USA Rare Earth seals deal to buy stake in French processor Carester

By Eric Onstad

LONDON, July 23 (Reuters) - USA Rare Earth finalised a deal on Thursday to buy a minority stake in France's Carester that will provide funds for expansion of a processing plant due to open later this year.

The move is part of a scramble by the U.S. and Europe to build their own rare earths and magnet output to cut dependence on China, which controls about 90% of global processed output of the minerals vital for the energy transition, electronics and defence.

"Integrating Carester’s capabilities into our global platform brings additional advanced processing optionality into our integrated value chain," USA Rare Earth's CEO Barbara Humpton said.

USA Rare Earth said it and French private equity fund InfraVia signed definitive agreements to each buy 13.6% stakes in privately-held Carester, without saying how much they were paying.

In April, the company said it had agreed to pay €40 million ($45.57 million) for a stake in Carester and in June said it would make additional investments in France that could exceed €175 million.

Carester is building a magnet recycling and heavy rare earth separation facility in Lacq, France, scheduled for commissioning in late 2026.

Heavy rare earths are necessary for magnets but may be difficult to source amid expected shortages, according to analysts.

The Carester deal will allow USA Rare Earth to buy oxide output from the French plant, while Carester will get access to material from the Serra Verde mine in Brazil, which the U.S. company agreed to buy for $2.8 billion in April.

USA Rare Earth, which agreed to a $1.6 billion debt-and-equity funding package with the U.S. government in January, has a magnet manufacturing plant in Stillwater, Oklahoma, which is expected to launch later this year.

($1 = 0.8777 euros)

(Reporting by Eric Onstad; Editing by Susan Fenton)