Brazilian Rare Earths Limited’s scoping study confirms the Amargosa Bauxite-Gallium Project as a large-scale, capital-efficient direct-ship bauxite operation with robust economic returns and strategic market positioning.
- 5 Mtpa direct-ship bauxite operation leveraging existing road and port infrastructure
- JORC-compliant 568 Mt mineral resource including 98 Mt high-quality low-silica bauxite
- Forecast after-tax NPV8% of US$630 million and IRR of 82% at US$71/t bauxite price
- Optional rail expansion via FIOL corridor to increase exports to ~15 Mtpa evaluated
- Targeted 2026 de-merger via ASX-listed spin-out to unlock shareholder value
Amargosa’s Strategic Positioning
Brazilian Rare Earths Limited (ASX, BRE) has released a comprehensive scoping study for its 100%-owned Amargosa Bauxite-Gallium Project in Bahia, Brazil. The study, conducted with SLR Consulting and other industry experts, positions Amargosa as a large-scale, low-cost direct-ship bauxite (DSB) project with strong economic fundamentals. Leveraging existing road infrastructure and the Port of Enseada, the project aims to produce approximately 5 million tonnes per annum (Mtpa) of high-quality, low-silica bauxite, targeting first production in 2029.
Amargosa’s location in Bahia, a mature mining jurisdiction with favourable taxes, skilled labour, and government support, underpins its development potential. The project benefits from a large JORC-compliant mineral resource estimate of 568 million tonnes, including 98 million tonnes of premium direct-ship bauxite, placing it in the first quartile of the global seaborne bauxite cost curve.
Robust Economics and Development Pathway
The scoping study forecasts an after-tax net present value (NPV8%) of US$630 million and an internal rate of return (IRR) of 82% at a spot bauxite price of US$71 per dry metric tonne. The payback period is estimated at a swift 1.2 years, reflecting the project’s capital-efficient truck-and-shovel mining approach and simplified logistics. Initial capital expenditure is estimated at US$119 million, including contingencies, with operating costs averaging US$48.73 per tonne.
Amargosa’s direct-ship bauxite product boasts a total available alumina (TAA) content of approximately 41.4% and reactive silica (RSI) of 2.3%, making it highly attractive to alumina refiners seeking premium feedstock. The project’s shallow, laterally continuous bauxite seams enable low strip ratios and straightforward mining without the need for blasting or beneficiation plants, further reducing execution risk.
Market Dynamics and Strategic Importance
The global bauxite market is tightening, driven largely by China’s surging import demand, which has grown from under 5 Mtpa to nearly 200 Mtpa over two decades. Guinea currently dominates China’s supply, accounting for an estimated 78% of imports in 2025, raising concerns over supply concentration and geopolitical risk. Amargosa offers a stable, high-quality alternative from a well-established mining province, enhancing supply diversification for global alumina refiners.
Furthermore, the project hosts a significant gallium endowment, a critical element for advanced technologies and permanent magnets. With gallium supply heavily concentrated in China and prices rising sharply due to export controls and demand growth, Amargosa’s gallium content adds strategic value as a potential co-product.
Expansion and Future Opportunities
Beyond the base 5 Mtpa DSB operation, the scoping study evaluates a Southern Logistics Option involving integration with Brazil’s FIOL heavy-haul railway and the Porto Sul deep-water terminal. This expansion could increase exports to approximately 15 Mtpa by 2032, incorporating beneficiation plants to process lower-grade bauxite. While this rail-linked scenario offers substantial upside with an after-tax NPV8% up to US$1.7 billion at higher bauxite prices, BRE views the 5 Mtpa DSB base case as the optimal near-term development pathway due to its lower capital intensity and reduced execution risk.
BRE is targeting a 2026 de-merger of Amargosa via an in-specie distribution into a new ASX-listed company, aiming to unlock shareholder value and allow BRE to focus on its rare earth and critical minerals portfolio. Key next steps include advancing feasibility studies, securing environmental approvals, and arranging project financing.
Bottom Line?
As global bauxite supply tightens and geopolitical risks mount, Amargosa’s low-cost, high-quality bauxite positions it as a compelling alternative; yet its success hinges on navigating financing and permitting hurdles ahead.
Questions in the middle?
- How will BRE secure the necessary financing to advance Amargosa to construction?
- What are the timelines and risks associated with environmental permitting in Bahia?
- How might evolving bauxite prices and Guinea’s supply dynamics impact Amargosa’s expansion plans?