Viridis advances funding plans with rare earths deal for Europe

Australian mining company Viridis signed a rare earths offtake agreement on Wednesday (November 4) to supply material from its project in Minas Gerais to Belgian chemicals company Solvay’s plant in La Rochelle, France. The seven-year deal is expected to begin with shipments in 2028 and ensures the miner will have a source of cash flow once operations start. The project requires an investment of $449 million (R$2.4 billion at the current exchange rate) and is still in the pre-production stage.

The agreement is important because it will serve as a guarantee for banks with which the miner is in talks to secure loans—a challenging but crucial step for projects that have yet to begin production. “If you don’t have guaranteed cash coming in, nobody wants to lend you money,” Rafael Moreno, Viridis’s CEO, told Valor. “We wouldn’t exist in 2030 if we couldn’t secure the offtake agreement; without it we can’t get financing,” he added.

The miner’s project is part of Brazil’s nascent rare earths industry and is considered one of the next developments likely to begin operating. The only rare earths mine currently in commercial operation in the country belongs to Mineração Serra Verde, which was sold this year to U.S.-based USA Rare Earth.

Viridis’s project is located in the Poços de Caldas Alkaline Complex, a geological formation associated with an ancient volcano in Minas Gerais. The area is also home to a rare earths project owned by another Australian company, Meteoric Resources, which has planned investments of $498 million (R$2.7 billion). Last month, Meteoric announced its sale to Lynas in a deal valued at R$3.5 billion.

The partnership between the Australian miner and the Belgian chemicals company, announced on Wednesday, comes as Western countries seek to break China’s dominance of the rare earths supply chain. Refining, one of the industry’s most complex stages, remains largely concentrated in China.

Solvay’s plant in France, Europe’s first industrial-scale rare earths processing facility and one of the largest outside China, will refine Viridis’s rare earth carbonates—an intermediate product from the mineral processing stage—and turn them into individual oxides with industrial applications.

Under the agreement, Viridis will supply Solvay with at least approximately 70% of its output of light rare earths neodymium and praseodymium, as well as the heavy rare earths dysprosium and terbium. Solvay will also have a right of first offer on the remaining production. The miner expects to produce a total of 2,960 tonnes of rare earth oxides contained in carbonates annually.

The Belgian chemicals company will also license its technology and support Viridis in producing the carbonates. “The agreement allows us to move further down the processing chain in Brazil, as we are bringing its solvent extraction technology to the country,” Moreno said.

Viridis plans to back the project with a capital structure comprising 70% debt and 30% equity. It secured the equity portion in August, raising $154 million (R$843.4 million). The amount includes the company’s own cash, investment commitments from global asset manager One Investment Management (OneIM) and institutional investors, including unnamed Brazilian investors, as well as advance funding commitments from Brazilian asset managers ORE and Régia Capital.

Securing most of the remaining investment through debt remains the company’s biggest challenge. Viridis has already received formal support from export credit agencies in France, Australia, and Canada. It said it is also in talks with European lenders, including the European Investment Bank (EIB), and three Brazilian banks, among them the Brazilian Development Bank (BNDES).

“The EIB has visited the project in Brazil several times, and they are strong supporters of the venture,” Moreno said. “Even with the banks we are talking to, including BNDES, if there is no guaranteed cash coming in, nobody will lend you money,” he added. In September, the company announced it had secured R$77.5 million in financing from the Brazilian development bank for its pilot plant.

The project’s final investment decision still depends on completing the debt financing package and obtaining an installation license from Minas Gerais’s environmental agency. Viridis expects the permit to be issued by December or January 2027.

Asked whether Lynas’s acquisition of Meteoric could pave the way for a wave of consolidation and whether Viridis itself would consider a merger or sale, Moreno said the deal validates Brazilian projects but stressed that the company’s priority is to remain independent until production begins. “If consolidation becomes the best option for shareholders, we will consider it. But for now, our entire focus is on production, and we have no plans for a change of control,” he said.

Moreno also praised Brazil’s National Policy on Critical and Strategic Minerals (PNMCE), enacted in September to accelerate investment in the sector. The policy is due to be fully regulated by December. The executive said he was not concerned that the Solvay agreement, which already commits more than two-thirds of the project’s output to Europe, might raise concerns within the federal government.

“The day they do that [intervene], not another dollar will come into Brazil. I think they understand that, so I’m not worried. Expectations are clear, and we are doing what was asked of us: bringing processing technology into the country,” he said. “Besides, there isn’t even domestic demand for this material at the moment. So even if I sell the remaining 30%—which we will probably do in Brazil—where would it go?” he added.

*By Michael Esquer — São Paulo

Source: Valor International

https://valorinternational.globo.com/