U.S. takes minority stake in USA Rare Earth in $1.6 billion push to expand domestic supply

Government-backed rare earth investment expands

The Trump administration is taking a minority stake in USA Rare Earth as part of a $1.6 billion investment aimed at strengthening U.S. supply chains for critical minerals. The Associated Press reported that the Commerce Department investment supports a rare earth mine in Texas and a magnet manufacturing facility in Oklahoma, reflecting a broader strategy to reduce reliance on China for materials considered strategically important.

AP said the package includes $277 million in federal funding and a $1.3 billion loan. The government would receive shares and rights to buy additional shares, positioning the investment as both industrial policy and a financial stake in a sector viewed as vital to national security and advanced manufacturing.

Why rare earths are a focal point

Rare earth elements are used in a wide range of products, including defense systems, electronics, and energy technologies. AP noted that China processes the vast majority of the world’s critical minerals, a concentration that has prompted U.S. efforts to develop more domestic capacity and reduce vulnerability to trade or geopolitical shocks. The deal with USA Rare Earth is part of a series of federal investments intended to accelerate mining, processing, and magnet production on U.S. soil.

Beyond the headline funding number, the move also signals that Washington is willing to use direct financing and equity-like structures to speed up industrial buildouts. For markets, the announcement underscores that critical minerals policy is increasingly intersecting with capital markets, as government commitments can change the financing outlook for projects that otherwise struggle with long timelines and high upfront costs.

• AP: $1.6 billion investment includes $277 million in federal funding and a $1.3 billion loan
• Project focus: Texas mine and Oklahoma magnet facility
• Strategic goal: reduce U.S. dependence on China for critical minerals processing