LONDON, Feb 5 (Reuters) - The U.S. government has agreed a financing deal worth $565 million with Brazilian rare earths miner Serra Verde, which includes the option to take a minority equity stake, the firm said on Thursday.

The deal is part of a wide-ranging package announced on Wednesday by U.S. Vice President JD Vance to create a preferential trade bloc for critical minerals and set price floors as Washington escalates efforts to loosen China's grip on materials crucial to advanced manufacturing.

Serra Verde will use the funding from the U.S. International Development Finance Corporation to refinance loan facilities at more favourable terms and expand production, it said in a statement.

Privately held Serra Verde's mine is rich in heavy rare earths, unlike many other Western deposits.

The company launched commercial production in early 2024, and has not yet hit full output, which is expected to be about 6,500 metric tons of total rare earth oxides a year by 2027.

Serra Verde is owned by private equity groups Denham Capital, Energy and Minerals Group and Vision Blue, which is led by the former head of Xstrata, Mick Davis.

(Reporting by Eric OnstadEditing by Bernadette Baum)

((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))