Brazil Rare Earth Mine Gets U.S. Backing Through US$1.55 Billion Offtake Vehicle

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Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

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Summary

Brazil's Pela Ema rare earth mine will sell 100% of its Phase I production to a U.S. government-backed special purpose vehicle as part of a funding package worth US$1.55 billion to support offtake. The deal reflects Washington's efforts to reduce its dependence on China dominated supply chains and diversify its sources of supply.

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Funding Package

US SIIE, a U.S. government-backed special purpose vehicle (SPV), completed a US$1.55 billion capital funding agreement to support offtake from the Pela Ema rare earth mine in Goias, Brazil. US SIIE agreed in April to purchase Phase I rare-earth production from Pela Ema, which is currently owned by Brazil's Serra Verde but is in the process of being acquired by USA Rare Earth.

The funding package includes US$750 million from the United States Department of Defense, a credit facility of up to US$500 million, and a commitment from the U.S. government to purchase at least US$300 million in rare-earth products from the SPV over five years.

The SPV will purchase 100% of Pela Ema's phase I production for 15 years. The agreement is structured on a take-or-pay basis and includes minimum price floors.

According to U.S. banking regulations, a SPV "means a securitization vehicle, investment fund, or other special purpose vehicle that is not a subsidiary of the covered company." In this case, US SIIE is a joint effort from the U.S. government and private capital sources.

The announcement follows USA Rare Earth's agreement to acquire Serra Verde in April 2026 for a total value of roughly US$2.8 billion. Shareholders approved the acquisition on August 28.

"With more than $1 billion already invested, Serra Verde is one of the world's most advanced rare earth projects and the only commercial producer of all four magnetic rare earths outside Asia. Serra Verde can now begin supplying these critical materials into the U.S. market and is positioned to be the first to deliver all four into Western supply chains at scale," said Michael Blitzer, executive chairman of USA Rare Earth.

The Pela Ema mine began operations in 2024 and will produce 6,400 tonnes of rare earth oxides per year by the end of 2027 over a 25-year mine life.

Industrial Info Resources is tacking a proposed Phase II expansion at Pela Ema, which would boost the capacity to 13,000 tonnes per year.

The importance of Pela Ema lies in its geographical position: it is the only ionic clay rare-earth mine in commercial production outside Asia. China dominates rare earth production and refining, making USA Rare Earth's acquisition of Serra Verde significant beyond a mining decision.

Why Rare Earths?

Rare earths are used for the manufacturing of high-performance magnets and electronics used in electric vehicles, wind turbines, defense equipment and more. Serra Verde produces rare earth carbonate containing neodymium, praseodymium, dysprosium, and terbium, which are all used in these permanent magnets.

That defense equipment, in particular, includes fighter jets and weapons systems, among other applications.

Currently, China dominates the global rare earth market. The Asian giant accounted for 69.2% of global rare-earth mining production in 2025, based on a report from the United States Geological Survey (USGS). According to the International Energy Agency, China also represents over 90% of refining share and accounts for roughly 95% of the magnet production.

Once USA Rare Earth's acquisition is completed, Pela Ema will form part of an integrated mine-to-magnet value chain spanning from Brazil, the United States, and the United Kingdom. The agreement shows Washington's push to decrease its exposure to Chinese rare earth segments.

Outside of China, Industrial Info Resources has mapped 12 rare earth mines, refining plants or pilots, in countries such as the United States, Australia, Canada, Brazil, and the United Kingdom. Across the world, however, Industrial Info Resources data show 254 rare-earth mining and refining-related projects amounting to US$33.44 billion. Of those, 33 are located in Brazil, worth US$2.85 billion in investments.

Besides Serra Verde, companies such as Aclara Resources, Equinox Resources, and Rainbow Rare Earths also have rare-earth projects in Brazil.

For its part, the Brazilian government supports foreign mining investments in rare earths, while seeking to develop domestic processing and manufacturing capabilities rather than simply becoming an ore supplier.

Key Takeaways

• Pela Ema to sell 100% of its Phase I production to a U.S.-backed buyer supported by a US$1.55 billion financing package.
• The Pela Ema mine will produce 6,400 tonnes of rare earth oxides per year by the end of 2027.
• The Brazilian government seeks to also develop rare earths domestic processing and manufacturing capabilities.

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).