US Government to Acquire 10% Stake in USA Rare Earth in Major $1.6 Billion Investment
The United States government is poised to acquire a significant 10% stake in Oklahoma-based USA Rare Earth as part of a substantial $1.6 billion investment package initiated by the Trump administration. According to two sources with direct knowledge of the transaction, this strategic move is designed to bolster the company's efforts in developing a local mine and a dedicated magnet production facility, marking a critical step in America's push for self-reliance in rare earth minerals.
Additional $1 Billion Private Funding Round and Upcoming Announcement
In a parallel development, USA Rare Earth is also securing a separate $1 billion private funding round, which is expected to be unveiled alongside the public investment announcement on Monday. Reuters reported that the company will host a morning conference call with investors to discuss the detailed terms of both funding initiatives, providing clarity on the financial structure and future plans.
America's Strategic Push for Rare Earth Independence
Rare earth minerals, comprising 17 essential elements crucial for advanced electronics and military equipment, are currently dominated by China in terms of processing and supply. The United States has limited domestic output, prompting Washington to intensify efforts to expand local production capabilities. This investment is a key component of a broader strategy to reduce dependency on foreign sources and enhance national security.
Investment Terms and Share Details
Under the finalized investment terms, the US government will receive 16.1 million shares in USA Rare Earth, accompanied by warrants for an additional 17.6 million shares. Both the shares and warrants are priced at $17.17 per share, a figure that aligns closely with the company's trading levels observed earlier this month, indicating a fair market valuation.
Fundraising Support and Key Personnel
To facilitate this fundraising effort, USA Rare Earth has enlisted Cantor Fitzgerald, chaired by Brandon Lutnick. Notably, Brandon is the son of US Secretary of Commerce Howard Lutnick, as confirmed by a source cited by Reuters. This connection underscores the high-level coordination involved in the deal, reflecting its importance to national economic and defense interests.
Project Developments and Operational Timelines
Currently, USA Rare Earth is actively developing a mine in Sierra Blanca, Texas, in collaboration with Texas Mineral Resources. This project is anticipated to commence operations by 2028, aiming to tap into domestic rare earth reserves. Additionally, the company's magnet manufacturing facility in Stillwater, Oklahoma, is scheduled to become operational later this year, further strengthening the supply chain for critical components.
Context of Previous Investments and Future Plans
This latest investment follows a series of equity stakes previously taken by the Trump administration in other mining firms, including MP Materials, Lithium Americas, and Trilogy Metals. A senior Trump official informed Reuters last month that more "historic deals" with the US mining sector are in the pipeline. These initiatives are focused on increasing production of lithium, rare earths, and other critical minerals vital to national defense, artificial intelligence, and related high-tech industries, highlighting a sustained commitment to securing America's industrial future.
