Brazilian Rare Earths Shares Fall 50% in Three Weeks: The Latest

Brazilian Rare Earths shares (ASX: BRE) have shed half their market value in just three weeks, hitting a 52-week low at A$1.92 into the weekend.

The BRE share price will head into this week’s open at A$1.96 after a brutal three-week sell-off that just saw the stock fall 36.16% last week. That followed up double-digit weekly declines of 12.29% and 11.17% in the two preceding weeks to a round 50%, or A$540million in market cap. It has been 12 consecutive red sessions, an unbroken streak of selling pressure that has overwhelmed any attempt at stabilisation, as the RSI collapsed to an extreme oversold 17.68.

What Is Happening To Brazilian Rare Earths?

The most damaging development came recently, when Brazilian media outlets reported that BRE is facing a significant federal lawsuit in Brazil tied to the exercise of a controversial contractual clawback clause.

The background to the dispute dates to January 2024, when BRE acquired 11 mining exploration rights in the state of Bahia for R$5 million (approximately US$900,000) in cash plus 8 million BRE shares. Embedded within the acquisition contract was a clause permitting BRE to repurchase 4 million of those shares, by that point valued at approximately R$61.6 million, or around US$12 million, for a total consideration of just A$1.00, provided that Brazil’s National Mining Agency (ANM) had not approved two final exploration reports within a two-year window ending in March 2026.

The ANM did not complete its review within the deadline, and BRE exercised the clawback. The original vendors subsequently filed suit in federal court, alleging that BRE inherited regulatory compliance obligations upon acquiring the tenements and effectively exploited administrative delays at the ANM to reclaim equity worth roughly US$12 million for a nominal dollar. BRE has publicly rejected the claims, maintaining that the contractual terms were clearly defined and properly executed.

Regardless of the ultimate legal outcome, markets are voting via the share price, which has yet to experience a positive close in the month of October.

Operational Setbacks

Compounding the legal controversy, BRE had already absorbed a meaningful operational blow in the August-to-September 2026 period when it was required to retract and revise forward-looking statements related to its flagship Rocha da Rocha project in Bahia.

The revised Scoping Study completely excluded the Sulista Project from early-stage production targets. Regulators determined that using Inferred Mineral Resources for projected production in years nine through fourteen of the mine plan did not provide a sufficient basis for financial modelling under applicable disclosure standards. BRE refocused its published financial scenarios on a standalone Monte Alto and Camacari development pathway, with first production now targeted for 2031.

While the company framed the revision as a recalibration rather than a fundamental change to the project’s long-term potential, the removal of Sulista from near-term financial models reduced the apparent scale of the initial development case and damaged confidence in the original valuation framework that had supported the stock at higher levels.

Demerger Overhang

Adding structural selling pressure to the mix, BRE completed the demerger and standalone ASX listing of its subsidiary Alurion Resources (ASX: ALU) during the July-to-September 2026 period. Alurion holds the company’s bauxite and gallium assets, and the Australian Taxation Office subsequently issued a class ruling in September 2026 confirming the tax treatment for participating shareholders.

Demergers routinely generate post-event selling as shareholders reassess their combined holdings, rebalance portfolios, or exit positions that were originally sized for a different asset mix. The ATO ruling, while providing clarity, also prompted tax-driven repositioning among retail and institutional holders, adding a further layer of supply to an already pressured stock.

Brazil’s New Critical Minerals Law

In September, Brazilian President Lula signed Law No. 15.506/2026, establishing the National Policy for Critical and Strategic Minerals (PNMCE). The legislation creates a formal policy framework for the development and export of critical minerals, including rare earths, and introduces a new oversight body, the Critical Minerals Council (CIMCE).

For BRE, the law carries genuinely mixed implications. On the bull side, the policy actively encourages domestic downstream processing, which aligns directly with BRE’s planned hydrometallurgical refinery at Camacari in Bahia. The company has already commissioned a Stage I pilot plant at the site and secured co-funding for a Stage II hydromet facility, positioning it as a potential beneficiary of the government’s push to capture more value from Brazil’s rare earth endowment onshore.

On the other hand, the new framework introduces tighter government screening of foreign ownership structures, changes in corporate control, and export supply agreements. For a foreign-listed company operating in a politically sensitive critical minerals sector, that heightened scrutiny represents an incremental regulatory risk that markets are now pricing more carefully.

Can The Stock Turn A Corner?

From a purely technical standpoint, an RSI reading of 17.68 is extraordinarily low and historically associated with selling exhaustion rather than the beginning of a sustained downtrend. That said, oversold conditions can persist in the presence of unresolved fundamental catalysts, and there are certainly enough pressures here to keep bears fueled.

Longer term, the bull case rests on the combination of a deeply discounted entry point relative to the company’s cash backing and resource base, continued downstream infrastructure progress at Camacari, and the structural tailwinds created by global rare earth demand growth.

BRE shares head into the new week at a price that reflects a market in full retreat, but whether these extreme oversold conditions can provide a temporary reprieve will only be told in time. A tough few weeks for holders, who had been 3% up YTD before the reversal.

Bull Case: