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 U.S. government, is to disrupt the prevailing Chinese monopoly in rare earths, especially magnetic rare earths and HREE. It is also expected to end the need to send Serra Verde’s mined ore to China for processing while retaining the minerals for a West-aligned supply chain. 

As part of the acquisition deal, Serra Verde’s ore will be bought by the SPV, which will sell it back to Western processing plants including USA Rare Earth’s Oklahoma plant, French rare earth processor Carester, and Less Common Metals, a British metal processing plant that was also acquired by USA Rare Earth in 2025. 

But does this suffice to disrupt China’s monopoly? China’s lead in the rare earth industry, which was built meticulously over decades since its mineral boom in the 1990s, has more to do with production and processing expertise than output volume. By now, China has acquired decades of expertise in mineral mining and refining with specialized infrastructure and systems in place, all of which contribute to its cost efficiency. 

In addition, China’s state-owned enterprise (SOE) model plays a complementary role. Subsidy-backed SOEs allow China to venture into the highly capital intensive mining industry, tolerating long lead times with delayed profits. The West, in contrast, despite acquiring mines, must now either replicate China’s appetite for subsidies or learn to compete at an industrial scale with China to gain a substantial edge globally. 

Then there is the disparity in output between China and Brazil. While USA Rare Earth’s acquisition of Serra Verde Group is a milestone in the U.S. attempt to build resilience in the global rare earth supply chain, it is unlikely to send tremors through China’s monopoly. China will still surpass the output of the rest of the world combined. For instance, the global rare earth production in 2025 was 390,000 metric tonnes, of which China produced 270,000 metric tonnes (amounting to approximately 69 percent). Brazil only produced 2,000 tonnes or rare earths in 2025 claiming a negligible 0.5 percent of the total global production. 

Following the acquisition and expanded capacity, by 2027 Serra Verde is expected to produce around 6,400 tonnes annually, still only a fraction of China’s total capacity. However, Serra Verde is estimated to account for over 50 percent of total HREE production outside China by 2027. This makes the loss of Serra Verde to U.S.-led Western competitors a significant strategic, even if not commercial, blow to China’s rare earth monopoly. 

Nevertheless, according to Benchmark Mineral Intelligence, the West will continue to depend on China for 91 percent of its HREE demand by 2030, down only slightly from 99 percent reliance in 2024. The United States is still building its magnet producing capacities.

For example, USA Rare Earth’s recently commissioned plant in Stillwater, Oklahoma aims to produce 1,200 tonnes of magnets by 2027. In comparison, China produced 16,001 tonnes in the first quarter of 2026 alone, up 4.8 percent year-on-year. Shanghai Metals Market forecasts China’s permanent magnet exports to reach 67,500 tonnes by the end of 2026.

The Strategic Blow of Supply Chain Integration 

In terms of the sheer scale of China’s rare earth capacity, the Serra Verde acquisition by the USA Rare Earth might not amount to anything significant. But it could be a strategic setback to China due to the reduced rare earth ore exports from Brazil. The acquisition’s 15 year offtake agreement ensures that all of Serra Verde’s production is legally obligated to be sold to the U.S.-funded SPV, preventing China from outbidding the sale.

The disruption to the Chinese rare earth monopoly may perhaps be manifested even more in terms of supply chain integration than the volume of production itself. Since the acquisition and SPV bring together USA Rare Earth and other West-aligned rare earth processors, it enables the creations of an integrated production network independent of China’s prevailing dominance, including mining (Brazil), refining (the U.S., France, the U.K.) and permanent magnet production (the U.S.). 

Serra Verde’s capacity to produce higher amounts of HREE adds to its strategic value, holistically building this new Western alliance’s access to heavy and light rare earths as well as its capacities for mineral processing and magnet production. Although the output might not match China’s, this move signals that Western states are taking conscious first steps to expand their capabilities and build their long-term supply chain resilience to circumvent China in the long run.