Report: U.S. plans $1.6 billion injection into USA Rare Earth for 10% stake as supply-chain push accelerates

The United States is preparing to inject $1.6 billion into USA Rare Earth and take a 10% equity stake in the company, according to a report that cited people familiar with the matter. The investment would represent one of the most direct federal moves yet to bolster a domestic rare-earth supply chain that policymakers increasingly view as critical for national security and manufacturing.

The report said the government backing is expected alongside a separate private financing package, and that the combined funding would be announced on Monday. Traders responded quickly: the company’s shares surged in premarket trading as investors priced in the implications of both capital support and perceived strategic importance.

Rare earths are essential inputs for magnets used in advanced electronics, defense systems, EV motors, and a wide range of industrial equipment. U.S. officials have repeatedly argued that domestic production and processing capacity must expand to limit exposure to geopolitical leverage and to reduce vulnerability to export controls or supply disruptions.

Under the reported structure, the U.S. would receive a block of shares and additional warrants, creating an ownership position tied to the company’s future performance. While the White House and the company did not immediately comment in the report, the market reaction underscored how closely investors are tracking federal industrial-policy signals.

The planned deal fits into a wider pattern of government efforts to stimulate domestic mining, processing, and downstream manufacturing for critical minerals. Analysts say the next key question is execution: timelines for permitting, plant construction, and scaling processing capacity will determine whether the investment translates into stable, competitive supply.