USA Rare Earth stock jumps on $2.8B Brazil deal to counter China grip

Shares of USA Rare Earth rose in early Monday trading after the company announced a $2.8 billion deal to acquire Brazil-based Serra Verde Group, a move aimed at strengthening its supply chain and reducing Western dependence on China for critical minerals.

The stock gained 10% in premarket trading, extending a recent rally, even as equity-funded acquisitions typically weigh on investor sentiment due to dilution concerns.

$2.8B deal to secure critical supply

USA Rare Earth said it will acquire 100% of Serra Verde in a cash-and-stock transaction valued at approximately $2.8 billion. The deal includes $300 million in cash and the issuance of roughly 126.8 million new shares.

The transaction is expected to close in the third quarter of 2026.

Serra Verde’s flagship Pela Ema mine and processing facility in Goiás, Brazil, is considered a strategically important asset. It is one of the few operations outside Asia capable of producing heavy rare earth elements (HREEs), which are essential for technologies ranging from electric vehicles to defense systems.

"Serra Verde's Pela Ema mine is a one-of-a-kind asset and the only producer outside Asia capable of supplying all four magnetic rare earths at scale, together with other vital REEs [rare-earth elements], such as yttrium," Chief Executive Barbara Humpton said.

The other heavy rare earths include Dysprosium, Terbium, and Erbium.

The acquisition builds on USA Rare Earth’s strategy to create a vertically integrated “mine-to-magnet” supply chain, following its earlier purchase of Less Common Metals, a UK-based rare-earth metals producer.

Strategic push amid geopolitical tensions

The deal comes as the US government intensifies efforts to secure domestic and allied sources of rare earth materials, which are dominated by China and have become a focal point in geopolitical tensions.

Serra Verde has already secured a $565 million financing package from the US International Development Finance Corp. to support its expansion, underscoring Washington’s strategic interest in diversifying supply chains.

“Rare earths represent a strategic nexus where national and energy security, and technological supremacy, converge,” said Serra Verde CEO Thras Moraitis. “The Western rare earth sector stands at a critical inflection point, as governments and strategic industries urgently seek reliable sources of critical rare earths — particularly scarce heavy rare earths.”

The Pela Ema mine is expected to play a significant role in this shift. By 2027, Serra Verde is projected to account for more than half of the non-China supply of heavy rare earth elements.

Separately, Serra Verde has entered a 15-year offtake agreement to supply its phase one production to a special-purpose vehicle backed by US government agencies and private capital.

Growth ambitions and market response

USA Rare Earth is still in the early stages of scaling its operations, but has moved quickly to expand its footprint. The company recently began commissioning equipment for its first rare-earth magnet production line in the first quarter of this year.

The acquisition is its second major deal in recent months and is expected to accelerate its ambition of becoming a global player in the rare earth supply chain.

Investor response has been broadly positive. The stock has rallied 27% in the last 5 trading sessions and remains up 40% in 2026, outperforming peers such as MP Materials as well as the broader S&P 500.

Analyst sentiment has also turned constructive. Wedbush analyst Sam Brandeis initiated coverage with an outperform rating and a $29 price target, citing the company’s development of a heavy rare-earth platform in West Texas as a key driver — even before factoring in the Serra Verde acquisition.

Despite recent gains, the deal highlights the growing urgency among Western companies and governments to build resilient supply chains for critical minerals, as competition for rare earth dominance continues to intensify globally.