TLDR
- Trump administration investing $1.6 billion in USA Rare Earth for 10% ownership stake
- Deal includes 16.1 million shares plus warrants for 17.6 million more shares at $17.17 each
- Investment funded through CHIPS Act, linking rare earth minerals to semiconductor supply chain
- Oklahoma-based miner building Texas mine and magnet facility with 2026 production start
- Follows previous government stakes in Intel, MP Materials, and other strategic resource companies
The federal government is investing $1.6 billion in USA Rare Earth. The transaction gives Washington a 10% ownership stake in the Oklahoma-based mining company.
The deal structure includes 16.1 million direct shares. The government also receives warrants to purchase another 17.6 million shares at $17.17 each.
This represents the largest federal investment in the rare earth mining sector. USA Rare Earth plans to announce an additional $1 billion in private financing alongside the government deal.
The company currently holds a market valuation of $3.7 billion. It focuses on heavy rare earth deposits located within U.S. territory.
Funding for the investment comes from the CHIPS and Science Act of 2022. The Commerce Department CHIPS office normally backs domestic semiconductor and equipment projects.
The government now treats rare-earth minerals as part of the semiconductor and AI hardware supply chain. This connects mining operations directly to technology manufacturing needs.
Production Facilities Moving Forward
USA Rare Earth is constructing a mine in Sierra Blanca, Texas. A magnet production plant is also planned for Stillwater, Oklahoma.
Both facilities should begin commercial production in the first half of 2026. The plants will manufacture neodymium magnets.
These magnets are used in electric vehicle motors, defense systems, and data center equipment. Electric vehicle makers depend on these materials for motor production.
The investment includes $1.3 billion in senior secured debt financing. A Commerce Department official verified the transaction was completed directly with the company.
Government Expands Resource Strategy
This deal extends a pattern of strategic federal investments. The administration wants to secure supply chains for critical resources.
In August 2025, the government converted CHIPS Act grants into a $5.7 billion equity position in Intel. That transaction gave Washington a 10% stake in the semiconductor manufacturer.
The administration also purchased a 15% stake in MP Materials. Similar transactions were completed with Lithium Americas and Trilogy Metals during 2025.
These investments aim to reduce dependence on foreign suppliers for essential materials. China currently controls most global rare earth production and processing capacity.
The Commerce Department and Defense Department coordinated on this transaction. Both agencies prioritize expanding domestic rare earth output.
Direct government investment may lower funding risks for mining operations. Federal backing could accelerate project timelines for domestic mineral production.
Federal ownership might increase regulatory scrutiny. Companies receiving government capital could face stricter compliance requirements.
Semiconductor companies including Nvidia and AMD need reliable supply chains for AI hardware. Intel’s domestic manufacturing expansion benefits from stable mineral access.
Trump administration investments in strategic sectors now total more than $10 billion. The spending encompasses steel, minerals, nuclear energy, and semiconductors.
The Commerce Department and USA Rare Earth declined to comment on the Financial Times report. The White House has not responded to questions about the transaction.
