• The company will pay cash and issue fresh stock as part of the deal.
• The deal includes the supply of rare earths to U.S. government agencies.
• Senior executives from Serra Verde will join USAR upon closing of the deal. 

USA Rare Earth (USAR) on Monday struck a $2.8 billion deal to assume 100% control of Serra Verde Group, the company that owns the Pela Ema rare earth mine and processing plant in Goiás, Brazil. 

The move aligns with the current U.S. government’s agenda to increase the stockpile of resources critical for electric vehicles, consumer electronics, smartphones, and defense systems, among other things.

USAR shares traded nearly 4% higher in premarket trading on Monday.

The deal comes on the heels of last week's announcement by rival U.S. company Critical Metals (CRML), which received approval from Greenland’s government to become a controlling stakeholder in one of the world's largest rare-earth deposits, Tanbreez.

Securing rare earth minerals has been among the top priorities of the current Trump administration. It has been pressuring countries such as Greenland, a major region with untapped rare-earth mineral deposits, and Ukraine to grant access to their undeveloped mineral deposits in exchange for military support, as it seeks to reduce its dependence on other nations, especially China. 

It is notable that the United States currently owns 10% stake in the USAR.

Deal Contours

The company said Serra Verde’s product contains a high percentage of all four magnetic rare earths, including heavy rare earths Dysprosium, Terbium, and Yttrium.

As part of the deal, the company will pay Serra Verde $300 million in cash and issue nearly 126.849 million new shares of USAR common stock. Serra Verde will also supply rare-earth minerals to a special-purpose vehicle backed by various U.S. government agencies to produce a permanent NdFeB magnet.

“Together, we believe the combined company will deliver a fully integrated rare earth solution at scale, accelerate growth, and create enhanced value for all stakeholders—including shareholders, customers, employees, local communities, and governments spanning Brazil, the United States, and our Allies,” said Serra Verde chief executive officer, Thras Moraitis.

The transaction is expected to close in the third quarter this year. Upon closing, Serra Verde’s chairman, Sir Mick Davis, and CEO Thras Moraitis will join the board of the combined company, with Moraitis serving as president.

How Did Retail Traders React?

On Stocktwits, retail sentiment remained ‘neutral’ amid a 25% spike in messaging volumes in the last 24 hours.

One bullish user on the platform calls the transaction “unbelievably impressive.”

Another calls it a “big strategic move.”

USAR stock has risen nearly 68% so far this year, while the S&P 500 has risen only about 4% over the same period.

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