Adds details from CEO interview

By Eric Onstad and Ernest Scheyder

LONDON, April 20 (Reuters) - Brazilian rare earths miner Serra Verde, which agreed on Monday to be acquired by USA Rare Earth USAR.O, will receive a 15-year offtake for most of its minerals at a set price from a consortium composed of private investors and the U.S. government, the companies said on Monday.

China accounts for about 90% of global processed rare earth output, and U.S., Europe and other Western nations are racing to build their own domestic sectors for the minerals vital for the energy transition, electronics and defense applications.

China's widespread market control has led to allegations that it manipulates rare earths prices in order to harm rivals, charges that Beijing has denied. The market imbalance, though, has fueled a range of government and private investor deals in an attempt to help Western miners grow.

Serra Verde said on Monday it had a 15-year agreement to supply the first phase of production from its Pela Ema mine in Brazil to a special purpose vehicle capitalised by the U.S. government and private sources.

The supply deal includes set prices for the four major rare earths needed to make permanent magnets - neodymium, praseodymium, dysprosium and terbium - used in electric vehicles, wind turbines, drones and fighter jets.

If market prices go above those levels, both USA Rare Earth and SPV will share profits from the upside.

The SPV will be able to sell the offtake to whomever it likes. Because USA Rare Earth will need a consistent supply of the minerals in order to make magnets, it may find itself buying back the rare earths produced at its own mine, CEO Barbara Humpton said.

"Think about arbitrage at every link in the chain," Humpton told Reuters. "Ask where does this material perform best? Where can we find the cheapest inputs for this step of the process and where can we sell at the highest price to customers?"

The offtake contract price for neodymium and praseodymium (NdPr), two commonly used rare earths, was set at $110 per kg, according to the companies.

Last year, the U.S. government offered a price floor at that same level to MP Materials MP.N as part of a multi-billion-dollar investment.

The MP deal included a stipulation for the U.S. government to compensate MP should rare earths prices fall below a certain level. That arrangement was not offered to USA Rare Earth.

Reuters reported in January that Washington was moving away from those kind of price floor arrangements.

The Chinese price of NdPr oxide SMM-REO-DIO has nearly doubled to roughly 795,000 yuan per metric ton, or $117 per kg, since the MP Materials deal was struck last July.

Serra Verde's mine is rich in heavy rare earths, unlike many other Western deposits, and the deal included offtakes for dysprosium and terbium at prices of $575 and $2,050 per kg, respectively.

Serra Verde's mine is also slated to produce yttrium, although that mineral was not part of the SPV offtake.