Meteoric Resources NL is facing difficulties in obtaining local financing for its $420 million rare earth project in Brazil, forcing it to look internationally for investors. This situation is challenging Brazil’s aspirations to develop its rare earth industry, critical for tech and defense sectors. The lack of acceptable collateral hampers funding opportunities, as companies pursue alternative financing strategies tied to future production.
Meteoric Resources NL is facing significant challenges in securing local financing for its $420 million rare earth project in Brazil, which is leading the Australian company to widen its search for investors outside the country. The lack of local funding availability is compelling Meteoric and similar mining companies to explore sales agreements based on future production as collateral for international loans, a situation that hampers Brazil’s potential to enhance its rare earth industry, essential for defense and high-tech applications.
Marcelo Carvalho, Meteoric’s Executive Director, stated that if local financing is unattainable, the company will seek funds abroad while offering offtake agreements for future production. He emphasized the need to develop Brazil’s production capacity, despite being compelled to ensure profitability for shareholders. Other miners echoed these sentiments during a conference organized by Brazil’s development bank, BNDES.
Several companies, including Viridis Mining and Minerals Ltd. and Serra Verde Group, are in line for loans totaling 5 billion reais (approximately $850 million) dedicated to strategic mineral projects facilitated by BNDES and the government funding agency Finep. Brazil’s refusal to accept mining rights or anticipated output as collateral complicates financing, as highlighted by Rinaldo Mancin from the Brazilian mining association Ibram.
Meteoric has already secured a $250 million non-binding support letter from the Export-Import Bank of the United States and is negotiating with the U.S. International Development Finance Corporation to back its Caldeira project. Starting in 2027, Meteoric plans to provide 11,000 tons of rare earth oxide from this project and aims to produce a refined mixed rare earth carbonate, with future aspirations to separate the oxides within Brazil. The first project license is anticipated to be granted within two months.
According to the U.S. Geological Survey, Brazil holds the world’s second-largest reserves of the 17 rare earth elements, putting it in a strategically lucrative position amidst growing interest from countries seeking to diversify their mineral supply, such as the U.S. under the current political landscape.
Meteoric Resources NL is struggling with local financing for its rare earth project in Brazil, compelling the company to seek funds internationally. This challenge stems from Brazil’s restrictive collateral policies, which hamper local industry growth in rare earth production. As a result, companies are considering alternative financing solutions, including future production agreements. Overall, Brazil’s rich mineral reserves remain underutilized due to these financial constraints, despite increasing global interest in diversifying supply sources for rare earth elements.
Original Source: www.livemint.com
