Lynas Rare Earths (ASX: LYC) has presented plans to build a rare earth oxide separation plant in Brazil’s Minas Gerais state, Mines and Energy Minister Alexandre Silveira told MINING.COM, as the government considers backing a project that could become one of the largest such facilities outside China.
The proposal forms part of Lynas’ expansion into Brazil through its $672 million acquisition of Meteoric Resources, whose Caldeira project hosts one of the world’s largest known ionic-clay rare earth deposits outside China. State development bank BNDES is evaluating potential financing, according to people familiar with the discussions.
“The project to implement a rare earth oxide separation plant in the Poços de Caldas region, presented by the company, could be a milestone for Brazil to advance through different stages of the value chain, adding value to our product and moving the country away from being merely an exporter of raw materials,” Silveira said in written comments.
The proposed facility would give Brazil a foothold in commercial-scale rare earth separation, an industry dominated by China, while potentially creating processing capacity for other ionic-clay deposits being developed in southern Minas Gerais.
Regional processing hub
People familiar with the discussions told MINING.COM that negotiations are more advanced than Lynas’ public disclosures suggest, with a preliminary understanding around establishing separation capacity in Brazil.
BNDES is expected to conduct a technical visit to Lynas’ Australian operations before the end of 2026 as discussions progress. The financing structure and final investment decision remain undetermined.
Lynas had not responded to MINING.COM’s questions by publication time.
Government officials see the Poços de Caldas region as a potential processing centre for several nearby ionic-adsorption clay projects, allowing the proposed plant to handle material beyond Caldeira, according to people familiar with the discussions.
Such a facility could complement Lynas’ existing operations in Australia and Malaysia while establishing a downstream presence closer to South America’s emerging rare earth resources.
Lynas has been more cautious in its statements to investors. When announcing the Meteoric acquisition, the Australian company described Brazilian downstream processing as a possible future investment rather than a firm commitment. It also retained the option of sending Caldeira material through its existing international processing network.
People familiar with the negotiations attributed that caution largely to regulatory approvals still required for the acquisition and the disclosure obligations of a publicly listed company ahead of a final investment decision.
Silveira said the government was closely monitoring the proposal alongside other ministries and BNDES, citing its potential industrial scale.
“We could have on Brazilian soil one of the largest industrial rare earth plants outside China,” he said.
Lynas is already the largest commercial producer of separated rare earths outside China, operating the Mt Weld mine and processing facilities in Australia alongside a major separation complex in Malaysia.
Officials regard the company’s commercial experience as an opportunity to bring processing technology and industrial expertise to Brazil, where the rare earth industry remains concentrated in exploration and mine development.
Policy’s first test
The Meteoric acquisition comes weeks after Brazil enacted a critical minerals policy aimed at expanding domestic processing and retaining more value from its mineral resources.
The legislation established the National Council for the Industrialization of Critical and Strategic Minerals (CIMCE), which will help evaluate strategic transactions and coordinate incentives for projects considered important to national mineral supply chains.
The Lynas-Meteoric transaction is expected to be among the first major deals considered under the framework. Its required Brazilian regulatory clearance will test how the government balances foreign investment in critical mineral assets against its industrial development objectives.
People familiar with the government’s position said officials have little opposition to the acquisition itself. Instead, they view it as a potential model for attracting foreign mining capital alongside commitments to domestic processing.
“The advancement of mineral projects along the value chain should be encouraged through a combination of incentives and regulatory instruments,” Silveira said.
“The CIMCE should have an important role in this strategy, using financing and regulatory mechanisms to encourage companies to expand beneficiation, processing, separation, refining and transformation of critical and strategic minerals in Brazil.”
The scale of Caldeira could underpin that ambition. Meteoric’s definitive feasibility study outlined a mineral resource of 1.63 billion tonnes grading 2,317 parts per million total rare earth oxides, including an ore reserve of 151 million tonnes at 3,524 ppm.
The project is designed to produce an average of about 12,500 tonnes of total rare earth oxides annually over a 23-year mine life, including neodymium-praseodymium and the heavy rare earths dysprosium and terbium.
The study estimated initial development capital at approximately $498 million, excluding the cost of a separate large-scale oxide separation facility.
That additional investment remains a key consideration as Brazil seeks to turn its rare earth exploration boom into an integrated domestic industry. Whether the proposed plant proceeds will depend on financing, regulatory approvals and Lynas’ final investment decision.
* Gabriel García is a journalist at CNN Brazil, based in Brasília, covering mining, infrastructure and economic policy. He specializes in critical minerals, mining regulation and the geopolitics of global supply chains.