Shares of USA Rare Earth (USAR +2.71%) jumped on Monday after the mining company made a transformative acquisition.
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A blockbuster purchase
USA Rare Earth struck a deal to acquire Serra Verde Group, which owns a rare-earth mine and processing plant in Brazil.
USA Rare Earth intends to fund the purchase with $300 million in cash and 126.8 million shares of newly issued stock. The deal values Serra Verde at about $2.8 billion.
The transaction is projected to close in the third quarter, subject to regulatory approvals.
NASDAQ: USAR
Key Data Points
The global rare-earth race is intensifying
The deal comes at a time when the U.S. and its allies are trying to reduce their dependence on China for rare-earth metals. These materials can be used to make crucial magnets for electric vehicles, robots, drones, and a host of other advanced technologies.
Serra Verde is expected to account for more than 50% of the total supply of heavy rare-earth elements (HREEs) from outside China by 2027.
"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," USA Rare Earth CEO Barbara Humpton said.
Integrating Serra Verde would give USA Rare Earth capabilities spanning mining, processing, separation, metallization, and magnet making.
"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," Humpton said.
