Vale (NYSE: VALE) is studying whether its tailings reprocessing operations could be expanded to recover rare earths and other minerals, according to comments from company executives.
As Brazilian Finance previously reported, the company has been evaluating opportunities in lithium and rare earths.

Vale is one of the world’s largest mining companies and the world’s largest iron ore producer, but its diversification is increasingly contributing to growth. The company also operates in nickel, cobalt and copper, as well as smaller operations in platinum group metals (PGMs). EBITDA from these businesses grew 95% over the past 12 months, compared with just 2% growth in iron ore over the same period.

Against that backdrop, executives said recently that rare earth minerals are not off the table when it comes to new initiatives, but the approach is quite different from how most rare earth projects in Brazil are being developed.

Rather than buying into an existing operation, as USA Rare Earth (Nasdaq: USAR) did with the Pela Ema mine, or developing an undeveloped deposit from scratch, as Brazilian Rare Earths is doing in the south of Bahia, Vale is exploring whether it can monetize the waste it has already produced, in an example of circular mining.

Tailings could become the entry point

The company has not discussed investing in greenfield rare earth projects. Instead, executives said Vale is studying whether it can recover rare earths, gold and other minerals from mining tailings, allowing the company to extract value from by-products generated by its existing operations.

It is not new territory for the miner. One example is the Gelado Dam in Pará, where Vale has used electric dredges since 2023 to extract material deposited at the bottom of the structure. The ore recovered this way has a high usable iron content of 63%. The miner has similar initiatives in Minas Gerais.

Rafael Bittar, Vale’s executive vice president of technical affairs, did not provide details to reporters on how extraction would work in the case of rare earths. He said, however, that the studies are already part of the company’s effort to expand the use of waste material and advance its circularity strategy.

Bittar said Vale is “cautiously optimistic” about the results so far, given that the analysis remains at an early stage. Vale has not yet established the project’s economic viability, meaning the initiative cannot yet be quantified or structured. Even so, he said preliminary results have been encouraging.

But if the company is already studying how to obtain the material through circular mining, what is holding back actual rare earth production? The obstacles may have less to do with the miner’s own operations than with the characteristics of extracting this complex group of minerals.

Scale and technology are the biggest challenges

Rare earth production faces challenges that extend well beyond Vale’s mining capacity. Brazil still has limited industrial-scale processing capacity, while its domestic rare earth market and downstream supply chain remain underdeveloped.

Scale matters even more for a company of Vale’s size. Most rare earth projects in operation or in the exploration phase are run by junior mining companies. Vale CEO Gustavo Pimenta noted that the supply chains currently in place for rare earth minerals operate on a very different scale from Vale’s traditional businesses, at a scale significantly smaller than that of the company’s established operations

“[Rare earth minerals] are still a very small market compared with iron ore and copper. It is a niche market, but geopolitically important,” Pimenta said.

Where the demand is and where the processing is not

The other half of the equation is understanding where the demand is coming from. Recent geopolitical tensions have pushed Western countries to diversify away from Chinese rare earth supply chains, creating a potential opening for new non-Chinese sources.

The difficulty, at the scale at which the company operates, is that the technology for extracting and processing these minerals still remains largely concentrated in China, and so does much of the market infrastructure for the ore.

If Vale ultimately targets growing demand from Western clients, particularly in the United States and Europe, it would need partners able to process the material at the scale it requires outside China.

It widens further down the chain. Magnets and other products derived from rare earths require several separate stages of refining before a finished product is reached, and that sequence of steps is not currently in place outside China.

For now, Vale’s rare earth ambitions rest on early-stage studies that executives describe as encouraging, but whose economic potential has yet to be quantified, and on a bet that circular mining can turn decades of accumulated tailings into a position in a market the company itself calls small, but strategically hard to ignore.