Meteoric Resources NL faces challenges in securing local financing for its $420 million rare earth project in Brazil. The lack of funding pushes the company to seek international investors and collateralize future production, undermining Brazil’s efforts to establish a robust rare earth industry. Amid regulatory obstacles, Meteoric has secured a support letter from the Export-Import Bank of the United States and anticipates starting production in 2027.
Meteoric Resources NL is experiencing significant difficulties in securing local financing for its $420 million rare earth project in Brazil. This challenge has prompted the Australian firm to broaden its search for international investors beyond South America. The lack of funding in Brazil is compelling Meteoric and other small mining companies to explore sales agreements linked to future output as collateral for international loans, which undermines Brazil’s goal of establishing a robust rare earth industry.
Executive Director Marcelo Carvalho indicated that “If we can’t get financing in Brazil, we’ll have to finance abroad and the guarantee will be offtake, sending production to other countries.” He emphasized the desire to nurture the production chain within Brazil while simultaneously prioritizing profitability for shareholders. Carvalho’s concerns resonate with those of other miners at a recent conference hosted by Brazil’s development bank, BNDES.
Meteoric, along with other mining entities such as Viridis Mining and Minerals Ltd. and Serra Verde Group, are vying for 5 billion reais ($850 million) in financing from BNDES and government funding agency Finep for strategic minerals projects. However, the financing landscape in Brazil is challenging, as the country’s regulations do not permit mining rights or future output as collateral, necessitating a letter of guarantee from a bank.
The company has secured a non-binding support letter worth $250 million from the Export-Import Bank of the United States and is in discussions with the U.S. International Development Finance Corp. for assistance with its Caldeira project. Meteoric plans to commence deliveries of 11,000 tons of rare earth oxide starting in 2027, with aspirations to refine and eventually separate the oxides in Brazil. The initial license for the project 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, placing it strategically in the global race for these vital minerals. This significance is amplified amidst rising interests from U.S. officials, including President Donald Trump, in securing natural resources from countries such as Ukraine and Greenland.
In summary, Meteoric Resources NL is confronting significant barriers in obtaining local financing for its rare earth project in Brazil, forcing it to seek funding internationally. The company and others in the industry highlight that the strict domestic regulations degrade Brazil’s potential in developing a competitive rare earth sector. With considerable reserves of these minerals and ongoing international discussions around resource acquisition, Brazil’s position remains vital in the global landscape.
Original Source: www.livemint.com
