Although the Brazilian and U.S. governments have not yet reached an agreement on critical minerals, two mining companies with advanced rare earth projects in Brazil have already entered into financing deals that could give the United States an advantage in receiving their production.
The mining companies Serra Verde and Aclara, from Goiás, recently signed financing with a US state bank, the DFC (Development Finance Corporation), in agreements that could evolve into larger transactions. Under the terms of the loan with Aclara, for example, DFC can convert the money owed into shares in the future.
Rare earths are a set of 17 chemical elements that are difficult to extract and refine, some of which are raw materials for the manufacture of magnets essential to technologies linked to the energy transition, such as electric cars, and to defense.
For the United States, the move is part of the strategy to rely less on rare earth supplies from China, which currently has 60% of global rare earth mining and 90% of refining capacity. On the other hand, the deals reduce the bargaining power of Brazil, home to the world’s third-largest rare earth reserves, behind China and Vietnam, in a possible deal with the United States.
The most recent commitment came from Serra Verde, the only rare earth mining company operating in Brazil and one of few outside of China. The company, owned by two American and one British investment funds, announced in November that it would receive a loan of $465 million (2.5 billion reais) from the DFC, which invests in projects outside the country.
The DFC’s critical minerals strategy is to ensure that the United States expands its range of suppliers beyond China. On its website, the bank emphasizes that its investments aim to “counterbalance China’s growing influence in the world.” When contacted for the report, the bank said it would not comment on the matter.
The contract between the mining company and the bank has not been disclosed, but, according to those who follow the matter closely, it is likely that Serra Verde is committed to supplying part of its production to the American market.
Searched by LeafSerra Verde said it would not comment on the matter. In an interview with Reuters news agency in early December, the mining company’s president, Thras Moraitis, said the company had recently reshaped a contract with Chinese customers to allow some of its production to go to Western customers, without mentioning their nationality.
“Within a few years, we will have some options for separating heavy rare earths outside of China,” Moraitis said.
Today, only Chinese refineries and one in Malaysia are capable of separating rare earths, a fundamental process for obtaining the oxides demanded by the automobile and defense industries. However, American companies, with the support of the American government, have invested billions of dollars to develop their own industries.
Serra Verde operates a mine north of Goiás and wants to produce 5,000 tonnes of oxide contained in the rare earth concentrate by early 2027 and reach 10,000 tonnes by 2030. The DFC loan aims precisely to make the expansion of the mine viable.
The rare earth concentrate, the final product of the mining company, is a preliminary step in refining the mineral and has little added value compared to other products in this industry.
“For a critical mining company to receive DFC funding, it must ensure that a certain amount of its production goes to the United States; that will be part of the final agreement,” says Samantha Carl-Yoder, former U.S. vice consul in São Paulo and current policy director at Brownstein, one of the largest lobbying firms in the United States.
Aclara, a company with an advanced rare earth exploration project also in northern Goiás, closed in September a financing with the DFC of 5 million US dollars (27.05 million reais). The resources, which can be converted into shares of the company in the future, will be used by the mining company to complete the feasibility study of its mine.
In October, the company also announced that it would build a refinery in the United States by 2028 to separate rare earth concentrate produced in Brazil. The investments planned by Aclara for construction in the United States are $277 million (1.5 billion reais), lower than those planned by the Goiás company, $680 million (3.7 billion reais).
The installation of a refining plant in a given country is, however, considered more strategic in a sector currently dependent on the Chinese. On its website, the mining company says the refinery will be able to meet more than 75% of U.S. demand for heavy rare earth elements for electric vehicles by 2028.
In a statement, Aclara said its contract with DFC does not guarantee future financial contributions or impose an obligation to direct production to buyers in the United States. “Possible transformation steps outside Brazil follow commercial, technical-operational, regulatory and fiscal criteria and do not change Brazil’s central role in the project,” he said.
CONVERSATIONS BETWEEN GOVERNMENTS
Aclara’s announcement goes against the Brazilian government’s interest in the processing of critical minerals carried out in the country. President Luiz Inácio Lula da Silva (PT) has already signaled that the generation of added value from these raw materials in Brazil would be a condition for a possible agreement between Brazilians and Americans.
Brazilian officials were in the United States in early December to discuss the issue, but there was no indication that a deal was close to being reached. When asked, the Ministry of Mines and Energy said it “maintains an ongoing dialogue with several strategic partners on topics related to critical and strategic minerals.”
An agreement between the two governments could be similar to the one signed between the United States and Australia in October, when the Americans pledged to invest $8.5 billion (about 46 billion reais) in the processing of critical minerals in the Oceanian country.
Erasto Almeida, director of Safe, an organization that works with the U.S. government to model strategies for critical minerals, said an agreement between the two governments is not essential to guarantee a stable supply of minerals to the United States.
“Brazil has a mining sector open to foreign investment. So, in theory, it’s not really necessary to have government-to-government agreements to move these mining projects forward. But, of course, having good bilateral political relations is important,” he says.
People following the matter on the U.S. side told the report that the Trump administration was interested in signing deals with Brazil, even though it had already made deals directly with companies. One interest is for U.S. companies to gain the right to be the first to receive bids for critical minerals mined in Brazil or the first to gain access to tendered reserves.
These points appear, for example, in the agreement signed at the beginning of December between the Trump administration and the Democratic Republic of Congo, which has significant deposits of copper and cobalt.
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