Shares of USA Rare Earth jumped sharply in premarket trading on Monday after it received a non-binding Letter of Intent (LOI) from the US Department of Commerce and a collaboration with the US Department of Energy to receive a $1.6 billion debt-and-equity investment package.
“The Department of Commerce’s CHIPS Program has provided an LOI covering a total of $1.6 billion, including $277 million in proposed federal funding and $1.3 billion in a proposed senior secured loan under the CHIPS Act,” USA Rare Earth said.
“In conjunction with this announcement, USAR has raised a common stock PIPE for $1.5 billion anchored by Inflection Point with participation from large mutual fund complexes,” it added.
The stock was trading up about 36% before the opening bell, extending a rally that has seen it climb roughly 75% year to date and more than double over the past year.
When completed, the 10% holding would make the Trump administration the company’s largest public shareholder, based on data compiled by LSEG.
Details of the investment
As part of the deal, Washington would receive 16.1 million shares in USA Rare Earth, as well as warrants for an additional 17.6 million shares, USA Rare Earth said.
Both the shares and warrants would be priced at $17.17 per share, close to where the stock traded earlier this month.
“The non-binding LOI with the Department of Commerce’s CHIPS Program includes $277 million of proposed federal funding and a proposed $1.3 billion senior secured loan.”
“Additionally, USAR will issue to the Department of Commerce 16.1 million shares of common stock and approximately 17.6 million warrants.”
“USAR has also signed a securities purchase agreement for a $1.5 billion PIPE transaction (69.8 million shares issued at $21.50 per share) with Inflection Point and other fundamental and strategic investors. The PIPE transaction, together with the proposed US Government funding and loan, would bring the total amount of capital to $3.1 billion,” the company said.
The investment highlights the administration’s growing involvement in the domestic critical minerals sector, as the United States seeks to reduce its reliance on China, which dominates global rare earth processing.
Rare earths are a group of 17 minerals used in a wide range of technologies, from consumer electronics and electric vehicles to advanced military systems.
The US currently produces only limited volumes of rare earths, a gap that has prompted successive efforts by Washington to support domestic mining and processing capacity.
“USA Rare Earth’s heavy critical minerals project is essential to restoring US critical mineral independence,” said Secretary of Commerce Howard Lutnick in the press release.
“This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”
Strategic assets and expansion plans
USA Rare Earth is developing a rare earths mine in Sierra Blanca, Texas, in partnership with Texas Mineral Resources. The project is slated to begin production by 2028.
Separately, the company is building a magnet manufacturing facility in Stillwater, Oklahoma, which is expected to come online later this year.
By 2030, the company aims to extract up to 40,000 metric tonnes per day of rare earth and critical mineral feedstock from its Round Top deposit in Texas, with commercial production targeted to begin in 2028, it said on Monday.
Processing capacity is also set to expand significantly.
The company plans to process a combined 8,000 tonnes per year of third-party mixed rare earth carbonate and heavy rare earth elements, as well as critical mineral oxides and concentrates, at the Round Top site.
In addition, the investment is intended to support the reshoring of around 10,000 tonnes per year of heavy rare earth metal and alloy production and strip-casting capacity to the United States.
Those capabilities do not currently exist domestically and would be developed through the company’s subsidiary, Less Common Metals, which specialises in rare earth metal-making and alloy production.
Magnets made from rare earth elements are critical components in products such as smartphones, washing machines, medical equipment, and F-35 fighter jets.
They are also essential to electric vehicle motors and a range of defence applications.
The company has hired Cantor Fitzgerald to assist with its fundraising efforts, according to one of the sources.
The financial services firm is chaired by Brandon Lutnick, the son of US Secretary of Commerce Howard Lutnick.
Move follows Trump administration’s broader push into critical minerals
The reported USA Rare Earth investment follows a series of moves by the Trump administration to deepen its presence in the mining sector.
Last year, Washington took equity stakes in MP Materials, Lithium Americas, and Trilogy Metals, signalling a more active role in securing supply chains for strategically important minerals.
A senior administration official said last month that more “historic deals” with US mining companies were in the pipeline.
In July, the Department of Defense agreed to invest an initial $400 million in MP Materials, another major US rare earths producer.
Shares of rare earths miners broadly rallied in 2025, driven by tightening global supplies and intensifying competition among governments to secure domestic sources of critical minerals.
Gains were further fuelled by Trump’s recent attempt to acquire resource-rich Greenland, which underscored the strategic importance of mineral security.
Market reaction spreads across sector
The surge in USA Rare Earth shares spilled over to other companies in the sector on Monday.
MP Materials rose about 5.7% in premarket trading, while Ramaco Resources gained 8.2%.
USA Rare Earth shares were last up around 38.5% before the bell, positioning the stock to build on a more than 100% jump so far in January.
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