U.S. takes minority stake in USA Rare Earth in $1.6 billion package to boost domestic critical minerals
The Trump administration is backing USA Rare Earth with federal funding and a large loan package, taking an equity stake as Washington ramps up efforts to reduce reliance on Chinese rare earth supply chains.
Government-backed financing and an ownership stake
The Trump administration is investing in USA Rare Earth as part of a financing package designed to strengthen U.S. production of critical minerals and magnets. The Associated Press reported Monday, January 26, 2026, that the U.S. Commerce Department is taking a minority stake in the company while providing a mix of funding and lending support.
AP said the overall arrangement totals $1.6 billion and includes $277 million in federal funding alongside a $1.3 billion loan. In exchange, the government receives equity in the company and the ability to increase that position under additional terms, reflecting a more direct industrial-policy approach to supply-chain security.
What the money is for
The support is aimed at accelerating a rare earth mine project in Texas and expanding magnet manufacturing capacity in Oklahoma. These steps target a key bottleneck in the supply chain: processing and producing materials needed for defense systems, electronics, and energy technologies—areas where China plays an outsized role globally.
The AP story placed the investment within a broader federal push to build domestic capacity for minerals and components considered strategically vital. That includes prior federal involvement with other firms and additional initiatives discussed in Washington to coordinate or expand critical-minerals development.
Why rare earths are politically and economically sensitive
- National security: magnets and specialty materials are used in weapons systems and aerospace.
- Industrial competitiveness: EVs, robotics and advanced manufacturing depend on stable access.
- Geopolitics: supply concentration can become leverage during trade disputes.
Investors also reacted to the announcement, as shares in rare-earth-linked companies often move sharply on signals that government support may reduce financing risk—though long timelines and permitting challenges remain.