Brazil’s Only Rare Earth Producer Secures US$565M DFC Loan, Grants US Option for Minority Stake

The financing will support expansion at the Pela Ema operation in Goiás and includes an option for the US government to take a minority equity position without management control.

Serra Verde Group, Brazil’s only operating rare earths producer, has secured a US$565 million loan from the US International Development Finance Corporation (DFC) to fund upgrades at its Pela Ema operation in the state of Goiás. According to terms disclosed by the company, the financing agreement also grants the US government an option to acquire a minority equity stake, with no role in management, underscoring Washington’s growing involvement in critical minerals supply chains.

DFC financing and Pela Ema expansion

Serra Verde said the US$565 million facility is 22% higher than the amount initially approved by the DFC board last year. The funds will be used to finance operational upgrades and capacity improvements at Pela Ema, an asset regarded as strategically significant due to its production of both light and heavy rare earth oxides and its position outside Asia-dominated supply routes.

The company began commercial production at Pela Ema in 2024, positioning the operation as a rare non-Chinese source of separated rare earth feedstock.

US equity option without management control

Under the final terms of the agreement, the DFC retains an option to take a minority ownership stake in Serra Verde. Chief operating officer Ricardo Grossi said the structure explicitly excludes any US involvement in management, formalizing a model of state participation limited to capital exposure rather than operational control.

From a governance standpoint, the option reflects a broader trend of selective state-backed equity participation aimed at securing strategic supply without direct intervention in corporate decision-making.

Critical minerals strategy and China exposure

The deal aligns with a broader US strategy to counter China’s dominance in rare earths, using a combination of loans, guarantees, and equity positions to support alternative supply chains. Similar approaches have been deployed across the critical minerals sector as part of efforts to improve supply resilience for advanced manufacturing, defense, and clean energy technologies.

Serra Verde’s financing places Brazil more firmly on the map of jurisdictions viewed as capable of contributing to Western rare earth supply diversification.

Production outlook and capacity growth

Serra Verde expects to produce 6,500 metric tons of total rare earth oxides in 2026, following a ramp-up phase that began after commercial start-up. The company is also assessing plans to double production capacity within the next four years, a move that could materially increase its relevance in non-Chinese rare earth markets.

The Pela Ema deposit contains a mix of light and heavy rare earths, including neodymium, praseodymium, terbium and dysprosium, which are essential for permanent magnets used in electric vehicles, wind turbines, electronics and industrial applications.

Strategic stockpiling and Project Vault discussions

The financing announcement comes as the US advances plans for strategic stockpiling of critical minerals to mitigate supply disruptions. Grossi said it “makes complete sense” for Serra Verde to be considered for participation in initiatives such as Project Vault, though discussions remain preliminary and no formal commitments have been announced.

Such programs are designed to bring forward revenue for early-stage producers while buying time for downstream processing capacity outside Asia to mature.

Offtake renegotiations and Western market access

On the commercial side, Serra Verde is renegotiating rare earth supply contracts previously signed with Chinese customers, with revised agreements expected by year-end. The process potentially opens the door to offtake agreements with Western buyers, although the company has not confirmed whether the DFC financing will be tied to future supply commitments.

Brazil’s role in the global rare earth landscape

Brazil holds the largest rare earth reserves outside China, yet Serra Verde remains the country’s only active producer. The Pela Ema project therefore occupies a unique position at the intersection of geology, geopolitics and industrial policy, highlighting how access to capital and international partnerships are becoming decisive factors in shaping the next phase of rare earth supply.