The cooperation between Australia and Brazil in critical minerals can lead to the establishment of a fair and sustainable pricing framework for these valuable resources. On September 16, 2026, President Lula da Silva signed Brazil's national policy for critical and strategic minerals, which includes guarantees and tax credits worth 7 billion reais (1.9 billion dollars). This policy aims to activate the largest rare earth reserves outside of China and seeks to increase production and elevate Brazil's industry to a higher processing level.
Opportunities and Challenges
Australia, which is also looking to increase rare earth production, may view this policy as an unwelcome competition. However, Gustavo Pessôa stated in a recent analysis that Australia's perspective of Brazil as a competitor is short-sighted and incorrect. The competition over tax exemptions and approval times drives Australia and Brazil towards a diminishing rivalry, giving industrial buyers leverage. His proposed solution is a bilateral pact that identifies projects, shares technical expertise, and jointly finds customers so that neither country can act as a price taker.
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Brazil's Role in Price Setting
Avoiding price taking requires participation in a meeting where prices are set. Brazil can act as a strong partner for Australia in this regard, ensuring that prices represent the interests of producers. While various countries seek mutually agreed pricing methods, negotiations on minimum mineral prices are ongoing. The United States is negotiating the establishment of minimum prices for specific minerals to counteract market distortions from China.
However, Australia and Brazil need to go beyond simple cooperation. If Australia collaborates with Brazil, it can influence these pricing criteria in two ways. Firstly, Brazil's weight in negotiations can strengthen producers' interests and help balance power in the negotiating room. Additionally, by establishing a pricing framework based on production costs, Australia can leverage Brazil's entry into the market and prevent negative competition.
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