The Trump administration has signaled its intent to take an equity stake and inject the largest amount to date — $1.6 billion — into USA Rare Earth, an Oklahoma-based company angling to build a rare earth mine and magnet supply chain outside of China.
The deal reflects President Donald Trump’s deepening foray into direct ownership of private companies to shore up minerals needed for key military and national security uses that Beijing dominates.
USA Rare Earth signed a letter of intent with the Department of Commerce to receive a $277 million award from the agency’s CHIPS Program and a $1.3 billion loan tied to the CHIPS and Science Act of 2022.
In exchange, the government will receive 16.1 million shares of common stock and 17.6 million warrants in the company. Unlike other deals, there are no price floors or offtake agreements.
Based on those terms, the federal government would be a minor equity holder with ownership ranging from 8 percent to 16 percent of USA Rare Earth, according to the company. The company will continue to be governed by its board and management team.
“USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence,” Secretary of Commerce Howard Lutnick said. “This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”
The government in recent months has taken direct equity stakes in half-a-dozen companies, including MP Materials, Lithium Americas and Trilogy Metals, arrangements that have raised eyebrows on and off Capitol Hill.
Separately, USA Rare Earth said it also hired Cantor Fitzgerald & Co. — which Lutnick used to chair and is now led by his sons — to raise more than $1 billion in equity financing. The company said Cantor was not involved in the government transaction.
USA Rare Earth has been working with Texas Mineral Resources to build a mine and extract minerals from its Round Top deposit in Sierra Blanca, Texas, which it says contains a large swath of the world’s 17 rare earth elements — primarily heavy rare earths like dysprosium and terbium — as well as large quantities of lithium, beryllium and gallium.
Officials with the company on Monday said the mine is expected to be operational in 2028, and material from the site will be processed in Wheat Ridge, Colorado, before it’s sent to a magnet manufacturing facility in Stillwater, Oklahoma. That facility is expected to be operational later this year.
USA Rare Earth, which went public last March, acquired the U.K.-based rare earth metals manufacturer Less Common Metals and is now building a plant in France as it builds out a “mine to magnet” supply chain,” said CEO Barbara Humpton in a statement.
“Through this landmark proposed collaboration with the U.S. government and our private capital raise, we’re advancing national and industrial security objectives across semiconductors, defense, aerospace and advanced manufacturing, while establishing a first of its kind, commercial scale rare earth supply chain outside of China,” said Humpton.
The Trump administration will disperse the money through 2028 as the company hits specific milestones, according to Rob Steele, the company’s chief financial officer. Steele said demand is so high for the minerals at Round Top that price floors and offtake agreements weren’t necessary.
Humpton added that USA Rare Earth is not divulging supply agreements and purchase orders. The company Monday also announced it had inked a letter of intent to collaborate with the Department of Energy’s National Energy Technology Laboratory to advance heavy rare earth separation technologies.
“Thanks to President Trump’s leadership, the Department of Energy is ending America’s reliance on foreign nations for the critical materials essential to our economy and national security,” Energy Secretary Chris Wright said in a statement. “The DOE is partnering with USAR to rebuild the critical minerals supply chain. By expanding domestic mining, processing, and manufacturing capabilities, we are creating good-paying American jobs and safeguarding our national security.”
The deal is “transformative” and means there are now two companies in the Western Hemisphere that will be fully integrated from mine to magnet, said Subash Chandra, an equity research analyst covering the energy sector at StoneX.
The funding, he said, is consistent with the CHIPS Act, especially given that USA Rare Earth’s mine and magnet facility are critical to countering China and boosting national security.
Chandra said his “antenna is up for freebies and giveaways,” but USA Rare Earth’s growth plan appears to be profitable and the company has been working for years on its mining and processing business.
But Robert Weissman, co-president of Public Citizen, accused the Trump administration of placing speed over corporate accountability and ethical safeguards when pushing rare earths mining and sidestepping due diligence practices.
“There is every reason to suspect ethical and environmental safeguards will not be meaningfully considered in this deal, which has all the trappings of yet another Trump grift and grab,” Weissman said in a statement.
