The U.S. government, under the Trump administration, has committed to a major $1.6 billion investment in USA Rare Earth, an Oklahoma-based company focused on mining and processing rare earth elements. This move is part of a broader strategy to strengthen domestic supply chains for these critical minerals and reduce heavy dependence on China, which controls about 90% of global rare earth processing.
Rare earths are a group of 17 elements vital for modern technology. They appear in everyday items like smartphones, electric vehicles, and medical devices, as well as defense systems such as missiles, fighter jets, and advanced electronics. “Heavy” rare earths, which USA Rare Earth specializes in, play a particularly important role in military and high-tech applications.
The investment package, announced in late January 2026, includes:
- $277 million in direct federal funding for equity, giving the government approximately a 10% stake in the company (through 16.1 million shares and warrants for another 17.6 million shares, priced at $17.17 each).
- $1.3 billion in a senior secured loan at market rates, provided through the Commerce Department’s CHIPS Program (originally created under the 2022 CHIPS and Science Act to support semiconductors but now repurposed for critical minerals).
Commerce Secretary Howard Lutnick described the deal as essential for “restoring U.S. critical mineral independence.” He stated that the investment “ensures our supply chains are resilient and no longer reliant on foreign nations.” The funding will help USA Rare Earth advance its projects, including developing a large mine in Sierra Blanca, Texas (containing 15 of the 17 rare earth elements), and building a magnet manufacturing facility in Stillwater, Oklahoma. The company aims to start commercial mining around 2028 and ramp up production to supply semiconductors, defense, and other strategic industries.
This government support came alongside a separate private fundraising effort. USA Rare Earth raised $1.5 billion through a private investment in public equity (PIPE) deal, led by Inflection Point and other investors. Combined, these sources provide the company with over $3 billion in new capital to accelerate its “mine-to-magnet” operations.
The announcement boosted USA Rare Earth’s stock price significantly, with shares rising more than 15% (and in some reports up to 20-27% in early trading) following the news.
The deal fits into a pattern of Trump administration actions since the president’s return to office. Over the past year, the government has invested in several critical minerals companies, including MP Materials (which operates the only active U.S. rare earth mine), Vulcan Elements, Lithium Americas, and Trilogy Metals. These efforts aim to counter China’s dominance, especially as Beijing has restricted exports in response to U.S. tariffs and trade tensions, creating vulnerabilities for American manufacturers and national security.
While the U.S. and allies like Australia continue building alternative supply chains, experts note that China still holds a near-monopoly on processing. Full independence remains a long-term goal, but investments like this one represent a significant step toward domestic production of these strategic materials. The agreement is non-binding at this stage, subject to further reviews and milestones, but it signals strong federal commitment to securing resources essential for technology and defense.