Commerce Dept invests $1.6B in rare earth miner USA Rare Earth

The U.S. Commerce Department announced Monday a $1.6 billion investment in USA Rare Earth, an Oklahoma-based company, providing funding and financing to advance rare earth mining operations in Texas and build a magnet manufacturing facility in Oklahoma. The Commerce Department will receive equity stake and future purchase rights as part of the agreement. The investment is part of a broader Trump administration effort to reduce American dependence on China, which processes more than 90% of the world’s critical minerals.

The government is intensifying efforts to break China’s near-monopoly over critical mineral supply chains, which the administration views as a national security vulnerability essential to smartphones, robotics, electric vehicles, and military equipment.

The Investment Structure

The Commerce Department will receive 16.1 million shares of USA Rare Earth common stock and rights to purchase 17.6 million additional shares, giving the government a significant equity stake in the company. Shares of USA Rare Earth jumped more than 13% before U.S. markets opened on the announcement.

The agreement operates through the Commerce Department’s CHIPS program, which focuses primarily on semiconductor support but has been expanded to critical mineral supply chains. The $277 million in direct federal funding and $1.3 billion in senior secured loan financing represent one of the largest government investments in domestic rare earth operations to date.

The Strategic Rationale

“USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence,” Commerce Secretary Howard Lutnick said in a statement. “This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”

China’s control of critical mineral processing has been a longstanding concern for U.S. policymakers. The country processes more than 90% of the world’s critical minerals — a list of 50 materials that includes 17 rare-earth elements essential to smartphones, robotics, electric vehicles, advanced batteries, and military equipment. During recent trade tensions, China used its supply dominance as leverage in negotiations with Washington.

Part of a Broader Push

USA Rare Earth is the third U.S. rare-earth operator in which the Trump administration has invested in recent months, reflecting a comprehensive strategy to build domestic production capacity.

The Pentagon invested $400 million in rare-earth producer MP Materials and gave the U.S. company an additional $150 million loan in August. In November, the Trump administration announced a $1.4 billion partnership with rare earth startups Vulcan Elements and ReElement Technologies, designed to scale up U.S. access to critical minerals and related manufacturing technology.

The Trump administration’s tax and spending cut bill provides substantial backing for these efforts. It allocates $2 billion for the Pentagon to boost the U.S. stockpile of critical minerals and $5 billion through 2029 to invest in critical mineral supply chains. Between 2020 and 2024, the Pentagon awarded more than $439 million to establish domestic rare earth supply chains.

A bipartisan group of lawmakers has proposed creating a new agency with $2.5 billion in annual funding to spur production of rare earths and other critical minerals.