USA Rare Earth to buy Brazil’s Serra Verde for $2.8 billion
USA Rare Earth announced It plans to buy Brazilian rare earth miner Serra Verde in a deal worth $2.8 billion in cash and shares in a bid to challenge China’s dominance of the supply chain.
The Oklahoma-based company said it will pay $300 million in cash and $126.9 million in newly issued shares for the transaction, which it expects to be completed in the third quarter of 2026, subject to closing conditions and regulatory approvals.
Rare earth elements have emerged as an important bargaining chip in the ongoing geopolitical competition between the United States and China. produces Approximately 70% of the world’s rare earths come from mines, and almost 90% of refined rare earths include materials imported from other countries.
Western officials have repeatedly flagged Beijing’s supply chain dominance as a strategic challenge, especially as demand for critical minerals is expected to rise. grow exponentiallyAs the transition to clean energy accelerates.
“The world has become too dependent on a single resource, and it’s time to break that dependence,” U.S. Rare Earth CEO Barbara Humpton told CNBC’s “Squawk Box” on Monday. he said.
He added that the deal would provide “access to a mine producing four magnetic rare earths that will serve our industry.”
Neodymium was sold on Wednesday, May 5, 2010, at the Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. in Baotou, Inner Mongolia, China. It was exhibited in the factory.
Bloomberg | Bloomberg | Getty Images
Rare earths refer to the 17 elements in the periodic table that have an atomic structure that gives them special magnetic properties. These materials are vital components of a wide range of modern technologies, from everyday electronics such as smartphones to electric vehicles and military equipment.
‘A strategic bond’
USA Rare Earth’s CEO said Serra Verde’s global importance is underscored by a 15-year sales agreement through a special purpose vehicle by various U.S. government agencies and private capital sources for 100% of the production of four magnetic rare earth elements: neodymium, praseodymium, dysprosium and terbium.
All of these are critical 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 Magazine | Getty Images
Speaking to CNBC about the announcement, Serra Verde Group CEO Thras Moraitis said the U.S. government has been “very active” in encouraging upstream investments, especially when it comes to establishing floor prices for rare earths.
“Rare earths represent a strategic nexus where national and energy security and technological superiority meet,” he added in a statement.
“The Western rare earth sector stands at a critical turning point as governments and strategic industries urgently seek reliable sources of critical rare earths, especially scarce heavy rare earth elements.”
USA Rare Earth shares fell 3.4% in premarket trading. But the stock was up nearly 68% year-to-date through Friday’s close.
