Brazilian Supreme Court faces challenge to block USA Rare Earth's $2.8 billion acquisition of Serra Verde on national security grounds
Left-wing Brazilian political party Rede Sustentabilidade has filed an emergency application in Brazil's Supreme Court seeking to suspend the sale of rare earths mining company Serra Verde Group to USA Rare Earth Inc on national security grounds. The filing argues that Brazilian legislation does not provide sufficient constitutional safeguards over strategic mineral resources and that no transaction should proceed that transfers significant economic control over such assets. USA Rare Earth had offered US$2.8 billion in cash and stock for Serra Verde — which would be one of the largest transactions in the rare earths industry globally. Serra Verde's Pela Ema operation in Goiás state currently produces around 100 metric tonnes of rare earth oxides per year, with output expected to rise significantly as an upgrade programme is completed. The legal challenge injects substantial uncertainty into a deal that carries direct strategic relevance for the US–EU critical minerals agenda. The Serra Verde asset was already the subject of international scrutiny given rare earths' role in defence, electric vehicle, and semiconductor supply chains. A Brazilian Supreme Court suspension — even temporary — would delay what had appeared to be a near-completed transaction, potentially triggering material adverse change provisions or conditions precedent debates under the sale and purchase agreement. The case also raises questions about whether existing Brazilian mining legislation meets the constitutional threshold for protecting strategic resources, a legal question with implications far beyond this single transaction.
Why this matters
This challenge activates public law, constitutional law, and cross-border M&A dispute workstreams simultaneously. If the Brazilian Supreme Court grants the suspension, the parties will need to assess whether a material adverse change has occurred and whether deal conditions remain capable of satisfaction — generating work for M&A counsel on both sides. The constitutional argument — that existing legislation is inadequate to protect strategic minerals — is a broader legislative risk that could affect the entire sector's investment framework. For London firms advising on critical minerals transactions, this case illustrates how national security-based judicial intervention is becoming a structural deal risk alongside the regulatory approvals process. The 'why now' trigger is the US–EU critical minerals partnership signed last week, which has heightened political sensitivity around foreign acquisition of rare earth assets globally.
On the Ground
On a cross-border M&A dispute of this type, a trainee would assist with preparing a chronology of deal events and conditions precedent status, research the applicable constitutional and statutory frameworks in the target jurisdiction, and coordinate with local counsel in Brazil on the procedural status of the court filing. Sanctions screening memos and cross-border legal opinion coordination would also be within scope.
Interview prep
Soundbite
National security judicial challenges are now a standalone deal risk in critical minerals M&A — sit alongside regulatory clearance on every CP checklist.
Question you might get
“If a client's acquisition of a foreign mining asset faces a national security-based court challenge in the target jurisdiction, what contractual protections would you look for in the SPA, and how would you advise on the risk of a deal condition failing?”
Full answer
A Brazilian political party has applied to the Supreme Court to block USA Rare Earth's $2.8 billion acquisition of Serra Verde on the basis that the country's legislation fails to meet the constitutional standard for protecting strategic mineral resources. This matters because, if the suspension is granted, it creates immediate uncertainty about whether the deal conditions precedent can be satisfied and potentially activates material adverse change provisions in the SPA. The wider picture is the hardening of national security review of critical minerals deals globally — a trend accelerated by the US–EU critical minerals partnership announced last week. My view is that constitutional litigation of this type will become a regular feature of cross-border resource M&A, requiring deal teams to build judicial intervention risk into their timeline modelling from the outset.
My notes
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