US backs Serra Verde rare earth with $750m, aims to reduce China dependence

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The US Department of War has committed USD 750 million to back rare earth supplies from Brazil’s Serra Verde, as Washington moves to build a more secure, China-independent supply chain for critical minerals used in defence, energy, aerospace and advanced manufacturing. The investment will support an offtake agreement for mixed rare-earth carbonates (MREC) from Serra Verde’s Pela Ema Project in central Brazil.

The funding forms part of a broader USD 1.55 billion initiative mobilised by the Department of War’s Economic Defense Unit. China’s rare earth supply chain is at present a point of dominance over the world seeking rare

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Shaping the USD 1.55 billion structure

The USD 750 million commitment has been made through the Industrial Base Analysis and Sustainment (IBAS) programme in partnership with US SIIE, LLC.

The wider structure includes a USD 300 million purchase commitment from the Defense Logistics Agency (DLA) and a USD 500 million commitment from a major bank. Separately, USA Rare Earth said the government-backed special purpose vehicle has secured a USD 500 million senior debt facility and a forward purchase commitment of at least USD 300 million over five years.

The latest US investment is USD 250 million higher than the USD 500 million originally contemplated for the structure, according to USA Rare Earth.

Rare earth elements are used to enhance the magnetic strength and thermal stability of neodymium-iron-boron (NdFeB) magnets. These magnets are important for a range of advanced defence systems, including nuclear submarines, fighter aircraft, satellites, guided missiles, combat vessels and drones.

“Securing resilient domestic and allied supply chains is a fundamental warfighting requirement,” stated Mike Cadenazzi, Assistant Secretary of War for Industrial Base Policy.

According to him, the partnership with Serra Verde would help reduce dependence on adversary-controlled rare-earth supply chains and provide the US defence industrial base with long-term access to critical materials.

Referring to the “historic” investment, George K. Kollitides II, Director of the Economic Defense Unit, remarked that the initiative marks a “major step towards securing one of the most vital supply chains” for the US defence base and its economy.

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Serra Verde targets key magnetic rare earths

The Pela Ema project is expected to provide supplies of Dysprosium, Terbium, Neodymium and Praseodymium, four rare-earth elements central to high-performance magnetic applications. The initiative is intended to support emerging US magnet manufacturing while reducing exposure to Chinese supply-chain dominance.

The move follows a USD 565 million financing agreement with the US Development Finance Corporation (DFC) to optimise and expand the Pela Ema Project. The investments form part of a broader effort to establish a mine-to-magnet value chain that is not dependent on China’s supply base.

Moreover, the funding strengthens the strategic role of Serra Verde’s Pela Ema operation in the emerging Western rare earth supply chain. USA Rare Earth has said that the acquisition of Serra Verde, once completed, would give it control of a mine outside Asia capable of commercially producing all four magnetic rare earths.

Hence, Michael Blitzer, Executive Chairman of USA Rare Earth, noted, “Serra Verde can now begin supplying these critical materials into the US market and is positioned to be the first to deliver all four into Western supply chains at scale,” thereby “providing access to advanced processing technologies and integrating a foundational asset into USA Rare Earth’s mine-to-magnet platform.”

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