USA Rare Earth is taking on China, with a $2.8 billion move into Brazil

By Tomi Kilgore

Rare-earth miner is issuing 127 million shares to buy Serra Verde, seen as representing more than half the non-China heavy rare-earth element supply

USA Rare Earth to buy Brazil's Serra Verde in a mostly stock deal valued at $2.8 billion, and the stock rose.

Shares of USA Rare Earth rose in early Monday trading after the rare-earth producer, in which the Trump administration has invested, announced a $2.8 billion mostly stock deal to buy Brazil-based Serra Verde Group.

The acquisition by the Oklahoma-based company (USAR) furthers the U.S. government's plan to be less reliant on China for rare-earth elements, which are used in a wide variety of industries, including defense, technology and consumer goods.

USA Rare Earth CEO Barbara Humpton explained that Serra Verde's Pela Ema mine and processing plant in Goiás, Brazil, is the only producer outside of Asia that can supply all four magnetic rare earths at scale. By 2027, Serra Verde is expected to represent more than half of the total non-China-produced heavy rare-earth element (HREE) supply.

There is already a connection with the U.S., as Serra Verde has secured a $565 million financing package from the U.S. International Development Finance Corp. to fund expansion until it is cash-flow positive.

"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."

USA Rare Earth's stock rose 1.5% in premarket trading, which puts it on track for a sixth straight gain. It has risen 23.5% over the previous five sessions. The gain marks a bit of a switch, as investors tend to be unhappy about stock deals, which dilute the ownership of current shareholders.

While the stock has rallied in April, it still closed Friday 25.3% below where it closed on Jan. 26, after the company announced the investment by the Trump administration.

Read: Trump administration invests in another rare-earth company. Should you buy the stock?

Under the terms of the buyout deal, USA Rare Earth will issue 126.85 million shares, which at Friday's closing price of $19.95 would be valued at $2.53 billion. The company will also kick in $300 million in cash, valuing Serra Verde at $2.83 billion.

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

The announcement of the deal comes on the same day that Wedbush analyst Sam Brandeis started coverage of USA Rare Earth's stock with an outperform rating and $29 price target, which implies 45% upside from Friday's close.

Brandeis wrote in a note to clients that his bullish stance is based on the company's building of a heavy rare-earth mine-to-magnet platform spanning the largest HREE deposit in North America in West Texas. That's even before the Serra Verde deal.

Despite the pullback in recent months, USA Rare Earth's stock has still rallied 67.7% in 2026, which compares with the 20.7% gain in rare-earth peer MP Materials' shares (MP), and the S&P 500 index's SPX 4.1% advance.

-Tomi Kilgore

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04-20-26 0750ET