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U.S. Government Backs Rare Earth Startup with Major Investment
Stillwater, OK / Sierra Blanca, TX – In a significant move to bolster domestic critical mineral independence, USA Rare Earth, a burgeoning startup, has secured a substantial financial package from the Department of Commerce. The company announced Monday that it will receive a $1.3 billion loan and an additional $277 million in federal funding.
This considerable investment will fuel USA Rare Earth’s ambitious plans, including the construction of a magnet manufacturing plant in Stillwater, Oklahoma, and the development of a rare earth mine at the Round Top mineral deposit in Sierra Blanca, Texas.
In exchange for the funding, USA Rare Earth will issue 16.1 million shares of common stock and 17.6 million warrants to the Department of Commerce. This arrangement will grant the federal government an 8% to 16% stake in the company, depending on the exercise of the warrants, according to a Securities and Exchange Commission filing. Following the announcement, USA Rare Earth shares reportedly surged over 20% on Monday.
Barbara Humpton, CEO of USA Rare Earth, hailed the government deal as a pivotal moment, stating it would establish the company as an industry leader. “This is a watershed moment in our work to secure and grow a resilient and independent rare earth value chain based in this country,” Humpton told analysts, emphasizing the need for a collaborative solution to address the nation’s critical minerals needs.
Commerce will disburse the funds between 2026 and 2028, contingent on USA Rare Earth achieving specific milestones outlined in its business plan, explained Chief Financial Officer Rob Steele. While the company’s overall plan requires approximately $4.1 billion, Steele indicated they still need to raise around $600 million in additional capital, which he anticipates will come from equity capital, including strategic and institutional investors.
This strategic investment comes as the United States seeks to reduce its reliance on foreign nations, particularly China, which currently dominates the global rare earth supply chain. Past trade disputes have highlighted the vulnerability of this reliance, with Beijing attempting to restrict rare earth exports.
Commerce Secretary Howard Lutnick underscored the importance of the project, stating, “USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence. This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”
Echoing this sentiment, U.S. Energy Secretary Chris Wright affirmed, “The Department of Energy is ending America’s reliance on foreign nations for the critical materials essential to our economy and national security.
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.”
Michael Grimes, Executive Director of the U.S. Investment Accelerator, further emphasized the national and economic security implications.
“Accelerating the onshoring of rare earth minerals, metals, and magnets is paramount to national and economic security,” Grimes said. “With the Department of Commerce’s funding for USA Rare Earth’s vertically integrated mine-to-magnet operations, we will significantly increase the domestic supply of crucial components for semiconductors, defense and numerous other industries strategic to the United States.”