By Eric Onstad
LONDON, April 20 (Reuters) - USA Rare Earth agreed on Monday to buy Brazilian rare earths miner Serra Verde for $2.8 billion, adding another company to its expanding 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 takeover, following a major U.S. government funding deal, will provide a mine that is rich in heavy rare earths, unlike many other Western deposits, making it particularly attractive.
"Serra Verde’s 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 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 14% in early trading, bringing their gains this year to 60%.
PRICE FLOOR SUPPORT
Serra Verde will receive price floors for its output, helping the combined company weather volatile rare earth prices.
The price floors are part of a 15-year supply agreement for 100% of Serra Verde's production during the mine's initial phase to a special purpose vehicle capitalised by the U.S. government and private sources.
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.
(Reporting by Eric Onstad; Editing by Toby Chopra, Kirsten Donovan)
