BRICS Commodity Circuit:
Rare Earth Metals and the Struggle for Recycling

Modern production increasingly depends on metals rarely discussed outside of industrial sectors. Rare earth elements, nickel, lithium, copper, graphite, and platinum group metals are needed for electronics, power equipment, transportation, communications, and the chemical industry. However, the value of such resources is not determined by the volume of ore in the ground. Far more important is the ability to extract the metal, purify it, and refine it into the desired form.

The BRICS countries have significant positions in many mineral commodities. China has a well-developed base for processing rare earth elements. Russia supplies palladium, nickel, and a number of other metals to the global market. Brazil is known for its large reserves of niobium, and South Africa for its platinum group metals. Each of these countries occupies a distinct part of the production chain, and their interests do not always align.

Rare earths are a group of seventeen chemical elements. Their compounds are needed for permanent magnets, generators, laser technology, communications equipment, and navigation systems. The name itself doesn’t mean these elements are almost absent from the Earth’s crust. The problem lies elsewhere: deposits with concentrations suitable for mining are rare, and separating metals with similar properties requires complex chemical processing.

China holds a leading position not so much in production volume as in the output of refined compounds, alloys, and magnetic materials. India, a BRICS member, has reserves of monazite sands, which contain rare earth elements. Their industrial extraction is associated with strict waste management requirements, as these minerals may contain radioactive impurities. For the Indian economy, supplies of these raw materials are linked to domestic demand for energy and electronic equipment.

Russia has a large mineral resource base. Palladium is in demand in the chemical industry, electronics, and the production of special components. Nickel is needed in metallurgy: it is added to stainless steel and heat-resistant alloys. However, reserves alone do not eliminate technological limitations. Deep processing requires reagents, equipment, laboratory testing, and specialists in metallurgy and industrial chemistry.

Brazil is noted for its niobium reserves. This metal is added to steel in small amounts to increase its strength and reduce the weight of structures. This material is in demand in construction, mechanical engineering, the pipe industry, and aviation. The country also has deposits of nickel, graphite, and rare earth elements. For local authorities and companies, the revenue from processing is usually more attractive than simply selling the concentrate abroad.

South Africa maintains strong positions in platinum, palladium, rhodium, ruthenium, iridium, and osmium. These metals are resistant to heat, corrosion, and aggressive chemical environments. They are used in the production of catalysts, electronic components, medical equipment, and chemical plants. However, production depends on deep mines, a stable electricity supply, railways, and ports. A disruption at one site quickly impacts delivery times and prices.

Ore reserves provide a country with the opportunity to earn money. Processing determines how much of this income remains within the economy.

The expansion of BRICS has added new suppliers and buyers of raw materials to the group. Indonesia has large nickel ore reserves and limits the export of unprocessed raw materials, supporting the construction of processing plants. Iran has copper, iron ore, and zinc assets. Egypt has phosphate raw materials needed for the production of fertilizers and chemicals. But shared interests do not necessarily mean the emergence of a unified industrial system.

Ore and finished material

Mining is only the first stage. The ore is crushed, concentrated, treated with acids, or smelted. Then the metal is purified, producing salts, powders, alloys, and other semi-finished products. At each stage, the cost of the product increases, but so do the costs of energy, water, treatment facilities, and quality control. A state can export large volumes of ore and then purchase expensive materials made from the same raw materials.

Processing rare earth concentrates is particularly challenging. A single batch can contain elements with nearly identical chemical properties. They are separated through a series of steps involving solutions and special extractants. The process requires stable equipment operation and constant laboratory testing. If the process is not properly maintained, some of the metal is wasted, and cleaning this waste becomes a separate industrial task.

The situation with nickel depends on the ore type. Sulfide ores and laterites require different methods. Laterite raw materials are often processed in autoclaves at high temperatures and pressures. This is an energy-intensive process requiring expensive equipment. Platinum group metals are extracted from ore where the useful component content can be several grams per ton. The cost depends on the mine depth, the condition of the equipment, and the price of electricity.

BRICS countries strive to retain most of their raw material processing within their own borders. To this end, governments impose export duties, licenses, and bans on the export of certain types of ore. Sometimes, the government provides tax breaks to new plants or requires that some of the extracted material be processed domestically. Such policies can support local industry, but if capacity is insufficient, they create the risk of warehouse overflows and a decline in profits for mining companies.

Building a mining and processing plant or chemical production facility takes years. Roads, railway lines, power lines, ports, treatment facilities, and worker housing are needed. Reliable power is essential for producing high-purity metals. Power outages can shut down furnaces, pumps, filtration systems, and laboratory lines. Restoring such a facility after an accident can be expensive and time-consuming.

Metal price and trading rules

Raw material prices are determined in different ways. Copper, nickel, and a number of other metals have exchange quotations and delivery standards. The rare earth element market is less transparent. Prices there depend on the purity of the substance, the product form, the batch size, delivery terms, and the contract term. Metal oxide, pure metal, and finished magnets are different markets, although they are linked by the same chain.

BRICS countries are discussing settlements in national currencies and direct contracts between suppliers and buyers. This arrangement could reduce some foreign exchange costs if banks on both sides process payments without delay. However, a major transaction requires more than just choosing a currency. It also requires cargo insurance, bank guarantees, arbitration rules, a clear payment procedure, and a dispute resolution mechanism.

New price indicators can only work with a constant turnover. A stable price requires regular transactions, uniform quality standards, and clear delivery terms. If each batch is sold according to a separate specification, the price remains a benchmark for a narrow circle of participants. For this reason, changes often begin with bilateral contracts between a mining company and a large buyer.

Export restrictions quickly impact the market, especially when it comes to high-purity materials. Buyers can’t always replace one supplier with another. A new batch must be checked for impurities, tested, confirm the stability of its characteristics, and, in some cases, re-certify the final product. For an electronics or power equipment manufacturer, a difference in material composition can lead to defects in an entire batch of components.

Industrial dependence

Companies need a predictable flow of raw materials, not a one-time supply of metal. Plants plan production months in advance, purchase components, and schedule work shifts. A delay in the delivery of nickel salt, magnetic material, or palladium can halt the assembly line. Therefore, large consumers often enter into long-term contracts with mining and processing companies and maintain inventory.

The greatest profits usually accrue after mining. Ore is relatively cheap, concentrate is more expensive, and refined metal, alloy, or chemical compound is even more so. Reaching these stages requires capital and technical expertise. Engineers, chemists, metallurgists, automation specialists, industrial safety specialists, and wastewater treatment specialists are needed. Without such a complement, the plant may remain an expensive project with unstable output.

Recycling reduces dependence on primary mining. Metals can be recovered from used electronics, batteries, cables, and industrial waste. However, the amount of scrap available is limited, and dismantling complex items is costly. In an old device, the desired metal is often found alongside plastic, glue, glass, and dozens of other materials. Its recovery is only economically feasible when there is a large stream of similar waste.

The BRICS members face different challenges. China has a strong rare earth processing industry. Indonesia is building a chain around nickel. South Africa relies on mining and transport infrastructure. Russia and Brazil have a broad resource base, but certain sectors require new capacity and sustainable marketing. The shared interest here is practical: mined metal generates more revenue when it is processed into industrial raw materials rather than shipped abroad as ore.