U.S. takes stake in USA Rare Earth in $1.6B push to build domestic mine-to-magnets supply chain

The U.S. government is taking a minority stake in USA Rare Earth as part of a $1.6 billion package aimed at accelerating domestic production of critical minerals and the magnets used across defense and advanced manufacturing. The investment is being structured through the Commerce Department’s CHIPS program.

USA Rare Earth said the support is intended to advance work on a rare earth mine in Texas and build a magnet manufacturing facility in Oklahoma. The package includes proposed federal funding alongside a much larger senior secured loan, reflecting the scale of capital needed to develop mine-to-magnet capability inside the United States.

Under the arrangement, the government receives an equity position through common shares and also obtains rights to purchase additional shares through warrants. Markets reacted quickly: the company’s stock moved sharply higher in early trading as investors digested the scale and symbolism of direct federal backing.

Officials have framed the move as part of a strategic effort to reduce U.S. dependence on China, which dominates processing and refining for many rare earth elements. Analysts have long warned that reliance on foreign supply chains creates vulnerabilities, especially for industries tied to semiconductors, military systems, and electrification.

The investment follows a pattern of recent government-supported deals across the sector, combining public capital with private financing to speed projects that are expensive, slow to permit, and exposed to commodity price swings. Supporters argue it is necessary to build resilience; critics warn it could pick winners and require careful oversight.

• $1.6B package supports a Texas mine and an Oklahoma magnet plant
• CHIPS-linked structure blends grants, loans, and equity-style returns
• Goal: reduce reliance on China and bolster national security supply chains