ANALYSIS
USA Rare Earth acquires Brazilian mining company Serra Verde for $2.8 billion, challenges Chinese dominance in rare earths
The transaction, considered "strategic," will be financed with $300 million in cash and the issuance of about $126.8 million of new USA Rare Earth shares. It is expected to be finalized in the third quarter of 2026, once customary regulatory approvals are obtained.
An excavator collects rare earths-File Image.
USA Rare Earth announced Monday the purchase of Brazilian company Serra Verde Group in a deal valued at approximately $2.8 billion, aiming to become a major player outside Asia in the production of rare earths.
Rare earths are a group of 17 chemical elements indispensable for making permanent magnets used in electric vehicles, wind turbines, electronic devices, robotics and artificial intelligence.
The transaction, considered "strategic," will be financed with $300 million in cash and the issuance of about $126.8 million of new USA Rare Earth shares. It is expected to be finalized in the third quarter of 2026, after obtaining customary regulatory approvals.
The company agreed in January to a $1.6 billion debt and equity financing package with the U.S. government, while Serra Verde, privately owned, closed in February on a $565 million financing deal with Washington.
Pela Ema: The mine that could break the Chinese monopoly
Serra Verde operates the Pela Ema mine, located in the Brazilian state of Goiás, which is the only deposit outside Asia that produces on a large scale the four key rare earth magnetic elements, in addition to another such as yttrium. According to AFP, the company also has a long-term supply agreement for 100% of its production of these magnetic elements.
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Barbara Humpton, CEO of USA Rare Earth, declared: "The acquisition of Serra Verde represents a transformational step in delivering on our ambition to build a global champion and the partner of choice in rare earth elements, oxides, metals and magnets." Humpton added that the Pela Ema mine is "a one-of-a-kind asset and the only producer outside Asia capable of supplying all four magnetic rare earths at scale."
USA Rare Earth's stock rose sharply on the New York Stock Exchange, posting gains of more than 14% shortly after the announcement.
Washington looks to Brazil for alternative to China in rare earths
Last March, a senior U.S. embassy official in Brazil told AFP on condition of anonymity that Washington is looking to multiply partnerships in the South American country to diversify its sources of supply. That same month, an agreement in principle was signed with the state of Goiás to promote the development of rare earths. According to the diplomat, the United States had already invested some $600 million in related projects in Goiás and in the state of Piauí.
The deal reinforces USA Rare Earth's strategy of creating an integrated and secure supply chain to the West by combining Brazilian production with its U.S. magnet processing, separation and manufacturing capabilities.
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