USA Rare Earth completes Serra Verde merger to challenge China
USA Rare Earth has completed its merger with Brazil's Serra Verde, creating a vital non-Asian supply chain for critical heavy rare earth minerals.
In a major step toward reducing Western reliance on Chinese critical minerals, Nasdaq-listed USA Rare Earth completed its business combination with Brazil’s Serra Verde Group on September 3, 2026. The transaction merges Serra Verde’s world-class mining operations in South America with USA Rare Earth’s processing and magnet-making capabilities in the United States, creating a fully integrated supply chain independent of Asia.
The centerpiece of this deal is Serra Verde's Pela Ema deposit in Goiás, a central Brazilian state known primarily for agriculture but increasingly recognized as a mining powerhouse. Serra Verde is currently the only scaled producer outside of Asia that yields all four critical magnetic and heavy rare earths: neodymium, praseodymium, dysprosium, and terbium. These highly sought-after elements are essential for manufacturing the permanent magnets that power electric vehicles, wind turbines, defense systems, and advanced electronics.
The Brazilian operation, which began production in early 2024, is currently undergoing a rapid expansion. It is targeting a run-rate of 4,000 tons per annum of total rare earth oxide by the end of 2026, with construction already underway on a second phase to boost average production to 6,400 tons. To secure this new supply chain, the combined company has entered into a 15-year agreement to sell 100 percent of its Phase 1 production to a U.S. government-backed special purpose vehicle, ensuring guaranteed price floors and stable cash flows.
For Brazil, the deal highlights the country's growing geopolitical leverage as Western nations scramble to secure alternative mineral supplies. While China still dominates global rare earth refining and mining, Brazil’s unique ionic-clay deposits—which are cheaper and more environmentally friendly to mine than hard-rock deposits—position the country as a primary partner for the United States and its allies in the race for green technology resources.
What it touches: This transaction directly affects USA Rare Earth (Nasdaq: USAR) as it transitions from a developer to an active producer with an integrated "mine-to-magnet" platform. The deal also reinforces the strategic value of the broader critical minerals sector in Brazil, drawing international investor attention to South American mining assets exposed to the global energy transition.