Brazil, Chile and Argentina have large deposits of elements that could help the transition to clean energy. Can they capitalise without big environmental sacrifices?
In central-western Brazil, a small town of just 27,000 is being pulled into the minerals race between world powers.
Minaçu in Goiás state has significant reserves of rare earth elements. Some of these are essential for the energy transition, owing to their place in manufacturing clean tech like electric cars and wind turbines.
Global demand for rare earths grew by approximately 7% in 2024, according to the International Energy Agency, with powerful nations including the United States and China rushing to secure supplies.
Despite Brazil accounting for nearly a quarter of the world’s known reserves, Latin America is still playing catch-up in rare earth mining. China dominates extraction, mainly via its domestic operations. The country accounts for almost 70% of global rare earth mine production, according to a report published by the US Geological Survey in early 2025.
Minaçu is an example of Latin America’s push to compete. When Pela Ema opened in 2024, it became the first mine outside Asia to produce a number of rare earth elements used in magnets for electric vehicles and wind turbines.
In early November 2025, the work of the company who opened it, Serra Verde, was boosted by a USD 565 million loan from the US International Development Finance Corporation, which dispenses federal funds for overseas development projects. Annual production of rare earths at Serra Verde is forecast to be 6,500 tonnes by 2027.
Major deposits of rare earth elements have also been found in Chile and Argentina. These represent a significant opportunity for the region. But experts say Latin American countries should be wary of rushing to export rare earths when they could be developing full supply chains. Others warn of serious environmental damage being done to sensitive ecosystems.
Winning the rare earths race
According to the US Geological Survey, China accounts for approximately half of the world’s known rare earths reserves. In addition to dominating mining output, it also controls around 90% of rare earths processing.
By contrast, Latin America’s rare earths mining and refining industry remains underdeveloped, despite having healthy reserves of its own. Brazil produced only 140 tonnes of rare earths in 2023, and 20 tonnes the following year, the report added, negligible compared to the 270,000 tonnes China produced in 2024.
The latest geological studies confirm that several Latin American countries, especially Brazil, Chile, Peru and Argentina, have deposits of global importance.
In recent months, rare earths have been at the heart of tensions between China and the US. China imposed restrictions on exports in October, citing concerns over their use by foreign militaries. This fed into a tariff battle with the US, which is seeking to guarantee supplies of rare earths to support its own industries. An agreement was then reached at the end of that month. In early February, the US “set out to reshape the global market for critical minerals and rare earths”, by hosting more than 50 countries for a meeting designed to begin growing their collective market share.
The growing industry in Latin America, meanwhile, means it has become a more attractive region for both powers.
“Latin America has regained its centrality as a supplier of critical resources,” says Juliana González Jáuregui, an international relations researcher at the Latin American Faculty of Social Sciences (Flasco) in Argentina. “This centrality is based not only on its geological endowment, but also on the fact that the main global players are seeking to diversify risks in strategic sectors dominated by a few countries.”
Geopolitical competition for minerals and the need to ensure stable supply chains for strategic transition industries are central to this, she says.
The rare earths rush
Extracting rare earths is technically complex and costly, as well as hugely energy intensive. China’s production dominance is anchored by its ability to produce them cheaply and at scale. This has made it difficult for smaller operations in other countries to compete on the market. To counteract this, mining companies in other regions want a separate, higher pricing system.
This is where Brazil may have an edge. Part of Brazil’s reserves, such as those in Minaçu, are found in ionic clays. This type of deposit is simpler and cheaper to exploit than those found in harder rock, and mining it has less of an environmental impact.
New discoveries are also attracting the attention of foreign companies. These include the “district-scale” find announced last year that has inflated Brazilian Rare Earths’ Pelé project in Bahia state. The Australian mining company Viridis is developing a project called Colossus in the municipality of Poços de Caldas, Minas Gerais state, with estimated resources of 201 million tonnes.
In June last year, the Brazilian government began evaluating 56 business plans for critical mineral project, including rare earths projects, which had been submitted to try and secure support. It has set aside a fund of BRL 45.8 billion (USD 8.9 billion) to distribute among the projects chosen to receive support.
Chinese companies have taken note. China Nonferrous Metal Mining Group purchased the Brazilian company Taboca Mining in 2024, securing access to rare earths. In the first half of 2025, Brazilian rare earth exports to China tripled in comparison to 2024.
In Chile, Canada’s Aclara Resources is partnering with the Chilean mining conglomerate, CAP, to develop the Penco Module project at an estimated cost of USD 148 million. This project will focus on rare earths such as dysprosium and terbium, which are again used in magnets in electric vehicles. Its aim is to produce 800-1,700 tonnes of minerals per year through a leaching process that uses recycled water. The developers claim the project will not produce tailings (residue waste) and that reforestation using native species will take place.
At least 19 deposits have been discovered in Argentina. An environmental impact study by the company Litica Resources is the precursor to possible extraction in the country’s northern provinces.
These developments have been noticed by the European Union and the US, which have both adopted strategies to diversify the risks in their supply chains. The former has signed memoranda with Argentina and Chile, including chapters on critical raw materials, and ratified trade agreements with the Mercosur bloc. The latter created the Minerals Security Partnership in 2022, made up of 14 countries and the European Union.
An unequal partnership?
One of the crucial debates in Latin America is whether its reserves will simply be exported as raw materials or used to support local refining, processing and downstream control. Brazil, Argentina and Chile are all seeking to reposition themselves as industrial players. In November, the Brazilian president Luiz Inácio Lula da Silva said: “We are not going to be exporters of critical minerals. Anyone who wants them will have to industrialise in our country so that our country can earn that money.”
Constantine Karayannopoulos, a consultant in the minerals industry, tells Dialogue Earth that Brazil has “probably one of the best” rare earths deposits in the world. He cautions against repeating what he sees as the mistakes made in Australia and Canada: “Their economies grew largely on the basis of extraction [of raw materials], but they did not capture the added value that the Chinese, the Koreans and the Japanese – and to a lesser extent the Europeans – did.”
Ayaz Alam, director of the Geological Society of Chile (SGC), says that while there is interest in moving towards value-added production, “it is important to be realistic.”
“Projects have been delayed for years,” Alam explains. “Some companies planned to start operating in 2026 or 2027, but there are unresolved environmental issues, technologies that are not yet consolidated, and pending conflicts with local communities.”
González believes that for Latin Americans to balance investment opportunities with the risks of technological and political dependence, they should work with major players like China to avoid maintaining “asymmetrical relationships”.
“The balance is not ‘with or without China’ but how to insert oneself into the global system without further deepening historical vulnerabilities,” she says.
What it means for the environment
One concern about this booming industry is the environmental impact. Rare earth elements are commonly mined using open-pit methods. The ore is crushed and ground, and rare-earth-bearing minerals may be concentrated using physical processes. These concentrates are then chemically treated with acids or alkalis to dissolve the rare earth elements. Then a solvent extraction process separates the different rare earths.
These processes traditionally require large volumes of water, and carry the risk of harmful substances leaking into surrounding ecosystems.
Rare earth mines can release radioactive elements such as thorium and uranium. The acidic waste generated during processing can pose a risk to animal and ecosystem health. Leaching – the process of using chemical pools or pits to dissolve rare earths, thus extracting them from surrounding material – can contaminate groundwater or surface water if there is leakage.
Francisco Valdir Silveira, director of geology and mineral resources at the Geological Survey of Brazil (SGB), tells Dialogue Earth that existing technologies can minimise these impacts: “If environmental and sustainability protocols are followed, the impacts will be much less and can be recovered in a short period of time. There are ways to prevent them.”
Some mining companies, such as Ukraine’s Kazatomprom and Cameco Resources in the US, have argued in favour of in situ leaching. They say directly injecting solutions into clay deposits reduces soil and solid waste removal by making excavation unnecessary. Trials of this technology are currently underway in Brazil.
However, studies suggest in situ leaching is not impact free. Research has shown that injecting chemical solutions can lead to soil acidification, the mobilisation of heavy metals and contamination of groundwater. Scientists have also highlighted the difficulty of fully restoring soil structure and microbial communities after operations end.
The electrokinetic technique, developed by the Chinese Academy of Sciences, is another proposal that claims to reduce the use of chemical agents – by up to 80%. This process uses electric currents to mobilise and recover rare earth elements, with less chemical waste. The technique still requires large volumes of water, however, and studies have identified several challenges to deploying it at a commercial scale.
Alam is sceptical that these methods can prevent environmental damage, particularly in salt flats like those found in Chile or Argentina: “Salt flats are unique ecosystems that depend on underground water stability. Biodiversity is linked to this balance. Phenomena such as extreme rainfall or prolonged droughts are already affecting this system, and industrial intervention tends to amplify these variations.”
The rare earths boom is still in its early stages in Latin America, giving governments a narrow window to define how the industry develops. Strong environmental standards, transparent licensing, meaningful consultation with communities and investment in processing and manufacturing could determine whether the sector delivers lasting benefits.
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