucracy must be supercharged and streamlined to take advantage of China’s overreach in this critical supply chain. Delay equates to irrelevance as the need for these critical minerals will drive the industry to look elsewhere regardless of Brazil’s reserves.
Brazil is moving to promote development of a full REE chain in Brazil, including by committing nearly $1 billion to critical mineral development through its national development bank, BNDES. There are dozens of projects identified across Brazil, many in partnership with international mining companies. Overcoming the inertia from a cold start going up against a monopoly player in any industry is difficult. But the value proposition around Brazil’s critical mineral potential represents more than the current net present value and cost of a project, once countries and companies incorporate the costs associated with lack of access to the materials in case of trade disputes. Smart industrial policy and focused financing, to include international financing, are necessary to broaden access to these materials which should also serve to moderate prices and increase security of access.
The second question – the U.S. trade dispute with Brazil – should be easier to resolve since it is more a matter of Trump administration policy rather than an intractable commercial dispute. But short-term objectives can sometimes cloud strategic thinking, which in this case would undermine a partnership that would meet the moment for both countries, satisfying a need for resources in the United States as efficiently as possible and helping Brazil build capacity in a sector crucial to its future growth.
Much like Churchill did over a hundred years ago, we must quickly move to partner with source countries not only for the raw materials, but to increase the refining capability to maintain access to these crucial elements. Failure to act decisively will jeopardize not only our economic interests but insert fragility into supply chains for our military. Brazil is clearly poised to become a partner in addressing the global concern of a Chinese monopoly in the sector.
James B. (Jimmy) Story is a founding partner at Global Frontier Advisors and a senior advisor to Dinámica Americas. He served as the last U.S. Ambassador to Venezuela, where he was engaged both in issues of Democracy and in support of US interests in the oil and mining industries, and as Consul General in Rio de Janeiro, Brazil. Ambassador Story most recently served as Acting Ambassador to Angola and to São Tomé e Principe where he supported U.S. interests working in the Lobito Corridor to export critical minerals to the United States. While in Africa, he supported efforts to stop the fighting in the Eastern Democratic Republic of Congo where some 26 TCF of critical minerals reserves have been discovered.
As a career foreign service officer, Ambassador Story served in postings around the world, including Brazil, Mozambique, Mexico and Afghanistan. In addition, he served as Head of the U.S. State Department’s Bureau of International Narcotics and Law Enforcement Affairs Office for the Western Hemisphere and as Head of the Bureau’s Bogota, Colombia Office. In Afghanistan, he was the Senior Civilian for Task Force Rakkasan in Regional Command East Afghanistan.
Ricardo Zúniga is a founding partner at Dinámica Americas. He is a retired U.S. Foreign Service Officer who served in Mexico, Portugal, Cuba, Spain, and Brazil and as President Obama’s National Security Council Senior Director for the Western Hemisphere, Special Envoy for the Northern Triangle in the Biden administration, and U.S. Consul General in São Paulo, Brazil.
This paper represents the research and views of the author(s). It should not be construed as legal or investment advice. It does not necessarily represent the views of the Tulane Energy Law & Policy Center, Global Frontier Advisors, Dinámica Americas, or the United States. The piece may be subject to further revision.
