A study by the Institute of Applied Economic Research (Ipea) indicates that Brazil has significant geological potential for critical minerals, but until recently, it had not been able to translate this potential into substantial economic production and lagged far behind countries such as Australia, China, South Africa, and Chile, among others.

Critical minerals are essential resources for strategic sectors such as technology, defense, and the energy transition, with their supply subject to risks of scarcity or dependence on a few suppliers. These minerals include lithium, cobalt, nickel, and rare earths, which are crucial for electric vehicle batteries, wind turbines, solar panels, and semiconductors.

Brazil, for example, possesses about 10 percent of the world’s reserves of these minerals, according to data from the Brazilian Mining Institute (Ibram), an entity representing the private sector.

The study How Important Is Brazil in the Global Chain of Critical Minerals for the Energy Transition? An Analysis of Reserves, Production, Foreign Trade, and Investments, by researchers Rafael da Silveira Soares Leão, Mariano Laio de Oliveira, and Danúbia Rodrigues da Cunha, was released on Thursday (Dec. 4).

According to the survey, Brazil’s performance in international trade over the past two decades has been modest, reflecting internal challenges and uncertainty in mineral production. “However, the expansion of investments in physical capital and the renewed spending on geological research in recent years, in line with global trends, appear to be preparing the country for a virtuous cycle of production growth,” the researchers say.

The research concludes that a new cycle of investments, “apparently underway,” could elevate Brazilian mining to a higher level of competitiveness, “but it is important that expectations regarding the sector’s impact on the Brazilian economy remain realistic.”

According to the authors of the study, from 2000 to 2019, Brazil’s mining production chain accounted for between 0.75 and 2 percent of Gross Domestic Product (GDP), depending on cycles of expansion and contraction in mineral commodity prices, particularly iron ore, which represents more than two-thirds of the sector.