US-Backed Rare Earth Mine in Brazil Could Transform Supply Chains, But Output Still Tied to China:

The Serra Verde mine in Brazil is now a focal point of interest in the West’s attempt to vie for strategically important rare earth minerals. It is the only significant reserve of heavy rare earth elements outside Asia, critical for electric vehicle, wind turbine, military, and drone technologies, and has attracted US investor support.

With operations initiated last year, the mine is an encouraging opportunity to challenge China’s status as a monopolistic supplier in the rare earths market. Still, with Washington’s attempts to decrease reliance on Beijing, Serra Verde's resources are virtually spoken for by Chinese customers through contracts until 2027—Chinas still reigns as the sole market capable of separating these minerals at scale.

US Support Quietly in the Works

China's control over the mine's current supply serves them, but US support tends to advance infrastructure spending, and funding is purportedly ready for the shafts’ expansion. Serra Verde has plans to increase production to 2 million tons by 2027, which may enable access to buyers beyond China and shift the balance of heavy rare earths.

Brazil’s Geostrategic Edge Regarding Rare Earth Minerals

Brazil has a strategic geological advantage with its clay-rich deposits which are almost identical to those in China and Myanmar that boast high concentrations of heavy rare earths like dysprosium and terbium. This puts Brazil’s potential to be a dominant player in the rare earth supply chain outside Asia at risk.

Short of Western Base Processing Infrastructure

With rich deposits at their disposal, Western countries still lack the funds and infrastructure to process heavy rare earths. Denham Capital’s $150 million investment into Serra Verde turned operational in Minaçu after years of development, but without Western infrastructure to refine the minerals, China remains a crucial processor.
The same challenges exist in other companies. MP Materials, for instance, still has to ship the majority of their output to China for processing while building a new refining plant in California. Progress in Europe is also slow, with some projects in France and Estonia and some revolving around battery recycling.

Outlook for 2027 and Beyond

Serra Verde has set a goal for 2027 to produce hundreds of tons of heavy rare earths annually which could double worldwide production outside of Asia. China, however, will still handle most refining until new facilities are built in the West, cementing their hold on the supply chain.

Rising Interest, But Delivery Delay

With the recent restrictions on exports from China and Serra Verde seeing increased interest from Western governments and companies, it seems like a missed opportunity thanks to existing contracts. Current supply agreements do not allow immediate changes to be made so some time will have to be waited.

Serra Verde’s CEO recognizes the difficulty in competing against China's infrastructural advancements and said, “It’s very hard to compete against what China has built.”