As the West scrambles to secure critical rare earth minerals amid China’s tightening export restrictions, a new mine in Brazil backed by US investors has emerged as a potential game changer. The Serra Verde mine, which began operations last year, is the only significant source of heavy rare earth elements outside Asia. These minerals are vital for manufacturing electric vehicles, wind turbines, drones, and advanced military systems, the New York Times reported.
But there’s a catch: the output is going to China
Despite growing urgency in Washington to reduce dependence on Beijing, nearly all of Serra Verde’s rare earth output is already contracted to Chinese buyers until at least 2027. “They were the only customer who could process the product and separate the product,” said Thras Moraitis, CEO of Serra Verde. China remains the only country with the capacity to separate the most valuable “heavy” rare earths at scale, making it an unavoidable middleman for now.
US quietly prepares to fund expansion
In light of China’s escalating restrictions on strategic metals, the US government has discreetly signaled its intent to help fund the mine’s expansion. But with current production already committed to China, it’s unclear how quickly any new Western-backed supply could be brought online. Serra Verde hopes to double its output by 2027, potentially allowing new buyers to enter the market.
Brazil’s geological edge could shift the balance
Rare earth minerals are relatively common but difficult to separate. China has spent decades building a monopoly over the refining process. However, Brazil’s natural clay deposits—similar to those found in China and Myanmar—contain rich concentrations of heavy rare earths. Industry experts say Brazil could play a decisive role in breaking China’s hold on global supply chains. “Brazil has by far the best access to heavy rare earths,” said Constantine Karayannopoulos, co-founder of Canada’s Neo Performance Materials.
Long road to independence
Serra Verde’s journey began in 2010 with backing from Boston-based Denham Capital. After years of delay and more than $150 million in funding, the mine finally opened in the town of Minaçu, once known for asbestos mining. But at that point, few outside China could process the minerals it would extract. “You can dig it up,” said Karayannopoulos, “but nowhere in the West is there existing capacity to produce separated dysprosium and terbium.”
Western firms still lagging
Other rare earth suppliers face the same challenge. MP Materials, a US company partly funded by the Pentagon, sells 80% of its output to China while it builds new domestic processing capabilities. The firm is constructing a new California plant to separate heavy rare earths, but it is not yet operational. Europe is also joining the race, with new facilities planned in France and Estonia and efforts to extract elements from recycled batteries.
By 2027, Brazil could double non-Asian supply
Serra Verde aims to produce a few hundred tons of heavy rare earths by 2027, which would double the world’s supply outside Asia. But until new processing plants come online, most of that output will remain bound for China under existing contracts.
A missed opportunity—for now
Since China restricted exports this month, Serra Verde has seen a flood of interest from governments and corporations. “There’s a greater sense of urgency,” Moraitis said. But the mine can’t deliver to the West until current deals expire.
“It’s really hard to not admire what they’ve managed to achieve,” Moraitis said of China. “And it’s very hard to compete against.”
US-backed mine in Brazil could reshape global supply chains, but nearly all production is contracted to China through 2027.
As the West scrambles to secure critical rare earth minerals amid China’s tightening export restrictions, a new mine in Brazil backed by US investors has emerged as a potential game changer. The Serra Verde mine, which began operations last year, is the only significant source of heavy rare earth elements outside Asia. These minerals are vital for manufacturing electric vehicles, wind turbines, drones, and advanced military systems, the New York Times reported.
But there’s a catch: the output is going to China
Despite growing urgency in Washington to reduce dependence on Beijing, nearly all of Serra Verde’s rare earth output is already contracted to Chinese buyers until at least 2027. “They were the only customer who could process the product and separate the product,” said Thras Moraitis, CEO of Serra Verde. China remains the only country with the capacity to separate the most valuable “heavy” rare earths at scale, making it an unavoidable middleman for now.
US quietly prepares to fund expansion
In light of China’s escalating restrictions on strategic metals, the US government has discreetly signaled its intent to help fund the mine’s expansion. But with current production already committed to China, it’s unclear how quickly any new Western-backed supply could be brought online. Serra Verde hopes to double its output by 2027, potentially allowing new buyers to enter the market.
Brazil’s geological edge could shift the balance
Rare earth minerals are relatively common but difficult to separate. China has spent decades building a monopoly over the refining process. However, Brazil’s natural clay deposits—similar to those found in China and Myanmar—contain rich concentrations of heavy rare earths. Industry experts say Brazil could play a decisive role in breaking China’s hold on global supply chains. “Brazil has by far the best access to heavy rare earths,” said Constantine Karayannopoulos, co-founder of Canada’s Neo Performance Materials.
Long road to independence
Serra Verde’s journey began in 2010 with backing from Boston-based Denham Capital. After years of delay and more than $150 million in funding, the mine finally opened in the town of Minaçu, once known for asbestos mining. But at that point, few outside China could process the minerals it would extract. “You can dig it up,” said Karayannopoulos, “but nowhere in the West is there existing capacity to produce separated dysprosium and terbium.”
Western firms still lagging
Other rare earth suppliers face the same challenge. MP Materials, a US company partly funded by the Pentagon, sells 80% of its output to China while it builds new domestic processing capabilities. The firm is constructing a new California plant to separate heavy rare earths, but it is not yet operational. Europe is also joining the race, with new facilities planned in France and Estonia and efforts to extract elements from recycled batteries.
By 2027, Brazil could double non-Asian supply
Serra Verde aims to produce a few hundred tons of heavy rare earths by 2027, which would double the world’s supply outside Asia. But until new processing plants come online, most of that output will remain bound for China under existing contracts.
A missed opportunity—for now
Since China restricted exports this month, Serra Verde has seen a flood of interest from governments and corporations. “There’s a greater sense of urgency,” Moraitis said. But the mine can’t deliver to the West until current deals expire.
“It’s really hard to not admire what they’ve managed to achieve,” Moraitis said of China. “And it’s very hard to compete against.”
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
