Serra Verde sees merger with American company as advancement in technology and market
The president of Serra Verde in Brazil, Ricardo Grossi, stated that the merger of the Brazilian mining company with the American USA Rare Earth represents a strategic advance to expand the company's access to technology, financing and market alternatives.
The statements were made during the International Seminar on Critical and Strategic Minerals, organized by Ibram (Brazilian Mining Institute).
According to Grossi, Serra Verde operates in a market that is still being formed, with a complex technical chain that requires time to mature. The company operates in Goiás with a focus on producing a mixed rare earth carbonate, elements considered strategic for sectors such as energy transition, defense, electronics and cutting-edge technologies.
The executive stated that the company needed to seek new forms of financing to advance the development of the project. He cited the contribution received from DFC, the United States development bank, and said that the merger with USA Rare Earth is part of a strategy to expand access to technology and open new commercial options.
"We are creating a new market, a new process, we need to be patient. We needed funding, we had a contribution from the DFC, we needed technology and market options, we did the merger", said Grossi.
With the merger, Grossi argued that Serra Verde becomes part of an integrated strategy, from mine to magnet.
USA Rare Earth's stated objective is to develop a verticalized rare earth chain, including mining, processing and production of permanent magnets, used in sectors such as electric vehicles, wind turbines, electronic equipment and defense.
According to the executive, the operation also gives the company more cash predictability.
Grossi also argued that the sector requires patience from investors, government and companies.
The merger between Serra Verde and USA Rare Earth was announced as part of a move to create an integrated rare earth chain outside of China, including mining, processing and permanent magnet production. These materials are used in electric motors, wind turbines, electronic equipment and defense systems.
The operation was announced in April and valued Serra Verde at around US$2.8 billion. The deal involves payment in cash and USA Rare Earth stock, as well as a 15-year supply contract with a guaranteed minimum price for magnetic rare earths.
In practice, this type of agreement seeks to provide revenue predictability to Serra Verde and reduce the company's exposure to the volatility of a market that is still not very liquid, technical and without the same pricing dynamics as traditional commodities.
The deal, however, began to be analyzed by Cade (Administrative Council for Economic Defense). The agency's General Superintendence opened a preliminary procedure to determine whether the acquisition of Serra Verde by USA Rare Earth and the associated contracts should have been submitted to the antitrust agency.
In parallel, USA Rare Earth closed a financing package of up to US$1.6 billion with the United States Department of Commerce, which provides for the American government's shareholding in the company
Source: CNN