USA Rare Earth (NASDAQ:USAR) outlined the details of its strategic investment in Carester during a conference call, describing the transaction as a key step in advancing the company’s “mine to magnet” strategy and expanding non-China processing options for heavy rare earth elements.
Equity investment and strategic agreements
Chief Executive Officer Barbara Humpton said the company has agreed to acquire a 12.5% equity stake in Carester, which she described as “Europe’s leading heavy rare earth and recycled magnet processing technology company.” The investment is being made alongside InfraVia, the French Critical Metals Fund seeded by the French government, which is also taking a 12.5% stake.
Humpton said that, in addition to the equity stake, USA Rare Earth has entered into three strategic agreements with Carester:
- A 15-year supply agreement
- A 15-year offtake agreement
- A technology and services framework agreement, including an IP licensing arrangement
According to Humpton, the agreements are intended to provide access to rare earth oxides, including the heavy rare earths dysprosium and terbium, as well as long-term engineering support and technology collaboration. She emphasized that the company is announcing the transaction on the basis of a signed term sheet and that definitive documentation is expected in about one month, while the ancillary agreements are “in agreed form.”
Carester’s capabilities and planned French facility
Humpton said Carester was founded in 2019 by Frédéric Carencotte, “a 20-year veteran of Solvay’s rare earth operations in France and China,” and characterized Carester’s team as among the most experienced in rare earth separation and oxide production, including heavy rare earths and recycled oxides.
She said Carester holds proprietary separation and recycling technology, including “four patented innovations” and its Parex+ simulation software, and that Carester employs 41 people with “over 250 years of combined rare earth industrial and scientific experience.” Humpton added that the company’s patented separation process is modular and designed to treat all types of ore, with a patent portfolio spanning pyrometallurgical, hydrometallurgical, and solvent extraction processes.
Through its subsidiary Coremag, Humpton said Carester is building Europe’s first large-scale, low-carbon rare earth recycling and refining facility in Lacq, France. The facility is expected to commence operations in the third quarter of 2026 and reach run rate in the first quarter of 2027.
Steele said the facility is designed to process 7,000 metric tons of feedstock per year and, at run rate, produce approximately:
- 800 tons per year of NdPr oxide
- 500 tons per year of dysprosium oxide
- 100 tons per year of terbium oxide
Humpton said those heavy rare earth volumes would represent about 15% of current world production of dysprosium and terbium, and she noted that “China today processes nearly 100% of these heavy rare earths.” She also said Carester has secured EUR 216 million in backing from the French government and strategic partners, including Japan France Rare Earths, which she said is backed by the Japanese government.
How USA Rare Earth plans to use the partnership
Humpton said the offtake agreement provides USA Rare Earth the right to purchase “up to 50% of the heavy rare earth oxides produced from our contributed feedstock,” including dysprosium and terbium, and that those oxides would flow into metal and alloy production at the company’s subsidiary Less Common Metals (LCM).
Humpton also said the supply agreement creates a processing pathway for Round Top, stating that Carester will process “any excess heavy rare earth concentrate from Round Top or from any other deposit” to which USA Rare Earth has access at the Coremag facility, providing a European separation option that does not rely on China.
Regarding technology, Humpton said the framework agreement includes engineering support, collaboration, and licensing for Carester’s proprietary technology in nitrate route separation, long-loop recycling, and radioactivity removal, and she said USA Rare Earth would own “all newly developed IP coming out of our cooperation.”
Round Top plans and scaling flexibility
In response to questions about how Carester’s capabilities complement Round Top, Humpton said USA Rare Earth intends to have processing facilities at Round Top, with additional processing facilities planned in the United States, and described processing and metal-making as “the most fragile links” in the rare earth value chain outside China. She said the company’s acquisition of Less Common Metals in October was aimed at securing metal-making capability, while the Carester investment helps address processing bottlenecks, particularly for heavy rare earths.
Steele said the partnership would augment USA Rare Earth’s own processing capability being developed at Round Top, adding that the company would effectively have “two different places” to process rare earth concentrates and carbonates—Europe and the U.S.—and that this also supports supply to LCM.
Steele said the Carester relationship does not change USA Rare Earth’s processing plans at Round Top, characterizing it instead as added “flexibility” and “optionality,” including the ability to source feedstock from other areas while scaling LCM.
Government support and potential magnet manufacturing in France
Humpton said the company’s co-investment with InfraVia and the French government “positions us” for broader opportunities in Europe. She said the French government has expressed interest in providing loan guarantees and CapEx reimbursement for LCM’s planned metal-making facility in Lacq, and in supporting a potential USA Rare Earth magnet-making facility in the south of France.
Asked whether the Carester investment was related to U.S. government funding, Steele said the investment “is not part of that funding” and “does not have anything to do with any of the gates or milestones,” but he added that the ecosystem being built supports the broader effort.
On potential magnet production in France, Humpton said the partnership provides a platform to consider that possibility, but noted the company is still in the “initial planning stages.”
Steele also said Carester’s dysprosium and terbium oxide specifications meet the requirements for metal and alloy making, adding that LCM has evaluated the specifications and that the companies have a long-standing relationship.
Humpton closed the call by calling the investment “a strategic step to connect U.S. rare earth resources” with European processing, recycling, and downstream manufacturing capacity, and said the company expects “more to come.”
About USA Rare Earth (NASDAQ:USAR)
USA Rare Earth (NASDAQ: USAR) is a development-stage critical minerals company focused on advancing a fully integrated rare earth element (REE) and lithium project in the United States. Its flagship asset is the Round Top deposit in West Texas, a large, polymetallic concentration of light and heavy rare earth elements, lithium and other co-products. The company seeks to move this asset through resource delineation, pilot-scale processing and eventual commercial production to address growing domestic demand for secure REE supply chains.
In addition to exploration, USA Rare Earth is engineering an on-site separation facility that will utilize dry magnetic separation and hydrometallurgical flowsheets to produce mixed rare earth carbonates.
