The United States government is preparing to make its largest-ever investment in the domestic rare earths industry, signaling a stronger push to secure critical mineral supplies that are essential for national security and advanced manufacturing.
As part of this move, the Trump administration is expected to inject $1.6 billion into USA Rare Earth, an Oklahoma-based mining company with access to some of the most significant heavy rare earth deposits in the country. The move aligns with Washington’s broader strategy to reduce reliance on foreign supply chains—particularly China—and strengthen domestic production of strategic materials.
This development has drawn widespread attention under the headline (US to invest $1.6bn in rare earths company to strengthen supply of critical minerals), highlighting its economic and geopolitical importance.
Government to Take Equity Stake in USA Rare Earth
Under the proposed arrangement, the US government will acquire a 10% ownership stake in USA Rare Earth, which is publicly traded and valued at approximately $3.7 billion. People familiar with the matter say the government will receive 16.1 million shares, along with warrants for an additional 17.6 million shares, both priced at $17.17 per share.
The government is expected to pay about $277 million for the equity portion of the deal. Based on the company’s recent trading price of $24.77, the shares and warrants together represent an implied paper gain of nearly $490 million.
Financing Backed by CHIPS and Science Act
In addition to the equity investment, USA Rare Earth will secure $1.3 billion in senior secured debt financing from the US government at market interest rates. The funding will come from a special financing facility established for the Department of Commerce under the CHIPS and Science Act of 2022.
A Commerce Department official confirmed that the transaction was completed directly between the department and the company, reinforcing the administration’s hands-on approach to strengthening domestic supply chains.
Timing Fueled by Renewed Investor Interest
Negotiations around the deal moved quickly this week as investor appetite for critical mineral stocks rebounded. This renewed interest followed President Donald Trump’s comments about a potential framework agreement that could give the US access to Greenland’s untapped mineral resources.
However, people close to the discussions emphasized that the USA Rare Earth transaction is not connected to Greenland and was already in motion before those remarks.
Strategic Importance to National Security
While USA Rare Earth declined to comment publicly, a senior official from the Commerce Department’s CHIPS office—part of the National Institute of Standards and Technology—said the government remains focused on “onshoring critical and strategic minerals essential to the semiconductor supply chain and US national security.”
Rare earth elements are vital components in products ranging from smartphones and electric vehicles to missile systems and fighter jets, making them a strategic priority for both the Commerce and Defense Departments.
Separate Private Funding and Cantor Fitzgerald’s Role
Alongside the government backing, USA Rare Earth is also raising more than $1 billion in private equity financing through Cantor Fitzgerald. Sources say this fundraising effort is separate from the federal investment and is not directly linked to it.
Cantor Fitzgerald, once led by current Commerce Secretary Howard Lutnick and now run by his sons, did not advise on the government deal itself. However, the firm has expanded its investment banking operations in recent years, aligning with the administration’s “America First” economic agenda.
Expanding Domestic Production Capacity
USA Rare Earth is developing a large-scale mining project in Sierra Blanca, Texas, which it says contains 15 of the 17 rare earth elements considered essential to modern technology and defense systems. The company is also planning to open a magnet manufacturing facility in Stillwater, Oklahoma, further strengthening domestic production capabilities.
Part of a Broader Government Strategy
This deal marks another example of the Trump administration’s willingness to intervene directly in private industry sectors deemed vital to national security. Similar moves include taking a 10% stake in chipmaker Intel and negotiating a so-called “golden share” arrangement in US Steel.
Last year alone, the administration invested in at least six mineral-focused companies, including MP Materials, Trilogy Metals, and Lithium Americas.
Conditions and Market Response
A key condition of the government’s investment required USA Rare Earth to raise at least $500 million from private investors. Due to strong demand, the company is now on track to raise over $1 billion through a financing structure known as a PIPE (private investment in public equity).
Investor enthusiasm has been reflected in the market, with USA Rare Earth shares more than doubling this year, including a sharp 40% jump this week. The company previously worked with Cantor Fitzgerald when it went public via a special purpose acquisition company in March last year.
