USA Rare Earth Targets China Dominance with $2.8 Billion Serra Verde Acquisition

USA Rare Earth, based in Oklahoma, is moving to diversify the global supply chain for critical minerals through the acquisition of Brazilian miner Serra Verde. The transaction, valued at $2.8 billion, combines $300 million in cash and $126.9 million in newly issued equity. The company expects the deal to close in the third quarter of 2026, subject to regulatory approvals. The acquisition is a direct response to China's overwhelming dominance in the sector, where Beijing controls approximately 70% of global mining and nearly 90% of refining capacity. As the clean energy transition accelerates, Western nations are increasingly viewing rare earth elements as vital to national security and technological supremacy. The deal provides USA Rare Earth with immediate access to a producing mine specializing in four key magnetic elements: neodymium, praseodymium, dysprosium, and terbium. These materials are essential for high-performance permanent magnets used in electric vehicles, smartphones, and advanced military hardware. Serra Verde's strategic value is further bolstered by a 15-year offtake agreement involving various U.S. government entities and private capital, ensuring a stable demand for 100% of its production of these four elements. This arrangement highlights the U.S. government's active role in spurring upstream investment to create price floors for critical minerals. While USA Rare Earth shares dipped 3.4% in premarket trading following the announcement, the company has seen a strong year-to-date rally of approximately 68% through Friday's close.