The Trump administration will invest $1.6 billion in Oklahoma-based USA Rare Earth, giving the government an equity stake that could exceed 15% as the White House continues its spree of investments in publicly traded companies.
Since Trump began his second term, the federal government has acquired ownership—or the right to purchase shares—in at least 10 companies. These include a “golden share” in Nippon Steel-owned U.S. Steel and becoming the largest shareholder in USA Rare Earth’s rival, MP Materials. The wave of dealmaking increasingly makes Trump the CEO-in-chief.
Six of the 10 pertain to the critical minerals industry, including rare earths, as the U.S. increasingly tries to break China’s near monopoly on the industry that’s vital to manufacturing everything from military equipment to cars to high-powered computing and data centers. Since Trump initiated tariff wars worldwide, China has leveraged its critical minerals and high-powered, magnet-manufacturing dominance.
“USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence,” said U.S. Commerce Secretary Howard Lutnick in a statement. “This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”
USA Rare Earth’s (USAR) stock jumped 8% on Jan. 26 after the deal was announced, increasing its market cap to $3.7 billion. The stock is up 125% since the beginning of the year.
The government’s ownership stake could range from 8% to 16% depending on whether all the warrants are executed, according to an SEC filing Jan. 26. The deal includes $277 million in direct federal funding and a $1.3 billion loan through the CHIPS Act. USAR also announced a PIPE (private investment in public equity) deal for $1.5 billion in private investment in its equity led by large mutual fund players. In PIPE deals, public companies raise fast capital by selling securities directly to private, institutional investors at a negotiated price, typically at a discount.
Industry analyst Neal Dingmann of William Blair said in a note there’s a likely “assumption that there is more government rare earth funding to come” for other companies.
The USAR deal gave the U.S. government a nearly 31% discount on its shares compared to its Jan. 23 closing price. The agreement triggered the subsequent jump in the share price.
While the USAR deal comes through the Commerce Department, the previous one with MP Materials was via the Defense Department, showing a lack of consistency in how the deals are negotiated as the administration takes a bespoke approach.
Likewise, the government built in guaranteed flooring pricing into the MP Materials deal, while the USAR agreement includes no such pricing mechanism—yet. The argument is the rare earths to be mined by USAR are less common and less subject to price dumping by China.
Future of USA Rare Earth
USAR doesn’t produce much yet either, but it’s on the cusp of doing so. Its Round Top rare earths mining and processing project in West Texas is slated to open by the end of 2028—two years earlier than prior projections—and its high-powered magnet manufacturing plant in Stillwater, Oklahoma is slated to open by the end of this spring.
Last year, USAR bought UK-based Less Common Metals, giving the company a processing and metal-making hub in the UK with a new facility beginning construction soon in France.
The goal for USAR is to become the only domestic mine-to-magnet manufacturer specializing in the rarer heavy rare earths, especially the dysprosium and terbium metals that are key to high-powered magnets. While rare earths are not, in fact, rare, it is harder to find them in high enough concentrations to economically mine and process them. The heavier rare earths are even more difficult to extract in large enough amounts.
MP Materials is currently the nation’s only mine-to-magnet manufacturer, but MP specializes in mining the lighter rare earths at its Mountain Pass hub in California.
As for the U.S. government’s other investments in critical minerals, the Trump administration has invested in two Canadian players, Lithium Americas and Trilogy Metals—both of which are developing U.S. projects—and in North Carolina-based magnets manufacturer Vulcan Elements. The government also has a deal with critical minerals processor, Indiana-based ReElement Technologies, for the rights to buy stock.
Dingmann suggested keeping an eye on other players the administration could invest in, such as mining developers NioCorp Development, United States Antimony, and even Australia’s Lynas Rare Earths. Lynas is the world’s largest rare earths player outside of China and is currently considering developing projects in Texas.
