USA Rare Earth buys Brazil's Serra Verde for $2.8 billion

USA Rare Earth said on Monday it will buy Brazilian rare earths miner Serra Verde in a ‌cash-and-stock deal worth $2.8 billion, the latest in a string of acquisitions boosting the company’s mining, processing and magnet-making portfolio.

In less than a year, USA Rare Earth’s international acquisition spree has seen it add British rare earths metals and alloy producer Less Common Metals and a stake in French processing firm Carester ​to its magnet manufacturing plant in Stillwater, Oklahoma, and its Round Top Texas mine.

The latest buyout, which comes after the ​U.S. Commerce Department took a stake in USA Rare Earth in January, will give the company ⁠control of Serra Verde’s Pela Ema mine, which is rich in heavy rare earths, unlike many other Western deposits, making it particularly ​attractive.

The deal “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,” USA Rare Earth CEO Barbara Humpton said.

Forecast shortages of heavy rare earths dysprosium and terbium could be a stumbling block in the West’s scramble to create domestic supply chains of rare earths and permanent magnets vital for the energy transition, electronics and ​defence applications.

China currently accounts for about 90% of global processed rare earth output, allowing it to largely control prices.

USA Rare ​Earth will pay $300 million in cash and 126.9 million in its own newly issued shares for Serra Verde, with the deal expected to close ‌in ⁠the third quarter of 2026, a statement said.

The company agreed to a $1.6 billion debt-and-equity funding package with the U.S. government in January, while privately held Serra Verde agreed a financing deal worth $565 million with Washington in February.

The U.S. group’s Oklahoma magnet plant is expected to launch later this year.

Shares of USA Rare Earth jumped 9% in afternoon trading.

OFFTAKE DEAL

Serra Verde will receive a guaranteed price for its output, ​helping the combined company weather volatile ​rare earth prices.

The offtake is part ⁠of a 15-year supply agreement for 100% of Serra Verde’s production with a special purpose vehicle (SPV) capitalised by the U.S. government and private sources. The SPV will be able to sell the offtake ​to whomever it likes, including back to USA Rare Earth itself to make parts for ​magnets.

Serra Verde’s mine ⁠launched commercial production in early 2024, and has not yet hit full output, which is expected to be about 6,400 metric tons of total rare earth oxides a year by 2027.

With the takeover, Serra Verde CEO Thras Moraitis will become president of USA Rare Earth ⁠and join ​its board, while chair Mick Davis, the former head of Xstrata, will ​also join the board.

Serra Verde’s current owners – which include private equity groups Denham Capital, Energy and Minerals Group and Vision Blue – will hold 34% of the ​combined company.