On January 9, after 26 years of negotiations, the European Union and Mercosur signed a trade agreement that market participants say will strengthen Brazil’s role as a strategic supplier of critical minerals, including lithium and rare earths.
In a joint statement in Rio de Janeiro on January 15, European Commission President Ursula von der Leyen and Brazilian President Lula da Silva emphasized that the pact will frame cooperation on joint investment projects in lithium, nickel and rare earths, supporting Europe’s clean energy transition and strategic independence.
Brazil’s mining association, IBRAM, noted that the agreement will broaden access to the European market, attract investment and preserve essential industrial policy instruments amid rising global demand for strategic minerals.
A 2025 European Commission report highlighted that the EU remains reliant on imports of materials such as aluminium, natural graphite, manganese, niobium, silicon metal, vanadium and tantalum, alongside lithium, nickel and rare earths, all of which Brazil can supply in a safe and sustainable manner.
Industry leaders say the deal should yield benefits quickly, as European firms pursue projects in Brazil.
However, domestic challenges persist.
Three lithium plants—operated by Sigma Lithium, CBL and AMG—are currently producing, with 25 further projects in various stages of development.
Fastmarkets forecasts Brazilian lithium carbonate equivalent output to grow at a 6.5% compound annual rate from 54,000 tonnes in 2025 to about 101,000 tonnes in 2035.
Sigma Lithium has faced cash-flow and equipment shortages, delaying its Grota do Cirilo II expansion and halting production since August 2025.
The company is remobilizing operations and selling stored lithium fines, but a labour ministry review of Sigma’s waste piles adds regulatory uncertainty.
CBL, by contrast, maintained full capacity in 2025 and is advancing a brownfield expansion to double spodumene concentrate output to 100,000 tonnes per year and raise lithium carbonate equivalent production from 2,000 to 6,000 tonnes.
Looking ahead, most greenfield projects are unlikely to begin commercial production before 2028.
Political factors, including 2026 elections and legal reviews of environmental licences in the “Lithium Valley,” could influence the sector’s trajectory.
Meanwhile, Brazil’s rare earth reserves—the world’s second-largest at 21 million tonnes—have attracted interest from the United States and Europe.
Analysts say converting these reserves into higher output will require robust policy frameworks, financial backing and technical support.
Source: Fastmarkets
