The pre-payment ensures that the Serra Verde Group has a buyer for its Pela Ema mine in the State of Goiás in central Brazil.
The project is the only commercial mine outside of Asia that can supply all four magnetic rare earth elements—neodymium, praseodymium, dysprosium and terbium—which are essential for technology, robotics, data centers, defense and aerospace industries, national security, renewable energy, and medical technologies.
The elements are also used in making weapons and other modern warfare equipment.
The partnership will establish a secure supply chain for rare-earth elements critical for national defense and economic security, according to the Pentagon.
The purchase agreement is part of a broader $1.55 billion total capitalization by the Pentagon for the Serra Verde project that also includes a $500 million secured revolving credit facility from a top-tier bank, and a $300 million contract to buy rare earth products over five years.
The transaction is part of the Trump administration’s goal to loosen China’s grip on the supply of global rare earth elements by creating a secure domestic supply chain for national security.
China dominates the expanding global rare-earth elements market, holding a 90 percent share of global refined output in 2024, according to the International Energy Agency.
“Securing resilient domestic and allied supply chains is a fundamental warfighting requirement,” said the Hon. Michael Cadenazzi, Asst. Secretary of War for Industrial Base Policy. “By partnering with Serra Verde, we are taking a decisive step to break our adversaries’ near-monopoly on rare-earth elements.”
Once fully operational, the Pentagon expects the mine to produce a massive supply of vital elements needed to improve the thermal stability and magnetic strength of neodymium-iron-boron magnets, which are essential for making critical components for U.S. warfighters.
These include advanced systems in nuclear submarines, fighter jets, satellites, guided missiles, combat vessels, and drones, according to the Pentagon.
The deal follows a $565 million U.S. International Development Finance Corporation (DFC) financing package to expand the Pela Ema project. The funding allowed Serra Verde to decouple the project from Chinese investors.
The Pentagon’s capitalization on Aug. 24 also sets in motion USA Rare Earth’s proposed merger with Serra Verde by satisfying a closing condition of the sale.
Oklahoma-based USA Rare Earth mining company agreed to purchase Serra Verde Group, valued at about $2.8 billion in April.
The deal includes a combination of $300 million in cash and 126.849 million shares of newly issued stock.
“Serra Verde can now begin supplying these critical materials into the U.S. market and is positioned to be the first to deliver all four into Western supply chains at scale,” said Michael Blitzer, executive chairman of USA Rare Earth.
The company expects to close the Serra Verde acquisition in the next few days, giving access to advanced processing technologies and integrating a foundation asset into the company’s mine-to-magnet platform.
USA Rare Earth also plans to own the Pela Ema mine.