USA Rare Earths announced plans to acquire Brazilian rare earth mining company Serra Verde in a deal valued at $2.8 billion in cash and stock to counter China’s dominance in its supply chain.
The Oklahoma-based company said it will pay $300 million in cash and $126.9 million in newly issued stock for the transaction, which is expected to close in the third quarter of 2026, subject to closing conditions and regulatory approvals.
Rare earths have emerged as a key bargaining chip in the ongoing geopolitical competition between the United States and China. China produces almost 70% of the world’s rare earths from mines and almost 90% of refined rare earths, including materials imported from other countries.
Western officials have repeatedly cited the dominance of China’s supply chain as a strategic issue, especially as demand for critical minerals is expected to rise sharply as the transition to clean energy accelerates.
“The world is too dependent on a single source of information, and it’s time to break that dependency,” Barbara Hampton, CEO of U.S. Rare Earths, told CNBC’s “Squawk Box” on Monday.
He added that the deal would provide “access to production mines that produce four types of magnetic rare earths that will benefit our industry.”
Neodymium is on display at the Inner Mongolia Baotou Steel Rare Earth High-Tech Co., Ltd. factory in Baotou, Inner Mongolia, China, on Wednesday, May 5, 2010.
Bloomberg | Bloomberg | Getty Images
Rare earths refer to the 17 elements on the periodic table that have atomic structures that give them special magnetic properties. These materials are essential components for a wide range of modern technologies, from everyday electronics such as smartphones to electric vehicles and military equipment.
“Strategic connection”
USA Rare Earth’s CEO said Serra Verde’s global importance was underscored by its 15-year off-take agreement with special purpose vehicles from various U.S. government agencies and private capital sources for 100% of its production of four rare magnetic rare earth elements: neodymium, praseodymium, dysprosium and terbium.
All of these are very important for the production of high-performance permanent magnets.
Las Vegas-based company MP Materials conducts mining operations at the Mountain Pass Rare Earth Facility in Mountain Pass, California on April 29, 2021.
Benjamin Hager Las Vegas Review Journal | Getty Images
Speaking to CNBC about the announcement, Serra Verde Group CEO Sluss Moraitis said the U.S. government is “very active” in encouraging upstream investment, particularly in terms of setting floor prices for rare earths.
“Rare earths represent a strategic nexus where national and energy security and technological advantages converge,” he added in a statement.
“The Western rare earth sector is at a critical inflection point, as governments and strategic industries urgently seek reliable sources of critical rare earths, especially rare heavy rare earths.”
Shares of U.S. Rare Earths fell 3.4% in pre-market trading. However, the stock is up about 68% since the beginning of the year through Friday’s close.
