Who will be edged out in the three-way contest for Brazil’s rare earth resources— the United States, Europe, or China?

The European Union is advancing its Critical Raw Materials Reserve Plan, led by France, Italy, and Germany: France handles finance and logistics; Germany oversees resource procurement; and Italy manages storage. Currently, ten EU member states are participating in a pilot program, with a target of achieving 40% domestic rare earth processing capacity and 10% domestic production by 2030. Following U.S. pressure—including from former President Trump—on Greenland’s rare earth projects, Brazil’s strategic importance has further increased. Meanwhile, the EU is promoting end-to-end cooperation across the entire value chain—from mineral extraction to magnet manufacturing—and imposing export restrictions on rare earth scrap and recyclable materials to build a closed-loop system. Unlike the United States, the EU emphasizes “transparency, environmental protection, and local benefit-sharing.” Brazil appeals to the EU due to its abundant resources, relatively open investment environment, and notably lower security and governance risks compared to some African countries. Four: China—the global rare earth hegemon—has entered the contest for Brazil’s rare earth resources. China dominates the global rare earth industry: accounting for ~70% of global production, 60–90% of refining capacity, and over 80% of permanent magnet output. Although its share of global reserves has declined to ~40%, China retains firm pricing power thanks to its fully integrated industrial chain and technological monopolies. In the first half of 2025, Brazil’s rare earth exports to China reached USD 6.7 million—triple the figure for the same period in 2024—with export volumes doubling. China’s large-scale imports from Brazil stem from three strategic considerations: 1. Conservation of domestic resources: Rare earths are non-renewable; past over-exploitation has depleted reserves. Importing allows China to reduce domestic mining intensity and preserve resources for future use. 2. Sustaining industrial chain dominance: China prohibits exports of rare earth separation technology. While countries like Brazil possess ore deposits, they lack refining capabilities. By importing raw ore, refining it domestically, and exporting high-value-added products, China reinforces its control over the global supply chain. 3. Hedging against U.S.-led “de-risking” strategies: As the U.S. courts Brazil, Australia, and others to rebuild supply chains outside China, Beijing is proactively integrating Brazil into its own ecosystem—thereby weakening the effectiveness of American “decoupling” efforts. Sino-Brazilian cooperation has entered a deep phase: In 2025, both sides signed multi-billion-dollar agreements covering exploration, mining, and long-term processing. Chinese enterprises are also involved in Brazilian lithium and niobium projects—forming an integrated “rare earth + lithium + niobium” resource portfolio. Customs data show that China’s rare earth exports to Japan and the U.S. remained extremely low in 2025, underscoring Beijing’s highly cautious stance toward strategic resource exports. China’s advantages in this contest include its status as the world’s largest buyer, its fully integrated industrial chain, and its strong infrastructure investment capacity. Its key disadvantage lies in the inviolable red line on technology transfer: if Brazil insists on local refining, China’s influence may be constrained. Five: The U.S., the EU, or China—who will hold Brazil’s rare earth card? The core of the Brazil rare earth contest does not lie in who secures mining rights first—but rather in who controls refining and downstream industrial chains. At present, the U.S. and EU hold advantages in technology and capital; China leads in market access and execution capability. The U.S. hand: Geographic proximity, national-security-driven priorities, massive fiscal support (“Treasury Program”: USD 12 billion), and a mature capital market. It faces virtually no disadvantages. The EU hand: Strong demand driven by green transition, relatively robust industrial coordination capacity, and environmental/local-benefit-sharing principles more readily accepted by Brazil. Its drawbacks include slow internal decision-making and continued deep dependence on China. China’s hand: World’s largest buyer, fully integrated industrial chain, strong infrastructure investment capacity, and close high-level ties with Brazil.

Frontline Impact | BloombergNEF Releases Report: Where Are Global Mining Giants Allocating Their Capital?

BHP shows a similar shift: capital expenditure rose from USD 8.4 billion in 2023 to USD 9.5 billion in 2025, while shareholder returns fell from USD 8.7 billion to USD 5.6 billion. Zijin Mining, by contrast, maintains a consistently stronger growth orientation: its operating cash flow reached USD 11 billion in 2025, while shareholder distributions remained significantly below capex levels. This signals a broader industry transition—from a ‘high-price, high-profit, high-dividend’ harvest phase back to an investment phase focused on capacity expansion, mergers & acquisitions, and securing supply for the next cycle. For mining company valuations, forward-looking metrics must now extend beyond commodity prices to include new-project return on investment, construction timelines, capital discipline, and balance-sheet resilience. Figure 2: Operating Cash Flow, Capital Expenditure, and Shareholder Returns for Six Mining Companies (2021–2025) Source: BloombergNEF, August 18, 2026. Three: Iron Ore Remains the Foundation; Coal Has Not Exited per ESG Scripts The declining revenue weight of iron ore stems primarily from falling prices—not output. Between 2021 and 2025, Rio Tinto’s realized iron ore price dropped from USD 144/tonne to USD 90/tonne—a 37% decline; BHP’s fell from USD 139 to USD 84/tonne—a 39% drop. Over the same period, iron ore’s share of BHP’s revenue fell from 55% to 43%, Rio Tinto’s from 59% to 46%, and Vale’s to 65%. Yet iron ore remains a high-margin, high-cash-flow business. In 2025, Vale allocated USD 3.9 billion—or 69.9%—of its capital expenditure to iron ore, focusing on expanding high-grade mines and upgrading infrastructure. Mining companies aren’t abandoning iron ore due to slowing growth; instead, they’re using iron ore-generated cash flow to sustain their foundation while directing incremental risk capital toward growth commodities like copper. Glencore presents another realist case study: In 2025, it allocated ~37% of its capex to coal and another 3% to oil—and remains the only one among the six companies actively acquiring coal assets. Its logic isn’t denial of energy transition, but rather retaining stable cash flows from traditional energy sources while selectively expanding into transition metals and low-carbon fuels. Ultimately, capital follows returns—not labels. Four: Six Mining Companies Are Forging Distinct Asset Portfolios Company Primary Capital Allocation Portfolio Evolution BHP Copper, iron ore, and mining technology Copper became its largest revenue contributor in 2025; iron ore cash flow continues to fund growth. Rio Tinto Iron ore, copper, lithium/aluminum Acquired Arcadium Lithium for USD 6.7 billion; targeting >200,000 tonnes/year LCE capacity by 2028. Glencore Coal, copper, and low-carbon fuels Retains thermal coal assets and associated cash flow, while selectively investing in transition metals and downstream fuels. Vale High-grade iron ore, copper, low-carbon steel Iron ore still accounts for nearly 70% of capex, with extensions into low-carbon briquettes and Class 1 nickel. Anglo American Copper and premium iron ore Exiting or spinning off coal, nickel, PGMs, and diamonds—resulting in a significantly streamlined portfolio. Zijin Mining Copper, gold, lithium, molybdenum Expanding simultaneously via M&A and project development; three lithium projects in 2025 collectively target ~180,000 tonnes/year lithium carbonate equivalent capacity.

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