By Brazil Stock Guide – Brazil’s antitrust regulator opened a preliminary proceeding to examine agreements involving Serra Verde Pesquisa e Mineração SA and USA Rare Earth Inc. (NASDAQ: USAR), adding regulatory scrutiny to a transaction aimed at building an integrated rare earths supply chain across four countries.
The Administrative Council for Economic Defense, known as Cade, disclosed the proceeding on Monday (11). The agency said its General Superintendence will assess whether the business combination between Serra Verde and USA Rare Earth, along with a long-term supply agreement, should be treated as a merger-like transaction subject to Brazil’s competition review.
Serra Verde and USA Rare Earth agreed to create a multinational rare earths company with operations spanning mining to magnets. The combined business would include eight operations in Brazil, the US, France and the UK, with capabilities across mining, processing, separation, metalization and magnet manufacturing, Cade said.
The regulator is also reviewing a 15-year supply agreement under which Serra Verde would deliver all of its Phase I output to a special-purpose vehicle backed by several US government agencies and private capital. The pact includes guaranteed floor prices for Serra Verde’s magnetic rare earths.
Cade said the proceeding will determine whether the business combination and the supply contract constitute a reportable concentration under Brazilian competition law. If so, the agency will assess whether the parties were required to notify the transaction or whether Cade should request its submission for antitrust analysis.
The opening of the preliminary proceeding does not mean the deals must necessarily be notified, nor does it indicate that Cade has found competition concerns. At the end of the review, the General Superintendence may close the case, allow the transaction to proceed or open an administrative process.
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