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There is a volcanic plateau in the South of Minas Gerais that holds, beneath its pastures and coffee plantations, a reserve of minerals that the modern world cannot live without. The place is called Poços de Caldas, and in the last two years, it has become the preferred address for foreign mining companies — especially Australian ones. On April 28, 2026, another one arrived: the Power Minerals Group completed the acquisition of the Morro de Ferro project and signed a Protocol of Intentions with the government of Minas Gerais, promising R$ 80 million in investments in rare earths. The news seems good. But, looking at the full picture of Brazil’s rare earths, a question lingers: does the country know what it is giving away?
A few days earlier, on April 20, the American company USA Rare Earth announced the purchase of Serra Verde — until then the only rare earth mine in operation in Brazil — for US$ 2.8 billion, equivalent to R$ 14 billion. The contract includes the exclusive supply of 100% of the production to United States government entities. In the same month, a political party took the case to the Supreme Federal Court, questioning the delivery of strategic national resources to foreign capital. Brazil has awakened to an uncomfortable reality: its largest reserves of future minerals are being rapidly granted in concession.
What is Morro de Ferro and why has it entered the radar of Brazil’s rare earths
The Morro de Ferro (MDF) project is located on the Poços de Caldas Plateau, a peculiar geological formation created by ancient volcanic activity. The technical evaluation conducted by Power Minerals revealed notable concentrations of magnetic rare earth oxides — specifically neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). These are not just any minerals: they are exactly the four elements that the global industry most competes for to manufacture electric motors, wind turbines, and propulsion systems for aircraft and missiles.
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The project is still in the development phase, with no commercial production underway. But the potential is significant enough to justify the announced R$ 80 million. According to Agência Minas Gerais, the initiative was formalized through a Protocol of Intentions between Power Minerals Brazil and the Government of Minas via Invest Minas, the state investment attraction agency.
As reported by Yahoo Finance, the acquisition of Morro de Ferro was completed after an independent technical evaluation confirmed the deposit’s viability for commercial extraction of magnetic rare earth oxides. The Australian capital company already has operations in other countries and chose Brazil as a strategic priority for 2026 and 2027.
Rare earth mining in Poços de Caldas is not new — the city has lived for decades with the exploration of uranium and niobium. But the scale and speed of international interest in local deposits of magnetic rare earths are unprecedented. In less than 24 months, three foreign companies have formalized their presence on the same plateau. The map of the global dispute for Brazil’s rare earths has Poços de Caldas at the center.
Power Minerals: the third Australian mining company on the Poços de Caldas Plateau
Power Minerals is not the first Australian to arrive at the Poços de Caldas Plateau. In fact, it is the third. Viridis Mining & Minerals is already established with the Colossus Project, and Meteoric has the Caldeiras Project, which received preliminary environmental license approval in December 2025. Now, with Power Minerals and Morro de Ferro, the mining plateau becomes a rare earth cluster with a strong Australian presence.
Australia has a historical tradition in mining and a venture capital industry specialized in natural resource projects. Medium-sized Australian mining companies are agile in identifying underexplored assets in countries with geological reserves but little local development capacity — and Brazil fits this profile perfectly for Brazil’s rare earths.
- Viridis Mining & Minerals → Colossus Project (Poços de Caldas)
- Meteoric → Caldeiras Project (Poços de Caldas, LP approved Dec/2025)
- Power Minerals → Morro de Ferro Project (Poços de Caldas, acquired Apr/2026)
The convergence of three Australian mining companies on the same plateau in less than two years is no coincidence — it is strategy. The global race for rare earths has intensified since 2022, when China — which dominates 85% of global rare earth processing — began signaling export restrictions. The West is desperate to create alternative supply chains, and Brazil is one of the few countries with proven reserves outside Asia.
Australia has a special interest in this. As an ally of the United States in the context of AUKUS and the Quad, the Australian government actively supports national companies that diversify the supply of critical minerals outside the Chinese orbit. Investing in Brazil while Brazil still has favorable licensing conditions is a race against time — and Australian mining companies understood this before many governments.
For Minas Gerais, the arrival of a third project in Poços de Caldas is a trump card for attracting investments. The State is already the largest iron ore producer in the country and has ambitions to diversify its mineral base. Having a consolidated rare earth cluster on the Poços de Caldas Plateau can position Minas as a reference in supplying critical minerals for the clean energy chain, with effects on job creation and tax revenue.
The context: USA bought the only rare earth mine in Brazil for US$ 2.8 billion
To understand the weight of what is happening, it is necessary to look at the full scenario. Eight days before Power Minerals announced Morro de Ferro, the American company USA Rare Earth announced the purchase of Serra Verde for US$ 2.8 billion, in Minaçu, Goiás.
Serra Verde is unique: it was, until then, the only large-scale producer of rare earths outside Asia capable of supplying the four main magnetic elements — Nd, Pr, Dy, and Tb — at the same time. The contract includes supplying 100% of Phase 1 production to United States government entities, ensuring supply for the American defense industry.
The detail that sparked political debate: the operation involves US$ 300 million in cash and 126 million new shares, with closure expected for the 3rd quarter of 2026. It is projected that Serra Verde’s production will represent more than 50% of the global supply of heavy rare earths outside China by 2027. A party took the case to the Supreme Federal Court questioning the delivery of a strategic asset to foreign capital linked to a government that may have its own geopolitical interests over the commodity.
Why Brazil’s rare earths are worth gold — and why the country has few ways to leverage them
Brazil holds the third largest reserve of rare earths in the world, behind only China and Russia. But reserve in the ground does not equate to industrial capacity. The country’s problem is structural: we do not have a processing chain. Extracting the ore is just the first step — the real value lies in the subsequent stages: separating the oxides, refining the metals, manufacturing the neodymium-iron-boron magnets that go inside electric motors and wind generators.
This entire chain is concentrated in China. Exporting unprocessed rare earths is like exporting crude oil instead of gasoline and plastics — the country loses the largest portion of the added value. Brazil made this mistake with iron ore for decades. It is about to repeat it with an even more strategic mineral.
- Extraction: where Brazil is attracting foreigners (Serra Verde, Power Minerals, Meteoric, Viridis)
- Primary beneficiation: rare earth concentrate — incipient in Brazil
- Oxide separation: almost non-existent — dominated by China
- Metals and alloys: absent in Brazil
- Permanent magnets: highest value final product — practically 100% in Asia
To break this cycle, Brazil would need aggressive industrial policies, public investment in research and development, and incentives for foreign mining companies to process locally, not just extract and export. None of these conditions are fully consolidated yet.
There are ongoing initiatives. The MCTI (Ministry of Science, Technology, and Innovation) has research groups dedicated to rare earth processing, and the CNEN (National Nuclear Energy Commission) maintains historical expertise on the subject — since rare earth mining often involves slightly radioactive elements like thorium. But turning academic research into an industrial plant is a distance that Brazil has not yet overcome.
The most sensitive point is the processing bottleneck. Today, if Brazil extracts raw neodymium, it will export it to China for processing — and import back the finished magnet at a price 10 to 20 times higher. This is exactly the model that the cold war for critical minerals intends to break. But breaking it requires capital, time, and long-term industrial policy — three items in which Brazil historically does not perform well.
What Brazil gains — and what it may be losing
The political debate has reached Congress. Lawmakers linked to national sovereignty are asking the federal government to create a strategic minerals policy that defines which assets can be granted to foreigners and under what conditions — including minimum local processing requirements and a percentage of production destined for the domestic market. The proposal does not yet have consensus, and while the debate progresses, concessions continue to be signed.
It is fair to be balanced: the entry of foreign investments in rare earths has positive sides. The R$ 80 million from Power Minerals in Poços de Caldas brings jobs, taxes, and regional technological development. The formalization via Invest Minas ensures at least some state regulatory control. The Morro de Ferro project is not yet operational — and the protocol of intentions is just the beginning of a process that can last years.
But the moment requires caution. The geopolitical context in 2026 is of a cold war for critical minerals between the USA, China, and Europe. Each country tries to secure its supply chains. Brazil — with its Brazil’s rare earths and its vast reserves of lithium, niobium, copper, and graphite — is sitting on exactly what the world needs for the energy transition.
Experts point out that Brazil has a short window of opportunity. With the geopolitical race for critical minerals in full acceleration, consumer countries — USA, Europe, Japan — are willing to pay more for guaranteed supply outside China. This creates a rare negotiating advantage for Brazil to impose conditions: require local processing, participation of national companies, technology transfer. But this window closes when concessions are already signed without these requirements.
The question the country needs to answer is not whether it should or should not receive foreign investments. It is under what conditions these investments are made. With local processing requirements? With state participation? With a reserve of part of the production for the domestic market? Or just in the form of extraction and export of raw ore, replicating the model that never enriched Brazil in oil, iron ore, or soy?
Poços de Caldas can be the starting point for Brazil to finally sit at the table of major strategic mineral powers. Or it can be another chapter of the same story of commodities without added value. The answer depends on decisions the country needs to make now — before all concessions have already been signed. The race for minerals in Minas Gerais has already begun — and Brazil is catching up.
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