U.S. takes stake in USA Rare Earth as Commerce backs mine-to-magnet plan with proposed $1.6B package
The Trump administration is backing USA Rare Earth with a proposed $1.6 billion package tied to a domestic rare-earth mine and magnet manufacturing push. The deal includes federal funding, a large loan and an equity component as the U.S. tries to reduce dependence on China.
The Trump administration has moved to support USA Rare Earth with a proposed financing package designed to strengthen domestic supply chains for critical minerals and permanent magnets. The Commerce Department’s backing would combine federal funding and a major loan, and it also involves the U.S. taking an equity position in the company.
According to the company and government details reported Monday, the proposal totals $1.6 billion, made up of $277 million in federal funding and a $1.3 billion senior secured loan connected to the Commerce Department’s CHIPS program. The structure is meant to speed development from mining to processing and magnet manufacturing inside the United States.
The arrangement would give the U.S. government 16.1 million shares and the right to purchase additional shares through warrants. Supporters of the initiative say the equity component aligns public investment with taxpayer returns while helping the U.S. rebuild industrial capacity for materials used in defense systems, electronics and other strategic sectors.
USA Rare Earth’s plan centers on developing a rare-earth resource in Texas and building a magnet manufacturing operation in Oklahoma. Magnets made with rare earths are crucial for a wide range of technologies, and supply constraints have become a major national security and industrial policy concern.
The announcement fits a broader U.S. effort to reduce reliance on China, which dominates the processing and refining stages of many critical minerals. Policymakers have argued that domestic mining alone is not enough; refining and magnet production must also be expanded to avoid bottlenecks.
The proposed package is not the only federal move in this space, as Washington has increasingly blended loans, grants and partnerships to accelerate U.S. capacity. For investors, the deal also highlights how industrial policy has become a central driver of valuation for companies tied to strategic supply chains.