During the US-China trade war, China weaponized rare earths and tightened exports further. In response, the Trump administration imposed high tariffs and began to establish a new rare earth supply chain. Currently, the US government is investing nearly $500 million to support a rare earth mine in Brazil, aiming to promote the development of a rare earth supply chain outside of China.
According to a report from the Financial Times on November 7th, the US International Development Finance Corporation (DFC) approved a $465 million loan in August to fund the Pela Ema rare earth project located in the Goias state of Brazil operated by Serra Verde company.
Brazil ranks second in the world for rare earth reserves, following China, with approximately 21 million tons, which accounts for over one-fifth of known global reserves and is more than ten times the reserves in the US.
Brazil also possesses abundant and even rarer heavy rare earth resources, including dysprosium and terbium, two silver-white metallic elements crucial for preventing magnets from losing their magnetism at high temperatures. Dysprosium and terbium are essential for electric vehicles as their motors rely on magnets for power even when heated.
The funding from the US International Development Finance Corporation will help Serra Verde increase the production of heavy rare earth metals. Currently, the global supply chain of heavy rare earths is predominantly dominated by China.
“Our company is the only producer in the short to medium term, so many countries’ governments are in talks with us,” said Thras Moraitis, CEO of the company, to the Financial Times. Commercial production at the mine started last year.
Serra Verde has adjusted some of its sales agreements to ensure that with the commencement of operations by new processors and magnet manufacturers over the next decade, more products can be supplied to global buyers.
“In the next two to three years, as large-scale separation of heavy rare earths outside of Asia becomes a reality, we will be able to supply products to these facilities,” Moraitis stated.
Rare earths, a group of 17 metallic elements, are primarily used in the manufacturing of permanent magnets needed for civilian and military technologies. Permanent magnets have wide-ranging applications in industries such as automobiles, energy, and defense. Among the rare earths mined globally, China contributes about 70% in terms of mining and 90% in processing, which is the aspect that other countries officials are truly concerned about ensuring their rare earth supply.
On October 30, the US-China summit in South Korea resulted in a temporary agreement, leading China to resume rare earth exports and Trump to temporarily halt additional tariffs on China. However, Western countries are striving to break away from their dependence on China in the rare earth sector by developing rare earth extraction, separation, and processing capabilities.
According to the US Geological Survey and import data, the US imported approximately 8,000 tons of rare earth compounds and a significant amount of finished permanent magnets last year.
Serra Verde mine is ramping up production with a target to produce 4,800 to 6,500 tons of rare earth oxide annually by early 2027. Part of the funds for the mine’s upgrade and renovation will be provided by loans from the US International Development Finance Corporation.
The DFC is an institution that invests in overseas development projects, and in August, the company stated that the mine would become the “first significant producer of heavy rare earths outside of China.” The DFC confirmed that its board has “approved the financing package for the mine.”
The US International Development Finance Corporation has already approved several financing plans for mining projects this year, including providing $5 million to Canada’s Aclara Resources for a rare earth mine in Brazil to supply raw materials for a processing plant planned in the US. Aclara indicated that the location of the US plant will be finalized by the end of August, and this processing plant will separate the rare earth ore into individual elements.