Highlights
- Western investment in rare earth mining exists, but no current facilities can process raw materials independently.
- Continued reliance on China for processing rare earth materials.
- The Serra Verde mine, funded by U.S. and U.K. capital, cannot sell rare earth output to Western buyers due to processing limitations.
- China's decades-long strategic planning has resulted in a midstream processing monopoly.
- This monopoly threatens global independence in rare earth supply.
A sobering report (opens in a new tab) from Jack Nicas, writing for the New York Times, reveals that Serra Verde (opens in a new tab), a rare earth mine in Minaçu, Brazil—funded by U.S. and U.K. private capital—has signed away nearly all its production to China, despite intensifying global efforts to build non-Chinese supply chains. The mine, backed in part by Boston’s Denham Capital (opens in a new tab) and heralded as a potential breakthrough in heavy rare earth access, cannot sell its output to Western buyers simply because no Western facility currently has the capability to process it.
A topic often raised in Rare Earth Exchanges is that the rare earth element and critical mineral value chain should be thought of as a system integrated upstream, midstream, and downstream. The U.S. media, even politicians, are just now starting to understand this basic concept.
Nicas, reporting for the New York Times, shares that Serra Verde’s predicament is emblematic of a wider crisis cited above. While the West has invested in upstream mining projects, it has failed to build the downstream separation and refining capacity required to turn rare earth “sludge” into strategic materials like dysprosium and terbium.
The only viable customer remains China—the very country the U.S. is now attempting to decouple from in the critical minerals sector. Even MP Materials, the Pentagon-backed U.S. miner, still sells most of its output to China and cannot yet process heavy rare earths onshore as Rare Earth Exchanges has reported.
Serra Verde's CEO Thras Moraitis (opens in a new tab) put it bluntly: “Prescient planning by the Chinese over many, many decades has put them in a position where they have very strong control.”
While Western plants are under construction in California, Texas, Estonia, and France, they remain years from full operation. That’s the reality. Rare Earth Exchanges has suggested full capacity in a resilient system could be a minimum of five plus years from today, if not more.
Meanwhile, China’s grip on midstream processing continues to lock the West into dependence, even as global demand for rare earths soars amid trade tensions, military rearmament, and the green energy transition. Now, of course, an export ban was imposed by the Chinese in response to a massive U.S. tariff. America under Trump seeks to reset trade relations worldwide.
The Serra Verde case is not just a cautionary tale—it’s a call to radically accelerate investment in midstream infrastructure, or risk losing the race for rare earth independence before it even starts.
The fault here sits entirely with Government: Industry has been trying to develop refining capacity for several years only to be frustrated by Bureaucratic indifference and Chinese undermining. Any Company looking like achieving traction in this space has had to run a gauntlet of price manipulation and political interference by the CCP while calls to the Regulators have mostly been ignored. It seems that Capitalism is not shy of shooting its own foot either, Traders and Accumulators are still sucking the life out of every price rise that they see. We hear stories about how “Daddy Warbucks” profiteered during WW2, it seems that nothing much has changed!