For decades the remote town of Minaçu thrived off its asbestos mine, the last in the Americas, before the one-time miracle material’s links to deadly diseases led to bans and an industry decline. Today, the municipality deep in Brazil’s interior is at the centre of a global race for the rare earth minerals essential to electronics, clean energy and defence tech, which have become a flashpoint in the US-China trade war. In a wilderness of green peaks and valleys, a mining group claims to have the only site outside Asia digging up some of the scarcest types of these metals at scale, with financial backing from Washington.

Residents believe it can revive the fortunes of this community of 27,000 in the tropical savannah state of Goiás. Since commercial rare earths production in the South American country began here a couple of years ago, newcomers are arriving again, said Minaçu’s mayor Carlos Alberto Leréia. “It’s a tremendous gain. The place was on its way to becoming a ghost town,” he added. “It’s as if you’re drowning and then a rope appears – you have to grab hold of it.” The sentiment echoes wider optimism about Brazil’s potential to be a major player in a strategically important sector.

Though its output remains modest for now, the country possesses the second-largest rare earth reserves after China, according to the US Geological Survey. A group of 17 metallic elements required in small quantities for many high-tech applications, rare earths are relatively abundant in the planet’s crust but difficult to extract and separate. With control over much of the world’s rare earth mining and a virtual monopoly on their processing, Beijing restricted exports last year in retaliation against President Donald Trump’s tariffs, intensifying a hunt for new sources.

That search has brought the Americans to Minaçu, where the mine’s owner Serra Verde is scaling up. “The objective is to be an alternative in the West for the production of rare earths,” said sustainability director Pedro Burnier at the company’s complex, which has received more than a billion dollars in investment. USA Rare Earth, in which Washington owns a minority stake, announced a $2.8bn takeover of Switzerland-based Serra Verde in April. “The rest of the world will [now] have access to the heavy rare earths that, quite frankly, we are all too dependent on China for today,” USA Rare Earth’s outgoing chief executive, Barbara Humpton, told the FT. The project has also secured more than $500mn in loans from the US International Development Finance Corporation, a public lender.

The mine has become a linchpin of US efforts to break free of Chinese dominance over the minerals, thanks to the presence of two of the most critical heavy rare earths, so-called because of their higher atomic weight. Dysprosium and terbium are found in powerful magnets for guided missiles, electric vehicle motors and wind turbines, helping maintain magnetic strength at high temperatures. “They are today the most highly valued,” said Burnier. By next year, Serra Verde aims to account for more than half the heavy rare earth elements supply outside China.

Yet its production target of 6,400 tonnes of total rare earth oxides still represents just a fraction of the overall 390,000 tonnes mined globally in 2025, according to USGS figures. During construction, the company signed long-term supply deals with buyers in China, reflecting the lack of rare earth processing elsewhere, but later slashed their contract periods. Instead, Serra Verde now has a 15-year agreement to sell its output to an entity backed by the US government and private capital.

This will then allocate stocks to processors, with guaranteed minimum prices in case China floods the market. “Costs here are higher than in China, possibly due to our greater focus on environmental concerns,” said Fernando Landgraf, professor of metallurgical engineering at the University of São Paulo. American officials have long eyed Brazil’s critical minerals.