The Trump administration took an equity stake in a critical minerals company, marking yet another government deal in the sector aimed at reducing the United States’s reliance on China.
The deal is part of the Trump administration’s approach to secure a domestic supply of critical minerals, which are necessary for building technology-based applications such as fighter aircraft, munitions, batteries, wind turbines, smartphones, blenders, and much more. But, China controls the global supply chain, raising national security concerns and prompting the administration to seek ways to build the U.S. supply chain through unconventional means, such as taking equity stakes in private companies.
USA Rare Earth announced on Monday that it entered into a nonbinding agreement with the Commerce Department and a collaboration with the Department of Energy. As part of the agreement, the Commerce Department will provide the company with $1.6 billion, including $277 million in federal funding and a $1.3 billion loan.
In return, the mineral company will issue the Commerce Department 16.1 million shares of common stock and 17.6 million warrants.
The administration’s investment will help accelerate USA Rare Earth’s mineral business, which it said will be able to extract 40,000 metric tons per day of rare earth and critical mineral feedstock from its top deposit by 2030, with commercial production expected to begin in 2028.
“This landmark collaboration with the U.S. Government represents a transformative step in USAR’s mission to secure and grow a resilient, independent domestic rare earth value chain,” USA Rare Earth CEO Barbara Humpton said in a press release.
“We are grateful to President Trump, Secretary Lutnick, and Secretary Wright for their support and recognition of the strategic importance of rare earth materials and permanent magnets,” she said. “With this unprecedented show of public and private support for our Company, we are positioned to accelerate the build-out of important domestic capabilities that are essential to U.S. national security, global economic competitiveness, and critical technologies of the future.”
USA Rare Earth’s stock jumped more than 20% on Monday following the deal announcement.
The government’s deal with USA Rare Earth marks one of its largest investments in a mineral company. For the government to take a direct ownership stake in a private company is an unusual step.
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For instance, in July, the administration took a 15% stake in MP Materials, a rare earth producer, with the Department of Defense investing $400 million. The government has also taken stakes in mineral companies such as Lithium Americas, ReElement Technologies, Vulcan Elements, and Trilogy Metals.
The unconventional approach is meant to loosen China’s grip on the supply chain. China has imposed several restrictions on the export of rare earth materials to the U.S. In November, President Donald Trump reached an agreement with China to lift some export controls for a year, but restrictions on other rare earths remain.
