Good morning and welcome to this update on energy developments. Today, we focus on a significant initiative involving the United States and plans for rare earths mining in Brazil.
Recently, the U.S. Department of State announced its support for a new rare earths project in Brazil, marking a key move in the Minerals Security Partnership (MSP). This partnership, which includes 14 nations and the European Union, aims to reduce Western reliance on China for critical minerals, including rare earths essential for various technologies and military uses.
China currently dominates the processing of these vital resources, controlling a substantial portion of the market. The MSP’s mission is to establish supply chains that are less dependent on Chinese influence, and the latest project in question is the Pela Ema deposit overseen by the Serra Verde Group.
On Monday, Serra Verde, a Swiss-based company, reported that it successfully raised $150 million through investments from notable mining firms like Denham Capital from Boston, the Energy and Minerals Group from Houston, and the Vision Blue Fund led by former Xstrata CEO Sir Mick Davis. The U.S. State Department praised this funding as a significant step in fostering sustainable and secure supply chains for minerals.
However, the MSP does not possess a dedicated funding pool like China; rather, it focuses on encouraging private and governmental financial support. Since its inception two years ago, the MSP has backed over a dozen projects aimed at securing essential minerals.
Currently, all rare earths produced by Serra Verde are shipped to China for processing. Although there are some heavy rare earth processing facilities being developed in North America and Europe, China remains the only country equipped to process the unique heavy rare earths extracted from Serra Verde’s site.
Located in Brazil’s Goiás state, the Serra Verde mine extracts rare earths from ionic clay, which includes crucial elements for manufacturing permanent magnets used in electric vehicles and wind turbines, such as neodymium and dysprosium. The mine began commercial production earlier this year and is now the only active heavy rare earths producer outside of China.
Extracting rare earths from clay is more efficient than traditional hard rock methods since it simplifies processing without requiring crushing. Despite its resource-rich potential, Brazil currently underutilizes its reserves, holding approximately 18% of the world’s rare earths yet producing less than 0.5%.
Thras Moraitis, CEO of Serra Verde, emphasized that the new funding will help the company scale up operations to compete effectively. This challenge arises partly from China’s ability to produce rare earths at lower costs, making it tough for new market entrants.
Gracelin Baskaran, who leads the critical minerals security program at the Center for Strategic and International Studies, highlighted that MSP’s endorsement of the Serra Verde project reflects a strengthening relationship between the U.S. and Brazil. Earlier this year, the International Development Finance Corporation launched its first Latin American office in São Paulo.
As this partnership develops, it has the potential to change the dynamics of rare earth production and processing on a global scale, with Brazil standing as a critical player in the future of these vital minerals.