US provides rare earths miner Serra Verde with $565 million financing, stake option

By Eric Onstad

LONDON, Feb 5 (Reuters) - The U.S. government has agreed a financing deal worth $565 million with Brazilian rare earths miner Serra Verde, which includes the option to take a minority equity stake, the firm said on Thursday.

The deal is part of a wide-ranging package announced on Wednesday by U.S. Vice President JD Vance to create a preferential trade bloc for critical minerals and set price floors as Washington escalates efforts to loosen China's grip on materials crucial to advanced manufacturing.

Privately-held Serra Verde will use the funding from the U.S. International Development Finance Corporation to refinance loan facilities at more favourable terms and expand production, it said in a statement.

MINORITY STAKE NEGOTIATIONS

The two sides were in the process of negotiating details of a minority stake, which was likely to be agreed in a matter of months, CEO Thras Moraitis told Reuters.

"It would not be a large stake, it would be a significant minority stake, but not out of kilter with what the U.S. government has taken in other companies," he said.

In the most high-profile U.S. deal in the rare earths sector, the government agreed a multibillion-dollar package last July with MP Materials MP.N, including a 15% stake.

U.S. stakes in other critical minerals firms have been in single-digit or low-teen percentages.

Moraitis told Reuters in December that Serra Verde had slashed the contract periods of its Chinese processing deals so they would end this year, opening up the potential to supply Western companies.

"We'll have off-take transactions in place in time for the end of 2026," he said on Thursday, declining to provide further details.

Serra Verde's mine is rich in heavy rare earths, unlike many other Western deposits, making it particularly attractive.

Forecast shortages of heavy rare earths dysprosium and terbium could be a stumbling block in the West's drive to create domestic supply chains of rare earths and permanent magnets.

The company launched commercial production in early 2024, and has not yet hit full output, which is expected to be about 6,500 metric tons of total rare earth oxides a year by 2027.

Serra Verde is owned by private equity groups Denham Capital, Energy and Minerals Group and Vision Blue, which is led by the former head of Xstrata, Mick Davis.