Rare Earth Minerals & AI Supply Chain Geopolitics

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The AI revolution runs on rare earth elements. Every GPU cooling fan, every data center motor, every robotic actuator, and every EUV lithography machine depends on neodymium-iron-boron magnets. China controls 60% of global extraction and over 90% of processing capacity. This concentration has now become the most consequential chokepoint in the global technology supply chain.

In October 2025, Beijing deployed its most aggressive export control regime yet: extraterritorial jurisdiction over any product containing 0.1% or more Chinese-sourced rare earths by value. This measure, modeled after U.S. semiconductor export controls, effectively weaponizes the physical foundation of AI infrastructure.

Brazil has emerged as the pivotal countermove. Brazil has the world’s second-largest proven reserves of rare earths behind China, but has struggled to develop them due to a lack of capital and expertise. With only 30% of its territory geologically mapped, Brazil represents the most significant opportunity to break China’s processing monopoly.

The January 2026 U.S.-Brazil negotiations signal a potential restructuring of global critical minerals supply chains.