Europe bets on Brazilian rare earth refining to win critical minerals race

The European Union is trying to distinguish itself in the global contest for Brazil’s critical minerals by backing more of the value chain inside the country, rather than simply seeking access to raw materials.

Jozef Síkela, the European commissioner for International Partnerships, told Reuters that Brazil has become the EU’s most important strategic partner in Latin America as the bloc looks to diversify supplies of minerals needed for electric vehicles, defence systems and advanced manufacturing.

His comments came during a visit on Saturday to a research and processing centre operated by Australia’s Viridis Mining and Minerals in Poços de Caldas, in the state of Minas Gerais. The site is one of four priority projects chosen to accelerate cooperation between the EU and Brazil.

Brazil holds the world’s second largest reserves of rare earths, a group of critical minerals used in magnets, batteries and high performance industrial technologies. The country, however, is still building the industrial capacity needed to process those resources at scale.

For Síkela, that gap is also the opportunity. The EU’s message to Brasília is that Europe wants to support mining projects that create higher value activity in Brazil, including refining, technology transfer and skilled employment.

"It is extremely important that Brazil also moves beyond low-margin businesses, meaning that value is created here in the country," Síkela said during the visit to Viridis. He added that Europe could use purchase agreements to meet its own needs while helping Brazil build refining capacity, acquire new technologies and move into higher-margin stages of the supply chain.

A rare earth pilot with bigger ambitions

Viridis opened its pilot processing project in May. The facility can handle 100 kg of ore per hour and produce up to 2.92 kg a year of mixed rare earth carbonate, known as MREC, according to the company information cited by Reuters. MREC is a pale powder containing a blend of rare earth elements that have not yet been separated.

The company is now planning a much larger step. Viridis intends to invest US$360 million in a commercial plant capable of producing 15,000 tonnes of MREC a year from 2028. Its Colossus project in Minas Gerais covers 228.62 square kilometres of licences.

Síkela said the project fits the EU’s priorities because it combines mineral supply with domestic industrial development.

"That is why I like this project in particular so much, because it basically delivers objectives: it creates jobs, creates new partnerships, brings new technologies, education and knowledge transfer, all based on the most advanced environmental, social and technical standards," he said.

This month, Viridis signed a non-binding letter of intent with Belgian chemicals group Solvay. The document covers potential MREC supply and could develop into a broader partnership, including technological support for processing.

Viridis chief executive Rafael Moreno said discussions with the EU over support for the project are advanced, and that a deal with Solvay could be completed by the end of July. He said European backing could involve financing tools and price protection mechanisms designed to reduce risk and preserve competitiveness.

"A floor price is important, so closing all these details will be important for us, and that is not far from happening," Moreno said, without giving a specific timetable.

Síkela stressed that the EU is not seeking to replace private investors or act as an equity provider. Its role, he said, is to provide political support and risk mitigation instruments that help bring in private capital.

Supply security without relying on China

The push comes as Western governments try to reduce their exposure to China, the world’s largest producer of rare earths. Europe and the United States have both been looking for alternative sources of critical minerals after recent shocks, including the pandemic and the war in Ukraine, exposed vulnerabilities in global supply chains.

Asked about China, Síkela said the issue is broader than any one country. Europe’s strategy, he said, is to cut dependencies across key supply chains.

Rare earths are not the only focus. Síkela said the EU also sees priority opportunities in Brazil involving other critical minerals, including nickel and lithium. He indicated that the bloc and the Brazilian government are working toward a memorandum of understanding, although details remain under negotiation.

The commissioner rejected the idea that Europe may have arrived late, after the United States and China made significant moves in Brazil. Europe’s offer, he argued, is different because it emphasises sustainability, job creation and education.

"We should not forget that Brazil is a global environmental player, with the rainforest, with the Amazon, with the resources," Síkela said. "So whatever Brazil does, if it does it right, it will have a global impact. And if it does it wrong, it will have a negative impact. Therefore, what we want to do is help with environmental, social and governance standards, because that matters to us."

Moreno said Viridis is aligned with a diversified market for rare earth supply chains. He said the company wants multiple partners to have access, whether in Argentina, Paraguay, Europe or Australia, and described the company’s approach as European, Western, or more importantly, Western in mindset.

At the end of last month, Moreno told Reuters that Viridis was in advanced talks with potential buyers of critical minerals in Europe and the United States, and that the company was not seeking Chinese purchasers.

Connect with Brazil Business Club

Brazil’s critical minerals sector is moving from geological promise toward industrial strategy. For investors, manufacturers and service providers, the next phase will depend on partnerships that understand both global demand and Brazil’s regulatory, environmental and regional realities.

If you are looking to invest in Brazil, build supply chain relationships or assess opportunities in mining, processing and industrial technology, connect with Brazil Business Club. We help international businesses navigate the Brazilian market with context, local insight and the right conversations.