MELBOURNE - Rare earth developer Meteoric Resources will collaborate with a regional department of Brazil's Minas Gerais state to explore the production of rare earth magnets, the Australian company said on Tuesday.

Meteoric is developing its Caldeira rare earths deposit in Minas Gerais. It is planning a demonstration plant to produce a mixed rare earth carbonate and small volumes of separated oxides that will start commissioning next year, and which will be supplied to the magnet factory, CEO Nick Holthouse told Reuters.

"Brazil at a state and federal level are very clear about their ambitions to build a rare earths supply chain," he said.

Aiming to break China's dominance of the supply chain, mining giant Brazil is forging ahead to build a rare earths industry as Western economies push to secure the metals needed for magnets used in green energy and defence.

Meteoric has signed a preliminary agreement that includes raw material supply to the Lab Fab permanent magnet facility for the pilot production of rare earth magnets, it said in a filing to the Australian stock exchange.

Lab Fab is a permanent magnet technology developer backed by Minas Gerais that aims to stimulate the industry to scale up to produce magnets for car manufacturers, electric motors and wind turbine industries.

It is the first permanent magnet facility in Latin America and will begin operations later this year. It will have an initial capacity of 100 tonnes of permanent magnets per year once, with plans to double capacity within three years.

Meteoric has a preliminary deal with Canada's Neo Performance Materials to supply its Estonia plant for 25% to 30% of its production, when it starts in the second half of 2027, and has also been speaking with automakers or original equipment makers (OEMs) for new supply deals.

"We do need to secure some more supply agreements. We are constantly talking to offtakers and OEMs so there’s multiple opportunities we are developing in the background," Holthouse added.

Meteoric also been awarded $250 million in preliminary support from the U.S. Export-Import Bank (EXIM).