USA Rare Earth soars after signing deal with US government for $1.6 billion in federal funding
USA Rare Earth signed a nonbinding letter of intent with the US government for $1.6 billion in federal funding, sending shares skyward in early trading.
“USAR and the Department of Commerce will mobilize a multi-year partnership at unprecedented scale and speed to build out capacity across heavy rare earth feedstock, processing, metal, and magnets,” Chairman Michael Blitzer said in a press release. In addition to the government financing, the company also announced that it has raised $1.5 billion through private investment in public equity in a direct sale.
The Trump administration will receive a 10% stake in the company (as well as warrants). These were reportedly priced at about a 30% discount to where the stock closed on Friday per the Financial Times, which first reported news of this deal on Saturday. Shares of the rare earths producer had jumped 9% to end the week on a high note, as did most of its peers. That rally came amid President Donald Trump’s push for a deal that gives the US more control over Greenland, including access to its mineral resources.
The equity position accounts for less than $300 million of the $1.6 billion package, with the remainder dedicated to debt and linked to the CHIPS Act.
USA Rare Earth, which controls the mineral rights to the Round Top deposit in Texas, is the latest company to benefit from the US government’s push to bolster the industry, whose outputs are used in everything from fluorescent lights to EV batteries to semiconductors. Aside from Intel and L3Harris, the Trump administration’s forays into equity ownership have focused on critical minerals producers. These include a 15% position in MP Materials revealed in July, as well as 5% and 10% stakes in Lithium Americas and Trilogy Metals, respectively, announced in October.
The government’s involvement has helped spur more private interest in the space, both from massive institutions like JPMorgan aiming to support the development of strategically important industries as well as investors looking to “follow the feds” and own companies that the government has already invested in, or may do so in the future, in hopes of outsized returns.
Other companies involved in the production of rare earths and other critical minerals include Critical Metals, United States Antimony Corp., and American Battery Technology Co..
