In a significant move poised to reshape the Western rare earth supply chain, USA Rare Earth has announced a definitive agreement to acquire a strategic minority stake of approximately 13.6% in Carester, a French company specializing in advanced rare earth processing and separation. This substantial investment, revealed on July 24, 2026, is a pivotal component of USA Rare Earth’s broader strategy to establish a robust, integrated critical minerals value chain, from mining to magnet manufacturing, mitigating geopolitical risks and enhancing supply security for crucial high-tech industries.

The deal sees USA Rare Earth, a leading developer of rare earth and critical minerals projects, join forces with InfraVia, through its Critical Metals Fund, which is acquiring a similar equity stake in Carester. The funding for this joint investment is expected to be completed in the third quarter of 2026, subject to the satisfaction of customary closing conditions. This development builds upon an initial strategic framework that was agreed upon by all parties in April 2026, signaling a carefully planned and executed collaboration.

A Strategic Alliance Forged in Critical Minerals

The core rationale behind USA Rare Earth's investment in Carester extends beyond a mere financial transaction; it represents a deeply strategic initiative to integrate and secure critical elements of the rare earth supply chain. Carester, established in 2019, is at the forefront of developing advanced rare earth processing and separation technologies. Its flagship project, the Caremag magnet recycling and heavy rare earth separation facility located in Lacq, France, is a crucial asset in the global effort to diversify rare earth processing capabilities away from heavily concentrated sources.

Under the terms of the agreement, USA Rare Earth and its subsidiary, Less Common Metals (LCM) Europe, will gain the right to purchase a significant portion of the output from Carester’s Caremag facility. This off-take agreement ensures a secure supply of separated rare earth oxides, essential for USA Rare Earth’s downstream metal-making and magnet manufacturing operations. Furthermore, USA Rare Earth will gain invaluable access to Carester’s cutting-edge engineering expertise and intellectual property in rare earth separation, processing, and recycling. Such technical collaboration is vital for continuous innovation and efficiency improvements across the rare earth value chain.

Conversely, Carester will benefit from access to USA Rare Earth’s substantial feedstock resources. These include material from the Serra Verde operation, a rare earth mine in Brazil, and the company's own Round Top deposit in Texas. This reciprocal arrangement ensures a stable supply of raw materials for Carester’s processing operations, which are critical for the facility’s sustained production. The proceeds from this transaction are earmarked to fund Carester’s strategic growth initiatives, including the expansion of its rare earth processing and separation operations, investment in research and development, and bolstering its working capital. A portion of the funding will also be used to acquire the interests of Carester’s existing minority shareholders, facilitating a streamlined ownership structure.

Carester's Caremag Facility: A New Hub for Heavy Rare Earths

The Caremag facility in Lacq, France, is poised to become a significant player in the global rare earth market, particularly for heavy rare earth elements (HREEs), which are often more challenging to process and separate. The plant is scheduled to commence operations in late 2026, with ambitious production targets set for its full ramp-up. At full capacity, the Caremag facility is expected to produce:

  • 800 tonnes per annum (tpa) of neodymium-praseodymium oxide (NdPrO): NdPrO is a critical component for high-strength permanent magnets used in electric vehicle (EV) motors, wind turbines, and various high-tech applications.
  • 500 tpa of dysprosium oxide (DyO): Dysprosium is a vital heavy rare earth element used to enhance the heat resistance and magnetic strength of NdFeB magnets, particularly crucial for high-performance applications like EV traction motors and defense systems operating at elevated temperatures.
  • 100 tpa of terbium oxide (TbO): Terbium, another heavy rare earth, also plays a critical role in increasing the thermal stability and magnetostrictive properties of permanent magnets, especially in high-temperature environments.

The expected output of dysprosium and terbium oxides from the Caremag facility is particularly noteworthy. At 500 tpa of DyO and 100 tpa of TbO, Caremag is projected to account for approximately 15% of current global production for these two heavy rare earth materials. This significant contribution highlights the facility’s strategic importance in diversifying and strengthening the global supply of these critical elements, which are predominantly sourced and processed in China today.

Diversifying the Global Rare Earth Landscape

The imperative to secure diversified, reliable, and ethically sourced rare earth supply chains has grown exponentially in recent years. Rare earth elements are indispensable for modern technologies, powering everything from consumer electronics and medical devices to advanced defense systems and the rapidly expanding renewable energy sector. The current geopolitical landscape, coupled with historic concentration of rare earth processing in a single nation, has underscored the vulnerability of global manufacturing and strategic independence.

USA Rare Earth CEO Barbara Humpton emphasized the strategic importance of this acquisition, stating, "Integrating Carester’s capabilities into our global platform brings additional advanced processing optionality into our integrated value chain, further supporting our mining, metal making and magnet manufacturing businesses." Humpton further highlighted the unique competitive advantage Carester brings: "This is also a highly strategic financial investment, as Carester’s position as one of the few facilities outside of China capable of separating heavy rare earths beginning in 2027 can provide a distinct competitive advantage." This statement directly addresses the critical need for non-Chinese sources of separated heavy rare earths, which are essential for high-performance magnets and critical for the next generation of technological advancements.

The ability to process heavy rare earths outside of China is a game-changer for industries seeking robust and transparent supply chains. Heavy rare earths like dysprosium and terbium are particularly vulnerable to supply disruptions due to their limited global sources and complex processing requirements. Carester’s Caremag facility, coming online in late 2026 and reaching full operational capacity in 2027, will significantly contribute to filling this crucial supply gap in Western markets.

USA Rare Earth's Broader Vision: From Mine to Magnet

The investment in Carester is a testament to USA Rare Earth’s holistic vision for a vertically integrated rare earth value chain. The company is actively developing its own rare earth resources, including the expansive Round Top multi-mineral project in Texas, which is recognized as one of the largest heavy rare earth deposits in North America. By securing upstream mining assets and now investing in midstream processing capabilities, USA Rare Earth is systematically building an end-to-end solution for critical minerals.

Complementing its significant resource base and its new processing partnership with Carester, USA Rare Earth is also making substantial progress in downstream manufacturing. The company is developing a 3.75 billion tonnes per annum metal and alloy plant, which will transform separated rare earth oxides into metals and alloys necessary for magnet production. In a recent announcement last month, USA Rare Earth revealed plans for a significant $1.2 billion investment to establish a new magnet manufacturing and refined metals facility in Cherokee County, South Carolina. This state-of-the-art facility will enable USA Rare Earth to produce high-performance rare earth permanent magnets domestically, leveraging its integrated supply chain to deliver finished products crucial for various strategic industries. The collocation of metal and alloy production with magnet manufacturing at the South Carolina site underscores the company’s commitment to maximizing efficiency and control over its entire value chain.

This comprehensive strategy, from feedstock sourcing (Round Top, Serra Verde) through advanced separation (Carester) to metal alloying and final magnet production (South Carolina facility), positions USA Rare Earth as a pivotal player in Western efforts to achieve rare earth independence. The company’s integrated approach addresses the inherent complexities and interdependencies of the rare earth industry, providing a model for sustainable and secure supply chain development.

The Road Ahead: Bolstering Western Supply Chains

The completion of funding for the Carester investment in Q3 2026, followed by the Caremag facility’s commencement of operations in late 2026, marks a critical timeline for the industry. The subsequent ramp-up to full production capacity of dysprosium, terbium, and neodymium-praseodymium oxides outside of China in 2027 will be a significant milestone. This collaboration, facilitated by financial advisor Moelis & Company and legal advisor Latham & Watkins for USA Rare Earth, exemplifies the kind of international partnership necessary to build resilient critical mineral supply chains.

The strategic minority stake in Carester not only strengthens USA Rare Earth’s competitive position but also represents a vital step toward diversifying the global rare earth supply and fostering greater security for Western advanced manufacturing sectors. As industries worldwide continue to electrify and digitalize, the demand for rare earth elements—and especially heavy rare earths—will only intensify. Investments like these, spanning continents and integrating diverse technical expertise, are indispensable for ensuring a stable and secure future for the critical minerals vital to the 21st century economy.