US govt to acquire 10% stake in USA Rare Earth, ramps up efforts for domestic production

The US government is set to acquire a 10% stake in Oklahoma-based USA Rare Earth, as part of Trump administration's $1.6 billion investment. The package is aimed towards supporting the firm to develop a local mine and magnet production facility, according to two sources familiar with the deal.

In addition to this government-backed investment, USA Rare Earth is also securing a separate $1 billion private funding round, which, along with the public announcement, is expected on Monday, Reuters reported. The company will also host a morning conference call with investors to discuss the terms.

America's push for rare earths

Rare earth minerals, a group of 17 elements critical for electronics and military equipment, are largely processed by China. The output from United States, however, remains limited, prompting Washington to make efforts to expand domestic production.

Under the investment terms, the US government will receive 16.1 million shares in USA Rare Earth, along with warrants for an additional 17.6 million shares. Both are priced at $17.17 per share, close to the company’s trading level earlier this month.

For fundraising support, USA Rare Earth has enlisted Cantor Fitzgerald, chaired by Brandon Lutnick, the son of US secretary of commerce Howard Lutnick, a source was quoted as saying by Reuters.

At present, USA Rare Earth is developing a mine in Sierra Blanca, Texas, in collaboration with Texas Mineral Resources, expected to begin operations by 2028. Its magnet manufacturing facility in Stillwater, Oklahoma, is scheduled to start later this year.

This latest investment follows previous equity stakes taken by the Trump administration in MP Materials , Lithium Americas , and Trilogy Metals. A senior Trump official told Reuters last month that more “historic deals” with the US mining sector are planned to increase production of lithium, rare earths, and other critical minerals vital to national defence, artificial intelligence, and related industries.