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Digging for Independence: U.S. backs Brazil’s Rare Earth production
The U.S. Department of State has backed a new rare earths project in Brazil, specifically the Pela Ema deposit run by the Serra Verde Group. This move highlights the role of the Minerals Security Partnership (MSP) in “promoting sustainable and diversified supply chains”. Essentially, the US wants to reduce reliance on China, which currently dominates the processing of minerals essential for defence and the energy transition.
The MSP, a U.S. led initiative that includes 14 countries and the EU, is working to establish supply chains for critical minerals outside of China. While the MSP encourages private and state-backed investments, it doesn’t have its own funding pool. Instead it relies on entities like the U.S. International Development Finance Corporation (DFC) and Natural Resources Canada. Since its creation two years ago, the MSP has supported over a dozen projects focused on minerals such as graphite, rare earths, and nickel.
Serra Verde’s mine in Goiás, Brazil, specializes in extracting rare earths from ionic clay, a key material for making permanent magnets used in electric vehicles and wind turbines. This mine, which began commercial production earlier this year, is the only heavy rare earth producer outside China. The process of extracting rare earths from clay is simpler and more efficient since it doesn’t require crushing.
China currently leads the market, producing 60% of the world’s rare earths and handling 90% of their processing. Serra Verde’s CEO, Thras Moraitis, said that new funding will help the company expand its operations and become more competitive. However, China’s low-cost production remains a challenge for new market entrants. Brazil holds about 18% of the world’s rare earth reserves, but it currently contributes less than 0.5% of global production, showing there’s significant untapped potential.
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