The Department of War, formerly the United States Department of Defense, announced an investment of 750 million dollars (around R$3.8 billion) in the purchase of rare earths produced in Brazil by the mining company Serra Verde.
In practice, the announcement places rare earths extracted in Brazil directly into the ecosystem of the US military industry – rare earth elements are used by the US weapons industry for their magnetism and resistance to high temperatures. This possibility had already been highlighted in a report by Public Agencywhich showed Serra Verde’s connections with the interests of the US government.
According to the Department of War, the resources will be invested in a “Specific Purpose Company” to facilitate an agreement to purchase rare earth concentrate (called carbonate) produced by Serra Verde in the Pela Ema project, in the north of Goiás.
This agreement had already been made public by the mining company itself in April, when Serra Verde announced a merger and acquisition operation with the American company USA Rare Earth and the formalization of a contract to supply 100% of its production for 15 years to a “Specific Purpose Company”, which at the time was not named or specified, but which would be capitalized by US government agencies and private sources.
Now, the War Department itself has given more details about the investment in the “Special Purpose Enterprise”, called “US SIIE”. The amount of 750 million dollars is part of an investment package of 1.55 billion dollars in total, which includes a purchase commitment of 300 million by the Department’s Defense Logistics Agency and another purchase commitment of 500 million by a large commercial bank that was not specified.
“Ensuring resilient supply chains, both domestic and allied, is a fundamental requirement for wartime operations,” said Mike Cadenazzi, Assistant Secretary of War for Industrial Base Policy.
“By establishing a partnership with Serra Verde, we take a decisive step towards breaking our adversaries’ near-monopoly on rare earth elements. This joint effort ensures that our defense industrial base has guaranteed, long-term access to the critical materials needed to manufacture next-generation weapons systems and maintain our technological advantage”, he added, in reference to China, which controls more than 90% of the industrial processing of these chemical elements.
Rare earth elements are used in magnets for F-35 fighters, drones and Tomahawk missiles, produced by the US weapons industry. No wonder the US government is in a hurry to break this monopoly. The War Department has decided to ban, from 2027 onwards, the acquisition of magnets made with rare earths extracted or processed in China and other countries considered enemies, such as Russia, Iran and North Korea.
In the midst of this dispute, Brazil, owner of the second largest rare earth reserves in the world, is strategic. Just like Serra Verde, which is the only mining company in the country to already produce rare earths on a commercial scale. The company produces a concentrate with several rare earth elements, including samarium, which is mainly used by the military industry due to its resistance to high temperatures. Since April last year, China has restricted the export of this element and its derivatives, such as metallic alloys, and started to require a series of documents to obtain export licenses, including the identification of the end user of the products – which, in many cases, are weapons manufacturers.
“Serra Verde is the only producer of heavy rare earths outside of Asia and it has all four magnetic rare earths,” said Barbara Humpton, CEO of USA Rare Earth, in an interview with Fox News. “And the brilliant initiative of the US government was to create a special purpose company, with support from several government agencies and private investment, to guarantee a purchase contract for 100% of production for 15 years, ensuring that we have access to the materials necessary for our economy and for our defense”, added the executive.
To this end, USA Rare Earth, owner of Serra Verde, has already secured 1.6 billion dollars in financing from the US government, which will have a stake in the company. It also purchased the British company Less Common Metals, one of the largest suppliers of rare earth metal alloys, and entered into a mutual sales agreement with Arnold Magnets. Faced with Chinese restrictions, these two companies – Less Common Metals and Arnold Magnets – worked over the past year to find alternative sources of samarium in order to continue producing the magnets used in Tomahawk missiles, as shown by the New York Times.
Source: www.brasildefato.com.br
