The United States has just scored a significant goal in the international race for rare earths, a market dominated by its main rival, China. A US company backed by the White House announced on Monday an agreement to buy the only Brazilian company that produces the coveted materials, one of the few operating on a large scale outside Asia. The deal between USA Rare Earths and Brazil’s Serra Verde is worth around $2.8 billion, according to the US firm’s announcement. Brazil holds the world’s second-largest reserves of these strategic materials used to manufacture magnets essential for wind turbines or drones.
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Serra Verde, a private firm, operates a large mine in the state of Goiás, neighboring the capital, Brasília. It has the particularity of being rich in heavy rare earths, unlike Western mines, Reuters reports.
USA Rare Earths CEO, Barbara Humpton, highlighted in a statement that “Serra Verde’s Pela Ema mine is a unique asset of its kind and the only producer outside Asia capable of supplying all four magnetic rare earths at scale.” Her company’s shares soared 8% after the announcement.
China produces 90% of the world’s rare earths, allowing it to control supply and prices.
Last February, Serra Verde received $565 million in funding from a US public body, the US Development Finance Corporation, which points to the White House’s enormous interest in positioning itself well in the race for control of these materials and reducing dependence on China. The Brazilian firm has been producing since 2024.
According to the Financial Times, USA Rare Earths, to which Washington has pledged up to $1.6 billion in financial support, is one of the US government’s biggest bets to create its own rare earths supply chain.
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The acquisition agreement includes a payment of $300 million in cash and the transfer of 126.9 million shares of USA Rare Earths, which is listed on Nasdaq, to Serra Verde.
In recent months, many countries have knocked on Brazil’s door, interested in its enormous rare earth reserves, the second largest after China. The Government of Luiz Inácio Lula da Silva is allowing itself to be courted and has engaged in dialogue on rare earths with many of its partners, including the United States, the European Union, and India. This very Monday, it discussed the issue with Germany at the highest level.
Chancellor Friedrich Merz took advantage of President Lula’s official visit to his country to offer collaboration. “Germany is prepared to support Brazil with technological know-how to expand our relations” in the field of rare earths. The Brazilian emphasized, in Hannover, where he is visiting one of the world’s main industrial fairs, that his Government has expanded investments in both rare earths and critical minerals. Once again, he stressed that his Cabinet “will not accept any molding [of collaboration] that reduces our country to the mere extraction of resources to satisfy external demand.”
In recent months, projects to exploit rare earths are multiplying in Brazil, but Serra Verde is the only one already producing. The company’s CEO, Ricardo Grossi, explained the business last month in an interview with O Globo: “Rare earth elements comprise 17 elements; we are focused on the 15 main ones, those with the highest atomic weight, with more than 200 applications.” And he detailed expectations for the future: “We estimate market growth of between 8% and 10% annually until 2035. Our position is advantageous thanks to our operational base and a competitive product portfolio.”