In a landmark move that may redefine the global critical minerals landscape, Brazilian rare earth producer Serra Verde has secured a $565 million financing package from the U.S. International Development Finance Corporation (DFC) to expand its flagship Pela Ema ionic clay project. Beyond dollars and tonnage, this deal represents a breakthrough: it decouples one of the rare non-Chinese commercial producers of heavy rare earths from entrenched Chinese offtake agreements, aligning its future more firmly with Western interests.
The DFC financing, announced February 6, includes an option for the U.S. government to acquire a minority equity stake in Serra Verde, a clear signal of Washington’s strategic intent to secure near-term access to essential materials outside Chinese control. This package will be used to refinance existing loans, fund operational optimization, and increase annual total rare earth oxide (TREO) production capacity from 5,000 to roughly 6,500 metric tons by 2027.
The Pela Ema project, located in Goiás, central Brazil, is Latin America’s only operational rare earths mine. Production of mixed rare earth carbonate (MREC) enriched in critical heavy rare earths, including dysprosium (Dy), terbium (Tb), and yttrium (Y), officially commenced in 2024. These elements are vital to a wide range of high-tech applications, from electric-vehicle traction motors to advanced military systems and wind turbine generators.
Unlike higher-grade hard-rock deposits, ionic clay resources like Pela Ema typically offer lower grades but compensate with faster ramp-up timelines, simpler metallurgy, and more stable operating profiles. These factors, along with Serra Verde’s actual production output, make the company a rarity among Western-aligned critical minerals producers.” From a Western government’s perspective, this is not just a future possibility but a functional, scalable asset already delivering real material,” said a source close to the deal. “That’s the new threshold for what 'de-risked' actually means in this sector.” Perhaps the most consequential aspect of this announcement came even before the DFC’s funds were finalized. In December 2025, Serra Verde successfully renegotiated its long-term offtake agreements with Chinese entities, previously expected to last nearly a decade. Now, those deals will terminate at the end of 2026, freeing Serra Verde to pursue new partnerships with Western buyers just as its production scales up.
This strategic pivot mirrors similar moves by other key rare earth producers such as MP Materials and Australia’s VHM Ltd, both of which have recently reduced their dependence on the Chinese firm Shenghe Resources. Industry insiders point to this emerging trend as evidence of a broader decoupling from China in critical mineral supply chains. “Companies are choosing certainty and strategic alignment with the West over purely transactional Chinese offtake contracts,” explained an analyst at REEx, a rare earth specialty research firm. “Serra Verde’s exit from long-term Chinese control, coupled with sovereign-backed Western financing, is a blueprint for viable de-risking in the rare earth space.”
For Washington, the Serra Verde deal represents more than an investment; it’s a strategic insurance policy. With global demand for rare earth elements sharply increasing and China still dominating nearly 90% of the market, securing non-Chinese sources of heavy rare earths is a top-priority national interest.
The United States is particularly exposed in categories such as Dy and Tb, which are critical to both cutting-edge weaponry and green technologies. Through DFC’s financing, the U.S. gains both immediate leverage and potential equity in an operational project producing exactly those resources.
Future of Offtake and Global Integration
As Serra Verde prepares to transition to new offtake agreements in 2026, expectations are high that contracts will be signed with processors or manufacturers in friendly jurisdictions, likely the U.S. or countries with established rare-earth separation capacity, such as Malaysia, Australia, Estonia, or France. These partnerships are expected to mark a definitive break with Chinese-controlled downstream nodes.
This deal also aligns with the broader goals of the U.S. Critical Minerals Strategy. At a recent ministerial hosted by Secretary of State Marco Rubio, DFC Head of Investments Conor Coleman underscored the importance of secure global mining partnerships. Serra Verde was highlighted alongside other key DFC-critical-minerals investments, including major transactions in the Democratic Republic of the Congo, Kazakhstan, and Ukraine.
Despite this Western momentum, China continues to assert control in the global supply landscape. Its acquisition of Peak Rare Earths and the Tanzanian Ngualla project in late 2025 is a stark reminder that while some downstream supply agreements with Chinese firms may be unraveling, upstream resources remain a strategic target for Beijing.
Yet projects like Serra Verde challenge this hegemony, not by replacing China outright, but by filling critical security-linked gaps in Western supply chains.
Serra Verde’s trajectory from a promising developer to a producing, strategically untethered player marks a rare success in a sector littered with delays, dependencies, and disappointments. Its partnership with DFC, including the optional U.S. equity stake, offers a replicable model for Western-aligned investment in critical minerals, prioritizing operational readiness, geopolitical resilience, and material relevance.
While this deal alone won’t end China’s dominance in rare earths, it materially narrows the gap where it matters most. For the first time in years, the West is not just playing catch-up; it’s placing real bets on the board.