U.S. takes stake in USA Rare Earth in $1.6 billion package to boost domestic minerals and magnets

A new push to secure critical supply chains

The U.S. government is moving to deepen its role in the domestic rare-earth industry, backing USA Rare Earth with a proposed $1.6 billion package that includes federal funding and a large loan while also giving Washington an ownership stake. The arrangement is aimed at accelerating a mine-to-magnet supply chain in the United States, reflecting growing concern that dependence on China for processing and magnet production creates economic and national security vulnerabilities.

USA Rare Earth said it entered a non-binding letter of intent with the U.S. Department of Commerce through the CHIPS Program, covering $277 million in proposed federal funding and a proposed $1.3 billion senior secured loan. In exchange, the government would receive shares and warrants, aligning taxpayer returns with project milestones. The company also announced additional private financing intended to increase the total capital available for development.

What the funding is expected to support

• Development of a rare-earth and critical-minerals project in West Texas (Round Top deposit).
• Construction and scaling of magnet manufacturing in Oklahoma to serve U.S. industrial demand.
• A broader domestic heavy rare-earth “mine-to-magnet” platform supporting defense, energy, and semiconductor supply chains.

Markets reacted quickly. USA Rare Earth shares surged as investors priced in both government backing and the prospect of faster progress toward production, though timelines remain multi-year and subject to permitting, engineering, and financing milestones. Supporters argue the deal reduces strategic risk by anchoring domestic capability in materials that are critical for EV motors, robotics, drones, and advanced defense systems.

The bet is that building magnets at home matters as much as mining—because processing and manufacturing are where geopolitical leverage often sits.

The move also fits a wider pattern of government involvement in critical-minerals projects, including prior federal investments meant to expand domestic capacity. Analysts note that such partnerships can de-risk early stages, but they do not eliminate commodity volatility, execution risk, or the challenge of competing against established global supply chains.