CADE investigates agreements involving rare-earths

On 11 May, the Office of the Superintendent General of CADE (SG) launched an administrative procedure to investigate a merger between Serra Verde Pesquisa e Mineração S.A. (Serra Verde) and USA Rare Earth, Inc. (USAR).

Serra Verde and USAR decided to establish a multinational mine-to-magnet rare-earth company, with eight operations in Brazil, France, the UK, and the USA having an active operational capacity in all the supply chain of light and heavy rare-earth elements, including mining, processing, separation, metallisation, and manufacturing of magnets.

In addition, Serra Verde signed a 15-year supply agreement to fill up a Special Purpose Vehicle (SPV), capitalised by several agencies of the United States, as well as sources of private equity, for 100% of its production in the 1st Stage (Supply Agreement) with a minimum price guarantee for the magnetic rare-earths.

CADE’s administrative procedure aims to analyse whether the business combination and supply agreements between Serra Verde and USAR may be considered a merger. If so, whether they would need a mandatory notification or whether their submission should be required in order to assess the competitive effects of the transactions.

The procedure openings do not necessarily mean that the mergers are to be notified or that there were competitive harms. At the end of the investigation, the SG may decide for the consummation of the transaction, opening an administrative procedure, or to dismiss the case.