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.
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.
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.
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. 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.
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