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By Shane Croucher
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It is easy to see leftist Luiz Inácio Lula da Silva’s surprising reelection in Brazil—which defied polls, prediction markets and history—as a major blow to President Donald Trump's so-called "Donroe Doctrine."
To be sure, had Trump's right-wing ally Flávio Bolsonaro won, life would be easier in the White House as it looks to aggressively enforce America's hemispheric hegemony.
But the contest in Brazil that matters most to Washington, D.C., is the U.S. competition with China. As Newsweek wrote previously, Trump could theoretically win Brazil with a Bolsonaro presidency, but still ultimately lose the country to Beijing.
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The Donroe Doctrine is down in Brazil, but it is not out. Strategic access does not need perfect political alignment. The absence of a Brazilian Trump in Brasília has not stopped the U.S. from getting its hands on critical resources. Even under Lula.
Look at Serra Verde’s rare-earth supply contract. On August 24, the Brazilian producer announced that an agreement covering 100 percent of its Phase I production for 15 years had taken effect. The buyer is a special-purpose vehicle backed by $750 million from the Department of War.
Separately, on September 3, USA Rare Earth, a Nasdaq-listed magnet maker with a $1.6 billion Commerce Department funding deal, completed its acquisition of Serra Verde. Together, they give the Trump administration a foothold in Brazil.
The transactions show that American access to strategic resources can advance under a government that resists Washington politically, and which Trump himself has openly attacked.
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Lula’s defeat of Bolsonaro may close one route to closer ties with the White House. But an existing commercial relationship can still develop when it is in both sides' strategic and economic interests.
The U.S. International Development Finance Corporation signed a $565 million loan agreement to expand and improve Serra Verde’s Brazilian mine. The supply contract also guarantees minimum prices for four magnetic rare earths, giving the producer more predictable revenues.
Serra Verde describes its operation as the only large-scale producer outside Asia of all four magnetic rare-earth elements. These materials help make permanent magnets used in electric vehicles, wind turbines and defense equipment.
Access to them offers Washington a way to reduce dependence on Chinese supply chains and embed itself more deeply in the most significant economy of South America. It also locks up a resource that may otherwise fall into Beijing's hands.
But there is, according to media reports, disquiet on both sides. Brazil's UOL reported disagreements between State Department officials favoring support for Bolsonaro and National Security Council officials prioritizing Brazilian rare earths.
Citing sources inside or close to the Trump administration, UOL reported that political disputes had complicated the minerals relationship. The report also described anger in Brasília over Serra Verde’s acquisition, which went ahead without an understanding with the Brazilian government.
Yet, American gains occurred during Lula’s presidency despite all that friction. It shows Washington can secure specific benefits without needing a politically aligned president.
Lula’s government has its own ambitions for those resources. A law he signed on September 16 promotes processing and industrial development inside Brazil, with incentives designed to retain more of the economic benefits at home.
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It also gives a new government council a role in examining and approving certain corporate reorganizations and changes of control involving mineral assets.
Mines and Energy Minister Alexandre Silveira defended the approach as a means of determining the terms on which investment enters Brazil. Lula said at the signing that Brazil’s sovereignty was not for sale.
Yet Roberta Demange, a lawyer at Pinheiro Neto, told Folha de S.Paulo that the legislation created mandatory costs and uncertainty over which transactions would require council approval.
For Washington, such rules could complicate further expansion even when American investors are willing to commit money. Brazil’s stated aim is to retain more processing, technology and employment locally. In other words: Brazil first.
The immediate test is industrial execution of the Serra Verde agreement. The mine began commercial production in early 2024, according to the company. Its acquisition brings together facilities at different stages of development, with further work needed to connect production to finished magnets.
Serra Verde’s August announcement expected deliveries to begin early in the fourth quarter. USA Rare Earth’s October investor presentation still projected its first magnet sales by year-end. It also listed a processing circuit tailored to Serra Verde’s material as being under technical development.
Announcing the acquisition’s completion, USA Rare Earth's executive chairman Michael Blitzer said the focus was “execution, integrating operations, and moving efficiently toward steady-state and reliable supply.”
The commercial foothold is established. But its real strategic value will depend on reliable production, processing and deliveries. Take the heat out of the politics at the top and cool heads will understand this benefits both sides.
If the companies meet their milestones, the arrangement could strengthen American supply security under a politically independent Brazilian government, whatever Trump says about Lula on Truth Social.
Further deals will also test whether Washington’s demand for minerals can accommodate Brasília’s demand for industrial development. There is room for a pragmatic relationship, if it is allowed by two octogenarians in particular.
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