Critical minerals could add almost US$40 billion to Brazil’s GDP

Investments in the critical minerals chain in Brazil could add 192.1 billion reais (US$ 37.6 billion) to the country’s economy by 2050.

According to a study conducted by the American Chamber of Commerce for Brazil, Amcham Brasil, this scenario could also generate around 750 thousand new jobs.

“The study compares two paths for developing the critical minerals and rare earths chain in Brazil. In the first, investments are financed mainly by domestic capital and production remains geared primarily toward exports, with low value added in the country. In this scenario, the cumulative impact on GDP reaches 128.7 billion reais, with an estimated creation of 304 thousand jobs”, Amcham said in a statement.

“The second scenario considers greater participation of foreign investments, expansion of mineral processing in Brazil and growing use of these inputs by the national industry. In this hypothesis, investments increase 120.9 billion reais, with a cumulative impact on GDP of 192.1 billion reais and an estimated creation of 750 thousand jobs”, the entity highlighted.

In recent months, the critical minerals segment, including rare earths, has seen a series of investment announcements and project advances, as Brazil is viewed by several countries as an alternative to reduce the current global dependence on China for the supply of these minerals.

“Brazil holds some of the largest critical mineral reserves in the world and has every condition to become a global player in this market. The greater the capacity to attract investments, the greater will be the transformation of this mineral wealth into value, technology, jobs, and industrial and economic development”, said the president of Amcham Brasil, Abrão Neto.

The materialization of this potential, however, faces risks and challenges, mainly related to the creation of a local value chain capable of expanding the economic benefits in the country.

“Brazil cannot repeat the mistakes of the past, when many investments ended up supplying international value chains rather than domestic ones. This, for example, is happening in infrastructure, where many contracts are being won mainly by Chinese companies, which end up hiring suppliers and services from China, generating little economic gain for Brazil,” said to BNamericas Luís Baldez, president of the National Association of Cargo Transport Users (Anut).

According to Amcham’s study, if the projected investments in critical minerals materialize, the industrial sectors that would benefit the most would be electrical machinery and equipment, with an estimated positive impact of 16.7%; machinery for mineral extraction, with 9.8%; automobiles, with 5.5%; and mechanical machinery and equipment, with 2.9%.

The study was prepared by researchers from the Federal University of Minas Gerais (UFMG) and the Federal University of Juiz de Fora (UFJF), with support from the U.S. Chamber of Commerce and companies in the sector.

The analysis covers the copper, graphite, lithium, nickel and rare earths production chains, minerals considered strategic for the energy transition and for technologies such as batteries, electric vehicles, wind turbines and electronic equipment.