Trump admin to invest $1.6bn in USA Rare Earth for 10% stake
The Trump administration has announced plans to invest a significant sum of $1.6 billion in the Oklahoma-based mining company USA Rare Earth, marking its largest deal yet in the rare earth element (REE) sector. This move, reported by the Financial Times (FT) and sourced from unidentified individuals, signals a strategic effort to bolster domestic production of critical minerals essential for various industries, including semiconductors, medical equipment, industrial magnets, and defense systems.
In exchange for this investment, the US Government will acquire a 10% stake in USA Rare Earth, underscoring its commitment to onshoring REE projects and reducing reliance on foreign sources, particularly China, which currently dominates global REE production. The government will receive $16.1 million in shares in the company, along with warrants for an additional 17.6 million shares at a price of $17.17 million, as detailed by one of the sources.
Additionally, USA Rare Earth will secure $1.3 billion in senior secured debt financing at market rates from the government, facilitated through a finance facility established under the CHIPS and Science Act by the Department of Commerce. This financial support aims to incentivize the manufacturing of semiconductors in the US, thereby strengthening the country’s supply chain and reducing vulnerabilities to foreign disruptions.
The company’s collaboration with Texas Mineral Resources in developing a mine in Sierra Blanca, Texas, slated to commence operations in 2028, will contribute to producing 15 out of the 17 REEs, as well as lithium and other metals. This initiative is poised to enhance the US-based magnet supply chain and bolster national security by reducing dependence on foreign sources for critical minerals.
In addition to government funding, USA Rare Earth is anticipating a separate private financial deal worth $1 billion, further supporting its growth and operational endeavors. The company has engaged Cantor Fitzgerald, a financial services firm chaired by the sons of US Secretary of Commerce Howard Lutnick, to assist in raising funds independently from the government’s investment.
The Trump administration’s decision to invest in USA Rare Earth aligns with its broader strategy of acquiring stakes in critical mineral companies to strengthen domestic production and reduce import reliance. Previous investments include a $400 million stake in MP Materials, a $670 million stake in magnet producer Vulcan Elements, and a 10% stake in Canadian minerals explorer Trilogy Metals through a $35.6 million exchange.
This significant investment in USA Rare Earth underscores the administration’s determination to secure a stable and self-sufficient supply chain for critical minerals, crucial for advancing technological innovation and national security. By fostering partnerships with domestic companies and incentivizing domestic production, the US aims to mitigate risks associated with foreign dependencies and ensure resilience in key industries.
