The talk of the town in the two Brazilian communities of Poços de Caldas, population 163,000, and its smaller neighbour Caldas, home to 14,000 residents, is rare earth elements. The southern region of the mining state of Minas Gerais holds an enormous deposit of these elements, with unprecedented concentration levels. These resources are crucial for energy transition technologies and the military industry, as well as central to trade disputes involving the United States, China, and Brazil.
In July this year, President Lula da Silva (from the Brazilian Workers’ Party) said that “nobody will lay hands on” Brazilian minerals, in what was understood as a message to American President Donald Trump.
However, members of the Alliance for the Pedra Branca Environmental Protection Area (EPA), a group of environmental activists from Caldas, have warned that it’s not quite that simple. Meteoric, one of the two Australian companies planning to explore rare earth mining in Minas Gerais as early as next year, has a signed agreement with Canadian company Ucore, whose factory is located in the United States. Ucore has received US$18 million in funding from the US Department of Defense.
Rare earth minerals are strategic elements for energy transition efforts because they can be used as part of super-magnets in things like electric vehicles and wind turbines.
“Rare earths, however, are also used to make missiles, bombs, and military drones,” explained Daniel Tygel, president of the Alliance for the Pedra Branca EPA.
It’s no coincidence that rare earth supply is one of Trump’s priorities in his second term as president. Earlier this year, he signed an executive order to boost domestic production, mentioning potential uses for the US military, rather than energy transition. “Critical minerals are essential to US military readiness, as they are key components of fighter jets, satellites, submarines, smart bombs, and missile guidance systems,” the document states.
Under the agreement with Ucore, Australia’s Meteoric has committed to supplying part of its rare earth production to the Canadian-based company, which would handle processing of these elements. Agência Pública asked Meteoric whether it’s possible that these elements could be used in weapons manufacturing.
“It’s impossible for us to control what will be done with this rare earth concentrate,” acknowledged Eder Santo, Meteoric’s sustainability director.
For many residents of both Caldas and Poços de Caldas, it’s not enough for Minas Gerais to simply extract and export these minerals to the US and other countries, in a process similar to what already happens with iron carbonate, one of Brazil’s biggest exports. At public hearings debating the arrival of the Australian companies in the towns, activists argued that the state needs to establish an entire high-tech industry capable of handling the complete rare earth supply chain, and not just mining.
Right now, that’s far from happening. Besides the Ucore deal, Meteoric has signed a contract to supply rare earths to the Estonia-based Neo Performance Materials. There, these elements would be processed to manufacture super-magnets.
The man who discovered this mineral treasure in Brazil, 63-year-old geologist Álvaro Fochie, is enthusiastic about the projects starting in both cities, but agrees with the activists’ concerns.
“Our desire is to bring all production stages to Brazil: we already have the mine to extract the rare earth carbonate, the second link is separating the oxides, followed by their metallisation, and finally manufacturing the magnets. If we achieve this, we’ll attract the entire supply chain that depends on rare earths: the auto industry, cell phones, televisions, wind turbines, solar panels, all types of electric motors, military and medical equipment,” Fochie said.
The rare earth carbonate is the product extracted by mining companies from the soil. Generally, such deposits have very low rare earth concentrations — less than 2%. That is why mining companies must first filter and discard most of the soil that doesn’t contain rare earths to produce a high concentration of these elements — known as the carbonate — which is the naturally occurring form of the rare earth minerals.
Fochie’s discovery dates back to 2011, when China limited exports of these minerals to Japan, and global rare earth prices skyrocketed on stock exchanges. Now, these reserves are proven to be highly strategic, after China restricted its rare earth exports for several months in response to Trump’s tariff threats. China is the largest rare earth producer and accounts for over 90% of global super-magnet production.
It has been known since the 1930s that the Caldas region contains critical minerals in the form of hard rocks, which makes extraction economically challenging. Fochie, more recently, suggested to his business partner and fellow Brazilian, Lívio Togni, that they prospect the lands owned by their company, Togni S/A. The company produces refractory materials, a type of ceramic widely used in industry, capable of withstanding high temperatures without degrading.
It took years of geological research and laboratory analyses to confirm there was an ionic clay deposit with rare earths in the area. Since Brazil lacks the necessary technology for this type of mining, Togni and Fochie sought foreign companies interested in rare earth exploration. In 2022, through mutual mining industry contacts, they reached Meteoric’s representatives in Brazil and finalised the sale of mining rights.
“I used to estimate we would have something like 300 million tonnes of ionic clay. The number we know today, just in our areas, is 7 billion tonnes,” Fochie told Agência Pública.
Meteoric and Viridis, a second Australian company established in Minas Gerais, say they do not want to limit their work to mineral extraction either, and aspire to establish an entire rare earth processing chain in Brazil. Both have formed partnerships with Australian industries to develop the necessary technologies. If successful, they would be the first companies to perform rare earth element separation and oxide production in Latin America.
“Our vision is that Caldeira [the name of Meteoric’s project] has the potential to become the world’s most significant rare earth mine and ‘revolutionise’ the industry by becoming the lowest-cost source of these elements outside China,” Meteoric’s president Andrew Tunks said in a letter to shareholders.
For now, the projects remain in testing phases. The companies aim to obtain environmental licenses in October this year. Only then would construction of industrial plants begin, with completion expected by mid-2027.
The enthusiastic and the sceptical
Viridis, owner of the Colossus project, and Meteoric, with its Caldeira project, are touting investments of around BRL 2 billion (around A$560 million), as well as the opportunity to generate thousands of jobs in the region, with hundreds of millions in taxes going to the towns and the state.
But the rewards are even more promising: over 13 years — the mining projects’ estimated lifetime — 800 million tonnes of clay would be used to extract rare earth carbonate. For each tonne of processed clay, about 1.5kg of carbonate is produced. The lands with mining potential total 420km² — about one-third of the combined area of Poços de Caldas and Caldas.
In this context, where everything has massive scale, residents, public authorities, and social movements in Caldas and Poços de Caldas are trying to understand the impacts and benefits this new mining wave might generate.
“We’re handing over to these two companies a territory much larger than the city of Belo Horizonte [one of Brazil’s biggest cities],” said João Carlos Landi, a community leader in Caldas, at a hearing held in the city in November 2024.
The biggest community concerns revolve around risks to water supply, proximity of mining zones to an old nuclear plant, and lack of investment in the rare earth supply chain beyond extraction.
“We know the mining will bring major changes,” the president of the Poços de Caldas City Council, Douglas Souza, told Agência Pública. “At the same time, we can’t ignore the environmental impacts, which need to be rigorously monitored,” he added.
One such impact concerns the enormous amount of water that will be used in the rare earth extraction process.
“In 2024, the city already faced severe water shortage, with entire neighbourhoods without supply. How will it be guaranteed that mining operations won’t further affect the population’s water security?” asked Nelson Henrique Filho, a community leader from the Parque Esperança neighbourhood, located near the area where Viridis wants to mine, at a public hearing in May this year.
According to Viridis’ own environmental impact study, the Poços de Caldas region faces a “significant” drought risk, a situation projected to intensify between 2030 and 2050. Meteoric acknowledges “potential changes” of its project “on surface and groundwater quality,” resulting in “variation in water dynamics and availability”.
José Marques, Viridis’ executive director, said at the same hearing that the water used would be sent to a treatment plant and reused in the leaching process.
“We expect to recover more than 75% of industrial water,” he said.
Meteoric plans to monitor the region’s water sources to understand if its activities are compromising any springs.
The planned extraction method — ionic clay leaching — has been presented as an environmentally less aggressive and cheaper method than those practised in Australia and the US.
“It is as if [the rare earth minerals] are absorbed on the clay surface — and can basically be washed using ammonium sulfate,” Gisele Azimi, professor in the chemical engineering department at the University of Toronto and researcher at the university’s Strategic Minerals Laboratory, told Agência Pública. Washing is the process used to “remove” rare earth elements from clay and produce the carbonate.
According to both companies, once the product — rare earth carbonate — is obtained, the remaining clay is washed to remove impurities and stored in a discard pile that is subsequently returned to the pit from which it was removed. Environmental damage, the companies say, would be minimal.
However, in China, which has led global rare earth production since the 1990s, mining has caused severe environmental damage, from water scarcity to soil pollution. According to regulators, recovering the areas mined could take up to a century. In order to try to mitigate the damage, the Chinese government has closed numerous rare earth pits in recent years.
Azimi assesses that, in a general way, rare earth mining “can be benign and safe for the community, soil, and water.” Everything depends, she said, “on how companies will design the process and what they’ll use for these particular deposits”.
Environmental protection area at the centre of a geopolitical dispute
The rush for Minas Gerais’ rare earths has led to a rare alignment between Governor Romeu Zema (NOVO) and Lula’s government. Though still in the environmental licensing phase, the Australian mining companies already have state and federal support.
“What we want is safe, green mining,” Zema said while signing a memorandum of understanding with Meteoric in 2023. Brazil’s ministries of Environment and Finance have included the company in the country’s Climate Investment Platform, announced in a G20 meeting in 2024, with the goal of “expanding investments in ecological transformation toward economic decarbonisation and sustainable resource use”.
All this enthusiasm has spread to municipal governments. The mayor of Caldas, Ailton Goulart, sent a bill to the city council aiming to suspend a buffer zone of Pedra Branca’s EPA, the region’s largest conservation unit. The proposal would strip the unit’s management council, composed of civil society and public authorities, of its veto power to stop developments affecting the EPA’s territory.
Among the areas expected to be impacted by Meteoric are those in precisely that buffer zone. On August 18, the EPA Management Council vetoed Meteoric’s presence in the region, arguing that mining activities would compromise the environmental preservation of this ecological sanctuary. A day later, the municipal government published a statement claiming the decision was illegal.
The following week, Meteoric wrote a letter seeking to reassure its shareholders: “We received written public support from the mayor of Caldas. The company continues to work closely with the mayor to ensure compliance with procedures and a quick resolution.”
The EPA, like both the municipalities and the region Meteoric and Viridis plan to mine, lies on the Poços de Caldas Plateau, a 750km² area that 120 million years ago was an enormous volcano. This isn’t the first time strategic minerals have been prospected in the region: in 1982, state-owned nuclear company INB established the country’s first uranium mining operation there.
Radioactive mineral extraction went on until 1995, leaving behind a huge environmental liability, including a deprecated INB warehouse in Caldas where 20,000 tonnes of radioactive waste are stored, and two dams close by that also store radioactive waste. Having already been the site of a disastrous minerals rush, many residents of Caldas and Poços de Caldas don’t enthusiastically welcome Meteoric and Viridis’ arrival.
“The nearby area that Viridis might want in four, five years is right next to INB, right next to Meteoric, right next to the waste dams, right next to the thorium dam, right next to the warehouse with 20,000 tonnes of radioactive waste,” said Tygel, the president of the Alliance for the Pedra Branca EPA.
Meteoric’s project indeed contains some facilities that would be near the old uranium extraction areas. Additionally, trucks loaded with forty tonnes of ionic clay would pass daily alongside one of the waste dams. The company was challenged on this during last November’s public hearing and ended up having to address Caldas residents’ demands.
Tygel, who holds a master’s degree in physics from Unicamp and until 2024 was a councilman in Caldas, listed other concerns. “The more I came to understand the projects, the more my excitement declined. In the way it was presented, what they’re proposing is catastrophic,” he said.
Another concern is that the projects under review are a tiny fraction of what the companies plan to mine in the future. “We’re not just talking about this first impact. We’re evaluating the entire future of this region,” Tygel said.
The Caldeira project comprises three mining areas whose rights were purchased by Meteoric. The company has also acquired rights to another 67 areas. Additionally, over the past three years, Brazil’s mining regulator (ANM) has received over a hundred rare earth research requests in the vicinity of Poços de Caldas from other companies.
Tygel’s fear is that mining will spread throughout the area, permanently altering Caldas’ rural character and harming tourism, one of Poços de Caldas’ economic mainstays.
“Our region is being considered a sacrifice zone,” Tygel said.
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