In a landmark move for U.S. industrial policy, the Trump administration is finalizing a $1.6 billion investment in USA Rare Earth (USAR), taking a 10% equity stake in the company.
The deal, expected to be formally announced on Monday, January 26, 2026, represents the largest federal intervention in the domestic critical minerals sector to date. It is designed to break China’s near-monopoly on the “midstream” processing of metals essential for semiconductors, EV magnets, and defense systems.
“America First” Mining: The $1.6 Billion Breakdown
The investment is a hybrid of equity and debt, structured to provide the government with direct oversight of the company’s “mine-to-magnet” vertical integration.
The Financial Structure
- Equity Stake: The U.S. government will acquire 16.1 million shares at a price of $17.17 per share, representing a roughly 25% discount to the recent market close.
- Warrants: The deal includes warrants for an additional 17.6 million shares, allowing the government to increase its upside if the company hits key milestones.
- Senior Secured Debt: The bulk of the package—$1.3 billion—is being provided as a loan through a Department of Commerce facility established under the CHIPS and Science Act.
- Private Raise: Parallel to the federal deal, Cantor Fitzgerald is leading a $1 billion private investment round, which has reportedly already surpassed its funding targets.
Strategic Assets: Texas and Oklahoma
The funding is specifically earmarked for two critical projects that will allow the U.S. to handle rare earths from extraction to final product:
| Project | Location | Strategic Importance |
| Round Top Mine | Sierra Blanca, Texas | One of the world’s largest “heavy” rare earth deposits; contains 15 of the 17 critical elements. |
| Magnet Plant | Stillwater, Oklahoma | Set to enter commercial operations in 2026 with a 5,000-tonne annual capacity for permanent magnets. |
| Processing Lab | Wheat Ridge, Colorado | Specialized in the difficult “separation” and refining process currently dominated by China. |
A “Dangerous Precedent” or National Security Necessity?
The deal has sparked a fierce debate over “Government Capitalism.”
- The National Security Argument: Proponents argue that since China has historically “weaponized” rare earth exports, the U.S. cannot rely on market forces alone to build a competing supply chain that takes 10+ years to mature.
- The Conflict of Interest Concerns: Critics point to the involvement of Cantor Fitzgerald, a firm previously led by current Commerce Secretary Howard Lutnick (and now run by his sons), as well as general concerns about “picking winners” in the private sector.
- Market Impact: Following the news, USAR stock has surged over 40% in a single week, with an implied valuation of nearly $16 billion—far exceeding its current $3.7 billion market cap.
Conclusion: The New Industrial Playbook
This $1.6 billion gamble follows similar 2025 stakes taken by the Trump administration in Intel, MP Materials, and Lithium Americas. By becoming a shareholder rather than just a grant-giver, the government is signalling a shift toward a “command-and-control” model for critical technologies. If successful, USA Rare Earth will begin full-scale production at the Round Top mine by late 2028, providing a domestic alternative for the magnets that power everything from F-35 fighter jets to Tesla motors.
