Serra Verde cancels China offtake deal after being approached by Western firms
Serra Verde, a Brazilian rare earths mining company, has reduced the contract durations of its Chinese processing agreements, allowing it to potentially supply Western companies once their separation capacity is available in the coming years.
China is the largest supplier of rare earths in the world, and 90% of it is processed. This makes it vital to electronics, defence, electric vehicles, wind turbines and other industries.
Serra Verde, when developing its mine, agreed to 10-year deals with Chinese companies for the purchase of its concentrate.
Serra Verde is rich in heavy rare Earths unlike other Western deposits. However, plants in the West are only just now preparing to process these materials.
CEO Thras Mouritzis said, "We'll be able to separate the heavyweights outside China in a few years."
Moraitis, a spokesperson for Serra Verde, said that the private company renegotiated its Chinese contracts and they will now conclude at the end next year. This gives the company several options to diversify their customer base.
The Chinese, Americans, Japanese, Europeans and Canadians have all approached us. We are the sole supplier of heavy rare Earths for the near future.
The forecast shortages of heavy rare Earths such as dysprosium, terbium and dysprosium could be the stumbling blocks in West's efforts to build domestic supply chains for rare earths and permanent magnetics.
Price Floor is Essential
Moraitis said that a government-guaranteed price floor was crucial for the growth of the rare earths industry outside China.
Sources say that the U.S. offered a guaranteed price minimum to the rare earths company MP Materials as part of the Pentagon's multi-billion dollar investment in July. The mechanism is likely to be extended to additional firms.
The Group of Seven and the European Union also consider price floors as a way to encourage rare earth production.
The Brazilian mine of Serra Verde is an ionic-clay deposit. In China and Myanmar, the standard extraction method for these deposits involves flushing them with chemicals. This has led to contamination of water sources and deforestation.
Serra Verde spent hundreds of millions of dollars to build a plant which does not emit toxic waste.
The company began commercial production early in 2024 but has optimized output to the point that it hasn't yet reached full production, which is estimated at 6,500 metric tonnes of rare earth oxides per year by 2027.
The U.S. Development Finance Corporation has approved a loan of $465 million earlier this year.
Serra Verde, a private equity group, is owned by Denham Capital, Energy and Minerals Group and Vision Blue. Vision Blue is headed by Mick Davis, the former CEO of Xstrata. Reporting by Eric Onstad. Mark Potter (Editing)
(source: Reuters)
