Canadian rare earths company Aclara Resources is in discussions with US government agencies regarding potential financing for its $1.5bn (C$2.04bn) plan to mine rare earths in Latin America and establish processing facilities in the US, reported Bloomberg.

The company aims to contribute to Western efforts to reduce reliance on China for rare earth permanent magnets, which are crucial components in various modern technologies.

Aclara, majority-owned by the Hochschild Group, is listed in Toronto. Currently, the company does not generate revenue and is focused on two development-stage projects in Chile and Brazil.

Aclara CEO Ramon Barua revealed in an interview that the company has submitted funding proposals to US agencies and is preparing to present its case in Washington.

Barua did not specify which agencies are involved in the talks or the nature of the potential financing but mentioned various forms of support including grants and loans from the Department of Defense, the Energy Department and the US International Development Finance Corporation.

Aclara's initiative comes in the wake of the Pentagon's recent investment in MP Materials, the sole US rare earth producer.

Barua said: "Those conversations right now are private, but a project like ours definitely catches the attention of the administration.

"So we are trying to explore together with them if there is an opportunity to join forces."

Barua added: "We have something that is perfectly complementary to their MP Materials deal."

Aclara plans to start exploiting clay deposits in Chile and Brazil by 2028, supplying elements for use in electric vehicles (EVs) and wind turbines.

The company is also evaluating US locations for a processing plant, with Louisiana, Texas, South Carolina and Virginia as potential sites.

Additionally, Aclara has an agreement with German magnet manufacturer Vacuumschmelze, which plans to establish a facility in South Carolina.

Despite past market volatility in the rare earths sector, Aclara sees a shift in investor interest due to increased geopolitical tensions and export restrictions by China.

Barua pointed out that investors are now prioritising the timeline for project commencement over price concerns.

Barua concluded: "For projects like ours that require funding and offtake agreements, recognising that the price of these elements is significantly higher than what the Chinese suggest, is very important."

In April, Aclara officially inaugurated its semi-industrial heavy rare earths pilot plant facility in Aparecida de Goiania, Goias, Brazil.