US government backs $5B investment in Brazilian rare earths to break China’s grip

China controls roughly 60% of the world’s rare earth mining and an even larger share of processing. For years, that dominance has been a quiet anxiety in Washington. Now, with nearly $5 billion flowing toward a single mine in Brazil’s Goiás state, the anxiety has become a strategy.

The project at the center of this is the Pela Ema mine, operated by Serra Verde, which sits on one of the few significant rare earth deposits outside Chinese jurisdiction. The scale of US backing being assembled around it is unlike anything seen before in critical minerals finance.

How $5 billion gets built

The money is coming from several directions at once. The US International Development Finance Corporation, the DFC, approved financing for Serra Verde that started at $465 million and was later raised to $565 million, covering expansions and ongoing operations.

In August 2026, the US Department of War pledged $750 million as the first tranche of a larger $1.55 billion financing package for the project. The Defense Logistics Agency is separately receiving $300 million of that commitment to facilitate access to mixed rare-earth carbonates, the raw material form of these elements before they are separated into individual oxides.

On top of government financing, USA Rare Earth announced a $2.8 billion acquisition of Serra Verde in April 2026. That deal comes with up to $1.6 billion in potential US government support, effectively making Washington a financial partner in the takeover.

A smaller but symbolically relevant piece: Aclara Resources secured a $5 million DFC commitment for its Carina project in Brazil, signaling that US interest in Brazilian rare earth sourcing extends beyond Serra Verde alone.

What rare earths actually do

Rare earth elements are a group of 17 metals with names most people never encounter outside a chemistry class: neodymium, dysprosium, terbium. They are essential ingredients in the permanent magnets that power electric vehicle motors and wind turbines, and in the guidance systems of precision weapons.

The problem is that China doesn’t just mine rare earths. It processes them. Even ore extracted outside China often ends up being refined inside China, which gives Beijing leverage over the entire supply chain even when the mining itself happens elsewhere.

Serra Verde’s target is to produce between 6,400 and 6,500 tonnes of rare earth oxides annually by 2027.

The geopolitics behind the transaction

In 2023, China introduced export controls on gallium and germanium, two materials used in semiconductors and defense electronics. Rare earths are the next logical pressure point, and both governments know it.

Brazil possesses the second-largest rare earth reserves globally after China. The Pela Ema mine marked Brazil’s first large-scale commercial rare earth production facility, which began operations in early 2024. Before redirecting contracts away from China, the plant initially exported some of its output to Chinese processors.

The Department of War’s involvement adds a dimension that pure development finance wouldn’t carry. Defense procurement commitments, like the one flowing to the Defense Logistics Agency, guarantee demand for Serra Verde’s output before the mine reaches full production.