USA possesses rare earths announced Brazil plans to buy rare earth mining company Serra Verde in a $2.8 billion cash-and-shares deal as it looks to challenge China’s dominance in the supply chain.
The Oklahoma-headquartered company said it will pay $300 million in cash and $126.9 million in its own 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 major bargaining chip in the ongoing geopolitical rivalry between the US and China, which production of About 70% of the world’s rare earths come from mines and about 90% of refined rare earths, including material imported from other countries.
Western officials have repeatedly flagged Beijing’s supply chain dominance as a strategic challenge, especially given that critical mineral demand is expected to grow. grow fastAs the clean energy transition is gaining momentum.
“The world has become too dependent on a single source and it’s time to break that dependency,” Barbara Hampton, CEO of USA Rare Earths, told CNBC’s “Squawk Box” on Monday.
He said the deal would “allow access to a productive mine that produces four magnetic rare earths that are going to serve our industry.”
Neodymium is displayed at the Inner Mongolia Baotou Steel Rare-Earth High-Tech Company factory in Baotou, Inner Mongolia, China, on Wednesday, May 5, 2010.
Bloomberg | Bloomberg | getty images
Rare earths refer to 17 elements in the periodic table that have an atomic structure that gives them special magnetic properties. These materials are critical components for a vast range of modern technologies, from everyday electronics like smartphones to electric vehicles and military equipment.
‘A strategic nexus’
The CEO of USA Rare Earths said Serra Verde’s global importance was underlined by a 15-year offtake agreement with various US government entities, as well as a special purpose vehicle by private capital sources, for the production of 100% of its four magnetic rare earth elements: neodymium, praseodymium, dysprosium and terbium.
All of these are extremely important for producing 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 Thras Moraitis said the US government has been “very active” in trying to promote upstream investment, especially when it comes to creating minimum prices for rare earths.
“Rare earths represent a strategic nexus where national and energy security and technological supremacy meet,” he said in a statement.
“The Western rare earth sector stands at a critical juncture, as governments and strategic industries seek reliable sources of urgently needed rare earths – particularly rare heavy rare earths.”
USA Rare Earth shares fell 3.4% in premarket trading. However, the stock is up about 68% year-to-date as of Friday’s close.
