USA Rare Earth shares surged more than 20% after the company announced that the U.S. Department of Commerce plans to take an equity stake in the critical minerals startup. This proposed deal includes a $1.3 billion loan and $277 million in federal funding in exchange for common stock and warrants. Giving the U.S. government an 8% to 16% ownership stake. USA Rare Earth also raised $1.5 billion form private investors, though the agreement is still subject to final approvals and conditions.
This funding will help USA Rare Earth build a magnet manufacturing plant in Stillwater, Oklahoma, which is expected to be commissioned in early 2026. The funding will also go to develop the Round Top rare earth mine in Texas, with commercial mining planned for late 2028. The company estimates it will need $4.1 billion to execute its full plan and still must raise about $600 million more.
The investment is part if a broader effort by the Trump administration to strengthen a domestic rare earth and critical minerals supply chain. In turn, reducing U.S. dependence on China. This became a concern when Beijing tried to cut off rare earth exports last year during trade disputed with the Trump administration.
USA Rare Earth shares jump 20% as Commerce Department takes equity stake
This seems like a good move by the government to me. I don't think China is a huge threat to us, because of the amount of trade we do with them, but they are not super friendly towards us. So it does seem important that we reduce our dependency on them. This is well summarized and very informative!
ReplyDeleteThis is a big move for USA Rare Earth and government backing it plus the private funding must have made investors very excited. This seems like a good step toward building a U.S. based rare earth supply chain and reducing reliance on China.
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