India and Brazil Forge Critical Minerals Agreement to Reduce Reliance on China

Indian Prime Minister Narendra Modi and Brazilian President Luiz Inacio Lula da Silva recently signed a significant agreement aimed at increasing cooperation on critical minerals and rare earths. This collaboration emerges as India searches for new supply sources to mitigate its reliance on China.

During their meeting in New Delhi, both leaders highlighted the importance of the agreement in fostering more resilient supply chains. Modi described the deal as a “major step towards building resilient supply chains.” China's dominance in the mining and processing of rare-earth minerals has prompted concern, especially with its tightening grip on exports in recent times.

Brazil, being the second-largest holder of critical minerals worldwide after China, plays a crucial role in various sectors such as electric vehicles, solar technology, smartphones, and defence systems. Lula emphasised the core objective of the agreement: enhancing investments and cooperation in renewable energy and critical minerals.

Details surrounding the mineral deal are still limited. However, there has been a notable surge in India’s demand for iron ore, of which Brazil is the second-largest producer and exporter globally, trailing only Australia. Rishabh Jain, an analyst with the New Delhi-based Council on Energy, Environment and Water, noted that India's collaboration with Brazil aligns with its recent engagement on supply chains with the United States, France, and the European Union. Jain conveyed to AFP that “Global South alliances are critical for securing diversified, on-ground resource access and shaping emerging rules of global trade.”

In conjunction with the critical minerals agreement, nine additional agreements were also signed covering various sectors, including digital cooperation and healthcare initiatives. Modi expressed his ambition to elevate bilateral trade beyond $20 billion in the next five years, asserting that this trade represents a significant trust between the two nations. He referred to Brazil as India’s “largest trading partner in Latin America,” adding that cooperative efforts would amplify the Global South's voice.

India’s Foreign Minister Subrahmanyam Jaishankar echoed this sentiment, suggesting that Lula's discussions with Modi would bring new energy to their diplomatic relations. Recent data from the Observatory of Economic Complexity in 2024 indicates that Indian exports to Brazil reached $7.23 billion, primarily driven by refined petroleum, whereas Brazilian exports to India were estimated at $5.38 billion, with raw sugar leading the export category.