Meteoric Resources NL struggles to obtain local financing for its $420 million rare earth project in Brazil, prompting searches for international investments. The lack of financial support restricts Brazil’s aspirations in rare earth development, with suggestions that companies may need to use future output as collateral. Additionally, the firm aims to secure funding through US institutions while preparing for future production.
Meteoric Resources NL is facing challenges in securing local financing for its $420 million rare earth project in Brazil, compelling the Australian company to seek international investors. This scarcity of funds is requiring Meteoric and similar small mining firms to consider using future production deals as collateral for international loans, which undermines Brazil’s goal of fostering a robust rare earth industry, essential for defense and high-tech sectors amidst the global shift away from China-centric supply chains.
Marcelo Carvalho, Executive Director of Meteoric, remarked on the financing difficulties, stating, “If we can’t get financing in Brazil, we’ll have to finance abroad… We want to develop the production chain in Brazil, but I work to make the project profitable to shareholders.” This sentiment reflects broader concerns voiced by other miners at a recent event hosted by Brazil’s development bank, BNDES, where companies like Viridis Mining and Minerals Ltd. and Serra Verde Group are also seeking funding for strategic mineral projects totaling 5 billion reais ($850 million).
Obtaining financing remains problematic as Brazil does not accept mining rights or anticipated output as collateral. The stringent rules imposed by BNDES limit the ability to secure private funding through such pledges, resulting in the requirement for a bank-issued letter of guarantee, according to Rinaldo Mancin of the Brazilian mining association Ibram.
Meteoric has received a non-binding support letter valued at $250 million from the Export-Import Bank of the United States and is in discussions with the US International Development Finance Corporation to support its Caldeira project. The project is slated to start producing 11,000 tons of rare earth oxide in 2027, with plans for refining and separating oxides domestically. The first operational license is anticipated within the next two months, according to Carvalho.
Brazil possesses the world’s second-largest reserves of rare earth elements, as per the US Geological Survey, highlighting its strategic importance. The pursuit of these minerals is gaining attention in light of recent international developments involving natural resources in the context of geopolitical interests.
In summary, Meteoric Resources NL is encountering significant obstacles in securing necessary financing for its rare earth project in Brazil, prompting a search for international investment. The stringent regulations in Brazil hinder the ability of miners to utilize mining rights as collateral, which poses challenges to achieving the country’s aspirations of becoming a key player in the rare earth industry. Notably, with strategic partnerships on the horizon, particularly with US financing institutions, there remains potential for progress despite the current funding landscape.
Original Source: www.livemint.com
