Located in Goiás State, Brazil, the Pela Ema mine is the only scaled producer of all four magnetic rare earth elements outside of Asia. On April 20, USA Rare Earth announced the terms of a definitive agreement to acquire the Serra Verde Group for approximately $2.8 billion.
This transaction will create a global rare earth leader by combining the technical refining expertise and well-established supply chain of USA Rare Earth with the high-quality assets and strategic geographic positioning of the Pela Ema mine. As part of the agreement, legacy Serra Verde investors will retain a 34% equity stake in the combined entity. The $2.8 billion acquisition is structured as $2.5 billion in stock and $300 million in cash.
This transaction creates a global leader by integrating USA Rare Earth’s established refining capabilities and supply chain expertise with Serra Verde’s high-quality, low-cost ionic clay assets.
“The acquisition of Serra Verde represents a transformational step in delivering on our ambition to build a global champion… Serra Verde’s Pela Ema mine is a one-of-a-kind asset. By combining Serra Verde’s world-class operations with our processing, separation, metallization, and magnet-making capabilities, we are advancing our goal of creating a fully integrated platform that will serve as a cornerstone of global rare earth supply security for decades to come,” said Barbara Humpton, CEO of USA Rare Earth.
Production Ramp-Up and Vertical Integration
The Brazilian mine, which commenced commercial operations in 2024, is expected to conclude its first phase of ramp-up by mid-2027. The target is to achieve the full nominal capacity of Phase 1 by the end of 2027, with an annual production of approximately 6,400 tonnes of Total Rare Earth Oxides (TREO).
With the combined operations of Serra Verde and USA Rare Earth, Phase 2, slated for 2028, is expected to incorporate vertical integration. The Pela Ema mine will supply feedstock to other rare earth facilities in the U.S. and Europe, driving the production of high-value downstream products, including permanent magnets for electric vehicle (EV) motors and wind turbines.
The Strategic Value of the Pela Ema Mine
The Pela Ema mine is a critical asset in the global rare earth supply chain, serving as a high-quality source of Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy), and Terbium (Tb).
The site is a comprehensive source of ionic clay, rich in both Light Rare Earth Elements (LREE) and Heavy Rare Earth Elements (HREE)—an exceptionally rare geological asset in the Western Hemisphere.
Ionic clay deposits are significantly easier and more cost-effective to mine, as they are generally located near the surface and do not require energy-intensive blasting, crushing, or milling. Furthermore, primary hard-rock deposits typically carry a larger environmental footprint, producing radioactive tailings that demand long-term, complex management.
This operational profile contrasts sharply with USA Rare Earth’s core asset, the Round Top project in Texas. Round Top consists of rhyolite deposits—a volcanic rock that requires extensive crushing and complex heap-leaching processes to liberate minerals from the rock matrix, necessitating a far more robust processing infrastructure. Additionally, the Serra Verde operation boasts a superior and reliable source of renewable energy, powered by two hydroelectric plants located just 25 km and 40 km from the site.
USA Rare Earth: A Government-Backed Strategic Powerhouse
USA Rare Earth is the cornerstone of the U.S. national security strategy to create a fully domestic “mine-to-magnet” supply chain, reducing the risk of an export embargo by Beijing.
Their deposit contains significant quantities of Lithium, Gallium, Beryllium, and Hafnium. From an asset valuation perspective, the USA Rare Earth project operates as a “technology metals hub,” where lithium acts as a valuable byproduct that helps make the operation economically viable.
The company also has heavy backing from the U.S. Government. The government invested $1.6 billion in early January 2026, which surely helped with the liquidity for this new acquisition and supported their heavy investments across various rare earth subsectors. These ongoing investments include the company’s high-powered magnet manufacturing plant in Stillwater, Oklahoma, which opened at the end of March 2026, and the Round Top rare earths mining and processing project in West Texas, which is planned to open by the end of 2028.
Strategic Importance Against Chinese Supply Dominance
Rare earth supply chain vulnerabilities have been a pressing issue for policymakers in Washington in recent years. With China controlling roughly 70% of the global supply and the U.S. trailing at just 13%, there is growing anxiety and a push for self-sufficiency and supplier diversification.
This strategic pivot has driven Washington to seek reliable international partners, placing Brazil in the spotlight. While Brazil currently accounts for only 0.5% of global rare earth production, it holds 23% of the world’s proven reserves—second only to China’s 35%. This presents a remarkable opportunity for both nations: Brazil can rapidly industrialize new sectors, while the U.S. secures a highly reliable, allied supplier.
Consequently, Brazil has witnessed explosive growth in foreign direct investment in this sector, primarily from Australian and American mining firms. Notable players include:
- Brazilian Rare Earths: An Australian company holding 1,410 km² of mining claims in the state of Bahia.
- Aclara Resources: Focused on providing Magnetic Rare Earth Oxides (MREOs) to a magnet production facility in South Carolina, U.S.
- Other key operators: Viridis Mining and Minerals, Meteoric Resources NL, Ionic Rare Earths Ltd, and Neo Performance Materials Inc. Many of these firms heavily emphasize the environmentally friendly nature of their ionic clay-based extraction methods.
Political Involvement and Controversy
In the Brazilian political arena, rare earth exploration has been a highly debated topic in 2026. In March, the Governor of Goiás and presidential pre-candidate, Ronaldo Caiado, announced via an Instagram video that he had secured a deal with the U.S. Embassy to invest in rare earth mining in his state.
The announcement was initially met with confusion by the federal government and the media, as it is highly unusual for a state governor to negotiate directly with a foreign government, especially when no official corporate deal had been formalized at the time. Connecting the dots in hindsight, the Serra Verde acquisition reveals a well-orchestrated strategy aligning government interests and private sector capital from both the U.S. and Brazil.
State-Owned “TerraBras” Proposal Scrapped
Earlier this year, Brazilian President Luiz Inácio Lula da Silva and other federal officials lobbied for more direct state involvement in the country’s rare earth reserves. They proposed the creation of a new state-owned enterprise, dubbed “TerraBras,” which would have been tasked with the exploration and refining of critical minerals nationwide.
However, following the USA Rare Earth acquisition announcement on April 20, government officials convened on April 22 and officially rejected the creation of the new state-owned company. Federal representatives argued that state-led exploration under this model is unnecessary at this juncture and could create counterproductive regulatory and fiscal hurdles for the booming sector.
