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Will the US Serra Verde Acquisition Help Break China’s Rare Earth Monopoly?

One of the primary drivers behind the acquisition, backed by the U.S. government, is to disrupt the prevailing Chinese monopoly in rare earths. Will it actually work?

On April 20, the rare earth industry witnessed a development many deem transformational, though not unforeseen. USA Rare Earth, a private American mining and manufacturing company established in 2019, announced its newest acquisition, a definitive deal to acquire Brazilian rare earth pioneer Serra Verde Group for $2.8 billion. This includes $300 million in cash and 126.9 million shares each valued at $19.95 per share (as of April 17, 2026). 

Earlier in February Serra Verde also received a $565 billion loan from the U.S. International Development Finance Corporation (DFC), signaling a strong backing for this newest move from the U.S. government. The acquisition deal includes a 15-year offtake agreement with a special purpose vehicle (SPV) funded by the U.S. government and private investors. The offtake agreement ensures that all of the rare earths mined by Sierra Verde will be sold to the SPV, providing a guaranteed customer and revenue for the next 15 years and a stable supply of rare earth ores at a predictable price for USA Rare Earth.

The rare earths are a group of 17 elements that have become indispensable for most modern technology, most notably for permanent magnets used in electric vehicles, wind turbines and advanced weapon systems. Despite the misnomer, rare earth elements are abundantly found, and the “rarity” is more reflective of the complexities in refining and processing the ore to industrial grade metals. 

The global rare earth industry is currently dominated by China which accounts for around 69 percent of global rare earth mining, 90 percent of global processing capacity, and around 52 percent of global rare earth reserves.  China also dominates 94 percent of global permanent magnet production. As a result, the rest of the world is asymmetrically dependent on China and strategically vulnerable and exposed to supply chain disruptions. China is increasingly weaponizing its monopoly as evident during the 2025 tariff disputes, when Beijing restricted rare earth exports to the United States, and then to the world at large, to retaliate against U.S. trade restrictions.

The Strategic Value of Serra Verde

Serra Verde is the only at-scale rare earth producer outside Asia largely due to its Pela Ema rare earth mine in Goiás state. The mine produces all four magnetic rare earths: neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). Dysprosium and terbium and Yttrium in addition are categorized as heavy rare earth elements (HREE) — the most valuable and hence the most sought after rare earths. 

Adding to Serra Verde’s strategic value, its rare earths occur as ionic clay deposits, which are easier, cheaper, and more environmentally sustainable to extract in contrast to the hard-rock deposits such as of California’s Mountain Pass Mine, the only operational rare earth mine in the United States. Until Serra Verde’s mines became operational, industrial scale extraction from ionic clay deposits were almost exclusive to Asia, specifically China and Myanmar. 

The first operating ionic clay deposit in the Western Hemisphere, Serra Verde began production only in early 2024 having received over $1 billion as capital investment. Brazil is home to world’s second largest rare earth reserves globally, second only to China. Brazil’s rare earth exports tripled in the first half of 2025, largely due to increased production from Serra Verde’s Pela Ema mine. 

However, until this new deal, Serra Verde was confined to mining while relying on China for processing the mined ore. Without their own mineral processing facilities, and with no other viable options in the West at the time, Serra Verde committed all of its rare earth ore to be exported to Chinese companies for processing through 10-year offtake agreements. 

However, last December, Serra Verde renegotiated the agreements, slashing the length of the deal by almost eight years. The agreements are now set to conclude by the end of 2026 – right when USA Rare Earth’s acquisition is expected to close. 

The renegotiation happened just after Serra Verde confirmed a $465 million loan from the DFC to expand the Pela Ema mine. In February this year, the amount was further raised up to $565 million. The DFC’s funding will be instrumental for Serra Verde as it will provide the capital necessary to end the offtake agreements with China and redirect its output to Western allies instead.

Can the Acquisition Really Disrupt China’s Monopoly?

The acquisition reflects the growing geoeconomic fragmentation in the global rare earth supply chain and the West’s attempts to break away from Chinese chokehold. One of the primary drivers behind the acquisition, backed by the........

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