Brazil and Europe Build Rare-Earths Supply Chain to Rival China

The Brazil EU critical minerals task force is the concrete translation of the Hannover Messe partnership into a structure Brussels, Berlin, and Brasília can actually execute against — and the four projects under evaluation now become the test of whether Latin American mineral wealth can be monetized as refined product rather than raw commodity.

Brazil’s critical-minerals strategy is finally assembling around a concrete European framework — and the United States, caught between its own Inflation Reduction Act supply-chain rules and its tariff regime against Brazil, is watching from outside. The Rio Times, the Latin American financial news outlet, reports that a Brazil EU critical minerals task force formally created to coordinate rare-earth and strategic-element cooperation now has four specific projects under evaluation, according to Valor Econômico’s Wednesday dispatch from Hannover Messe 2026 where Brazil is the official partner country.

The task force operates on two tracks. The EU-level structure coordinates with Mercosur through the forthcoming free-trade agreement, which enters provisional implementation on May 1. The bilateral Brazil-Germany declaration signed Monday creates a parallel fast track between Latin America’s largest economy and Europe’s industrial backbone.

Both tracks point in the same direction: Europe wants secure, non-Chinese supplies of lithium, nickel, cobalt, graphite, copper, manganese, niobium, and rare earths. Brazil has the reserves.

The Brazil EU Critical Minerals Framework Explained

The EU-Brazil strategic partnership on critical minerals was formalized at a dedicated Hannover Messe session titled “Strategic Partnership Brazil-European Union on Critical Minerals and Sustainable Development.” Uallace Moreira, Brazil’s MDIC secretary for industrial development, represented the Brazilian side, framing the partnership around value-added refining rather than raw export.

“We are rich in minerals,” Moreira said at the session. “Beyond exploring the minerals, we want to add productive value, developing the national industry and generating jobs and income.” That framing is the doctrinal foundation of the task force — Brazil will engage only on terms that include technology transfer, processing capacity built domestically, and value capture beyond extraction.

The four projects currently under evaluation have not been publicly named, but the framework principles are clear. Eugênio Baena, Brazil’s Hannover Messe coordinator, told Brazilian press in February that the model rejects “a traditional scheme of simply exporting raw minerals.”

The Brazil-Germany Bilateral

On Monday April 20, Lula and Chancellor Merz signed a joint declaration of intent on critical minerals between Brazil’s Ministry of Science, Technology and Innovation (MCTI) and Germany’s Federal Ministry of Research, Technology and Space. The declaration establishes the basis for joint research, development, and innovation across the full critical-minerals value chain.

Specific commitments include innovation support for small and medium-sized enterprises in both countries, joint R&D projects on responsible mineral management, scientist and post-graduate technical-personnel exchange, and a new bilateral direct-financing mechanism for institutions and companies to be structured during 2026.

Separately, German development bank KfW issued a letter of intent to contribute €500 million to Brazil’s Climate Change Fund operated by BNDES, targeting emissions-reduction and climate-adaptation projects. The KfW commitment sits alongside 14 other cooperation agreements signed during Lula’s German leg of the three-country European tour.

The Mercosur-EU Enabling Environment

The critical-minerals task force acquires force because it sits inside the Mercosur-EU free-trade agreement entering provisional implementation on May 1. Under the agreement, Mercosur will eliminate tariffs on 91% of European goods entering South America over 15 years, while the EU will eliminate tariffs on 95% of Mercosur goods over 12 years.

The free-trade framework gives refined mineral products and specialty alloys originating in Brazil preferential access to European industrial markets that Chinese and Russian suppliers will not enjoy. That preferential access is the commercial rationale for the European side to accept technology transfer and domestic refining requirements.

The Brazilian side, in turn, gains an anchor export channel that reduces dependence on the Chinese processing complex that currently dominates global rare-earth supply chains.

The Competitive Geometry: China, USA, Europe

The Brazilian critical-minerals story is now three-cornered. China controls an estimated 70% of rare-earth processing globally and has invested heavily in Brazilian mining assets. The United States took a direct position earlier this month with USA Rare Earth’s US$2.8 billion acquisition of Serra Verde’s Goiás mine — the first American claim on Brazilian heavy-rare-earth reserves.

The European track is the third corner. It is slower than US bilateral acquisitions but more comprehensive in scope, covering the full value chain from extraction to refining to end-use in batteries, wind turbines, and specialty alloys.

For Brazilian policymakers, the competitive geometry is a negotiating advantage. Three buyers bidding for preferential access creates room to extract better terms — higher domestic value-addition, more technology transfer, deeper financing commitments — than any single bilateral deal would offer.

The Execution Risk: PL 2.780 and Mapped Reserves

The gap between framework and execution is substantial. Only 35% of Brazilian mineral potential has been geologically mapped, according to a 2025 Deloitte-AYA Earth Partners study. The Câmara’s critical-minerals policy law (PL 2.780, proposed July 2024) has stalled for nearly two years in committee and has been assigned a new rapporteur, Arnaldo Jardim (Cidadania-SP).

Two financing vehicles are under structuring. The first is a R$1 billion fund for smaller exploration firms, with BNDES and Vale each contributing R$500 million. The second, much larger, is the R$5 billion fund targeting the transformation industry — the refining and specialty-alloy capacity that would convert Brazilian reserves into European-grade inputs.

Neither fund is operational yet. Both are designed to anchor the technology-transfer leverage that Brazilian negotiators are promising European counterparts.

What to Watch Through 2026

Three markers will determine whether the framework converts into operational capacity. The first is the passage of PL 2.780 — without the National Critical Minerals Policy, financing frameworks and permit regimes will remain fragmented. The second is the naming and launch of the four EU task-force projects, expected over the second half of 2026.

The third is the Lula government’s ability to close the new bilateral German financing mechanism during 2026, as the declaration commits. A clean structure would create a template for similar bilateral arrangements with France, Italy, and the Netherlands — three countries with industrial interest in Brazilian rare earths and battery-grade lithium and nickel.

For international investors reading the Brazilian commodity story through the BofA “new gold” framework, the critical-minerals track is the industrial-diversification layer missing from the oil-and-soybeans baseline. The question investors will be asking through the rest of the year is whether the framework Lula and Merz signed Monday becomes a refining complex in Brazilian territory, or another checklist of diplomatic intent that fails to reach execution by October.

Related Coverage: Lula’s Hannover Messe with Merz • USA Rare Earth Serra Verde Deal • EU-Mercosur Deal 2026 Guide