Brazilian President Lula's successful re-election has hit a setback for U.S. President Trump's important strategic plan.
On November 5 local time, three members of the newly established Brazilian National Commission for the Industrialization of Critical and Strategic Minerals (CIMCE) revealed to Reuters before the first meeting of the committee that the Lula government plans to introduce new regulations for the critical minerals industry. The priority is to promote the processing, refining, and industrialization of rare earth resources domestically, rather than direct export of raw materials. The committee held its first meeting on that day, with Lula attending the meeting.
This means that Trump's government may face new obstacles in its plan for obtaining rare earth resources from Brazil quickly.
However, the Lula government does not intend to keep American companies out of Brazil. Instead, it aims to change the long-standing pattern of simply exporting raw materials. It seeks for more foreign investors to participate in the processing, refining, and manufacturing of rare earths within Brazil’s domestic market.
It is worth noting that when discussing this development direction, Brazilian officials also specifically mentioned China.
"The most important thing is to produce more products in Brazil, process and manufacture them, increase their added value, and invest in knowledge, research, and development." said Marco Laret, a member of the Brazilian National Key Minerals Industry Committee. "This is exactly what China has been doing for the past 30 years."
Brazil has the second largest reserves of rare earths in the world, making it an important potential partner for the United States in trying to become independent from China's rare earth supply chain.
According to data released by the U.S. Geological Survey in 2026, China has a rare earth reserve of approximately 44 million tons, while Brazil has about 21 million tons, ranking first and second in the world respectively. In comparison, the United States has a rare earth reserve of approximately 1.9 million tons.
However, having rich mineral reserves does not mean that Brazil has the necessary mining and processing capabilities. Currently, Brazil only has one rare earth mine that is commercially operational, and the construction of its industrial chain is still in its early stages.
The U.S. government has always hoped to obtain priority access to Brazil’s rare earth resources. An U.S. State Department official who is familiar with the discussions between the U.S. and Brazil revealed to Reuters that the Trump administration sought priority treatment in this area.
In May of this year, after meeting with Trump, Jair Bolsonaro, the former president of Brazil, promised that Brazil would establish a “long-term strategic partnership” with the United States regarding its mineral resources.
In the eyes of the United States, if Flavio wins the presidential election in October, Washington may gain access to Brazil’s rare earth resources more quickly, thereby gaining an advantage in the competition with China for key minerals.
However, the outcome did not progress in the direction that Trump hoped for.
On October 25th, Lula won the second round of presidential elections with 51.79% of the valid votes, defeating Flavio who received 48.21% of the votes. He thus secured a fourth term as president.
The report argues that Lula's victory means the hope of the United States to quickly enter Brazil's rare earth market is under pressure. Analysts had expected that if Flavio would be elected, he might abolish the key mineral management agency established by Lula's government, thereby reducing the policy pressure on foreign companies to develop downstream industries in Brazil.
Trump's close relationship with the Bosonaro family also added political dimension to this competition for resources.
Previously, the Trump administration used tariffs and sanctions to pressure Brazil, attempting to force the country to stop pursuing legal proceedings against former President Jair Bolsonaro. However, this effort failed to achieve its goal.
Currently, as Luiz Inacio Lula continues to be in office, the control over Brazil's rare earth policy remains in the hands of the current government.
In fact, the Lula government has already started planning for critical minerals.
On September 16th of this year, Lula signed Law No. 15506, officially establishing Brazil’s National Policy for Critical and Strategic Minerals. The National Commission for the Industrialization of Critical and Strategic Minerals (CIMCE) was also established, responsible for coordinating investments, industrial development, and related policies in the field of critical minerals.
The policy document released by the Brazilian government indicates that the new law aims to promote the exploration, mining, processing, and further development of mineral resources. It encourages companies to increase the value of their products. By investing in research and development, technological innovation, and the development of local industries, the country hopes to transform its advantages in mineral resources into advantages in economic development.
According to information obtained by Reuters, three members of the committee stated that future U.S. investments will still be welcome, but the government will prioritize the processing of rare earths within Brazil, rather than directly exporting raw materials.
The new regulations will also cover investment incentives, identification of priority projects, changes in control over some mining enterprises, and the review of international cooperation agreements.
Committee members, Baixiya Prefecture government officials Elaisi Laifuent expressed that Brazil hopes foreign investors will conduct processing and refining businesses locally, and share related technology.
Regarding American companies, he emphasized that the US remains an important participant and will not be excluded.
This means that the Brazilian government is not simply choosing sides between China and the United States, but rather hopes to develop its domestic industries with the help of foreign capital and technology.
Lahay said that both China and the United States can contribute to Brazil's achievement of industrial development goals.
However, Brazil's ambitions still face real obstacles.
Aclara Resources company CEO Ramón Barúa stated that, even though the Lula government hoped to immediately establish rare earth separation capabilities in Brazil, real conditions still do not allow for this.
"We first need to obtain relevant technology." he said.
According to reports, Serra Verde rare earth mine in Brazil, the only one that has achieved commercial operation so far, was acquired by the American rare earth company USA Rare Earth in September this year. The project received support from the U.S. government, but it still faces technical challenges. It is expected that full production will not be reached until the end of 2027.
Therefore, the Lula government aims to promote not only the expansion of mining operations, but also the construction of a complete industrial chain from upstream mines to downstream processing and manufacturing.
According to the current plan of the Brazilian government, the relevant committee will strive to introduce new industry implementation rules by early 2027.
As the United States seeks to reduce its dependence on China's rare earth supply chain, Brazil's abundant mineral resources are attracting increasing attention.
But Brazil's predicament also demonstrates that there exists a clear gap between the mineral reserve and industrial competitiveness.
According to data from the United States Geological Survey, China’s production of rare earth minerals in 2025 is approximately 270,000 tons, while Brazil’s production is only about 2,000 tons. Although Brazil has the second-largest reserves of rare earths in the world, its level of industrial development is far behind that of China.
China has developed industrial capabilities in the extraction, separation, refining of rare earths, as well as in downstream applications. These capabilities are precisely what Brazil hopes to gradually establish as its own strength.
In this context, Lula's government gives priority to the development of domestic processing and manufacturing industries. This not only relates to whether Brazil can increase its resource revenues, but it may also affect the speed at which the United States can establish alternative rare earth supply chains.
For Washington, which is eager to obtain supplies of key minerals, Lula's re-election does not mean that American companies will lose the opportunity to enter the Brazilian market. However, the path it had hoped for to quickly obtain resources and expand supplies has become much more complex.
For Brazil, a more important question than who the rare earths will eventually be sold to is whether this country with world-class mineral reserves can establish its own high-value-added industrial chain, rather than just continuing to serve as a raw material supplier for the global industrial system.
