USA Rare Earth (Nasdaq: USAR) has begun shipping mixed rare earth carbonate from its Pela Ema operation in Brazil to a Pentagon-backed buyer under a 15-year supply agreement with guaranteed minimum prices.
Commercial-scale shipments began in October and payments started this month, the company said Nov. 9. The buyer, US SIIE LLC, is a special purpose company backed by U.S. government and private capital. Its take-or-pay contract covers all output from Serra Verde’s initial development, requiring it to buy the contracted material or pay for it.
“We are ramping up and the optimized process is performing as we anticipated, with product quality ahead of planned specification, meeting our contractual obligations,” Ricardo Grossi, USA Rare Earth’s head of upstream in Brazil, said in a release. “We aim to continuously improve our execution and remain focused on ramping up production and shipments in a sustainable and responsible manner.”
The shipments add feedstock to efforts to build a rare earth supply chain outside China for magnets used in electric vehicles, wind turbines and defence equipment. The Pentagon provided $750 million (C$1.06 billion) to capitalize the buyer, USA Rare Earth disclosed in an August filing.
Production ramps up
USA Rare Earth completed its acquisition of Serra Verde in September. Pela Ema is near Minaçu in Brazil’s central Goiás state. Commercial-scale production restarted after the first stage of an optimization and expansion program was completed on time and within budget, the company said.
USA Rare Earth now targets an annual production rate of 4,000 tonnes of contained rare earth oxides by the second quarter of 2027. That compares with the end-2026 target Serra Verde gave in August. These volumes measure the carbonate’s rare earth oxide content, rather than its total weight.
A second optimization stage is scheduled for commissioning in the third quarter of 2027, lifting the targeted annual production rate to 6,400 tonnes by year-end. Both stages form part of the initial development covered by the offtake agreement.
The company is separately evaluating a further expansion that could double the volume of ore mined from the same deposit.
Price protection
The contract sets minimum prices of $110 per kg each for neodymium and praseodymium, $575 per kg for dysprosium and $2,050 per kg for terbium. The four elements are used in high-performance neodymium-iron-boron magnets.
USA Rare Earth also receives 70% of the amount by which specified non-China market prices exceed the floors, with a fixed separation charge deducted. The benchmarks draw on US and European prices. Other payable heavy rare earths, including yttrium, generate additional revenue after separation, the company said.
Non-China dysprosium oxide prices were 14 to 16 times those in China, while terbium oxide prices were six to nine times as high, USA Rare Earth said, citing late-October indices from pricing agencies Argus and Benchmark Mineral Intelligence.
Brazil placed rare earths in the highest-priority category of its critical minerals list on Nov. 5. The policy directs government support towards mining and domestic processing, Brazil’s industry ministry said.
Shares in USA Rare Earth were 4.2% weaker at $7.92 apiece in premarket trading Thursday in New York, valuing the company at about $3 billion.