U.S. takes minority stake in USA Rare Earth with $1.6B Commerce Department package to boost domestic supply
The Trump administration struck a $1.6 billion investment package with USA Rare Earth, including proposed federal funding and a major loan, as Washington accelerates efforts to build U.S. critical-minerals and magnet manufacturing capacity and reduce reliance on China.
The U.S. government is taking a minority stake in USA Rare Earth as part of a $1.6 billion Commerce Department investment package aimed at expanding domestic production of minerals and components used in high-tech manufacturing, the Associated Press reported Monday.
USA Rare Earth, based in Stillwater, Oklahoma, said the funding is intended to advance a mine project in Texas and build a magnet manufacturing facility in Oklahoma—two steps officials framed as central to reducing U.S. dependence on overseas supply chains.
AP reported that the agreement, tied to the Commerce Department’s CHIPS program, includes $277 million in proposed federal funding and a $1.3 billion senior secured loan. In return, the Commerce Department will receive 16.1 million shares of common stock and rights to purchase an additional 17.6 million shares.
The investment reflects long-running national security concerns about critical minerals. AP noted that China processes more than 90% of the world’s critical minerals, and U.S. officials argue that this concentration creates strategic vulnerabilities for industries ranging from smartphones and robotics to electric vehicles and defense systems.
The report said the USA Rare Earth deal is the third recent government investment in a U.S. operator in the sector. AP referenced earlier moves including Pentagon backing for MP Materials and a separate partnership announced with rare earth startups Vulcan Elements and ReElement Technologies intended to scale up U.S. access to materials and technology used across high-tech and military equipment supply chains.
Beyond the immediate financing, the development underscores a broader shift in industrial policy: linking minerals, manufacturing capacity, and strategic stockpiles. If the mine and magnet facility proceed on schedule, USA Rare Earth could become a more visible node in U.S. efforts to localize critical parts of the value chain that currently run heavily through China.