Serra Verde signs $565M US deal for rare earths mine

Latin America’s sole rare earths miner Serra Verde has closed a $565-million funding package with the United States that could carve out a minority equity stake for Washington.

The deal with the U.S. International Development Finance Corporation (DFC), announced Thursday, is a $100-million top up to the $465 million agreed with the DFC last November. The funding is aimed at operational upgrades for Pela Ema, in Brazil’s Goiás State.

“Today’s announcement is a strong endorsement of Serra Verde’s pre-eminent strategic importance on the global stage,” Serra Verde CEO Thras Moraitis said in a release. “Throughout Serra Verde’s 15-year journey, the company has been diligently focused on growing a responsible, sustainable supply of critical rare earth materials for the world’s future needs.”

$1.36B for rare earths

The agreement is the latest of several deals worth more than $1.36 billion the U.S. has made with rare earth explorers, processors and producers since 2023 and underscores U.S. efforts to build rare earth supply chains independent of China. It also could see the fifth government stake in a miner as the Trump administration pursues investments in the sector as part of a deal-making shift to earn business revenue.

Last month, the Department of Commerce signed a proposed $277-million funding and equity deal with USA Rare Earth (Nasdaq: USAR) to support its Round Top project in Texas. That follows deals last year with MP Materials’ (NYSE: MP) for $400 million in support and a $620-million loan for rare earth magnets manufacturer Vulcan Elements.

The 17 rare elements are essential components in electronics and many green energy transition technologies.

Pela Ema, which started commercial production in early 2024, is also among the few operators outside China that produce the heavy rare earths dysprosium and terbium, critical for manufacturing permanent magnets used in wind turbines and defence applications.

Most other rare earths projects across the Western Hemisphere – including North America’s only rare earths mine MP Materials’ Mountain Pass in California – are dominated by light rare earths.

6,500-tonne rise

The financing from the DFC will be used for refinancing loan facilities at more favourable terms, streamlining operations at Pela Ema, enhancing its rare earths products for new markets and expanding capacity, Serra Verde said.

It plans to ramp up to 6,500 tonnes by early 2027 from its current capacity of 5,000 tonnes of light and heavy rare earths over a 25-year life.

Ionic clays

Pela Ema also benefits from its geology: the rare earths occur in large, soft and near-surface ionic clays that don’t require drilling or blasting to access. Many of those characteristics are shared with Meteoric Resources’ (ASX: MEI) Caldeira project in neighbouring Minas Gerais state, the largest ionic adsorption clay rare earths deposit outside China.

Both projects were cited in an analysis last October from BMI which said Brazil is emerging as “Latin America’s rare earth powerhouse” due to its huge reserves, advanced projects, strong government and foreign investment and international partnerships.