usa rare earths Stocks rose on Monday after the critical minerals startup announced the Commerce Department would take a stake.
The Department of Commerce issued a letter of intent to provide USA Rare Earths with a $1.3 billion loan and $277 million in federal funding.
USA Rare Earths will issue 16.1 million shares of common stock and 17.6 million stock acquisition rights to Commerce. Depending on whether stock options are exercised, the U.S. government will own between 8% and 16% of the company, according to a filing with the Securities and Exchange Commission.
USA Rare Earths also plans to raise $1.5 billion from private investors. The proposed agreement with Commerce is subject to certain terms being finalized.
CEO Barbara Hampton said the agreement with the U.S. government allows USA Rare Earths to become an industry leader. The company’s stock soared 29% to Monday’s high and closed up about 8% at $26.72 per share.
“This is a watershed moment in our efforts to secure and grow a resilient and independent rare earths value chain based in this country,” Hampton told analysts on a conference call Monday.
“We have long said that meeting the urgent call to reassure the rare earth and critical minerals industry requires a multiplayer solution. This establishes us as one of the leaders,” she said.
USA Rare Earths is the latest in a series of mining companies the Trump administration has acquired stakes in to build a supply chain for rare earths and critical minerals in the West to reduce dependence on China.
Rare earths are a subset of critical minerals that are important raw materials in strategic industries such as defense, robotics, electric vehicles, and semiconductor manufacturing.
Magnet factory and mine
The capital infusion from the Trump administration will help USA Rare Earths move forward with plans to build a magnet manufacturing plant in Stillwater, Oklahoma, and a mine at a rare earth deposit called Round Top in Sierra Blanca, Texas.
Commerce will disburse the funds from 2026 to 2028 based on milestones as USA Rare Earths executes its business plan, Chief Financial Officer Rob Steele told analysts on a conference call.
USA Rare Earths plans to start operating its magnet manufacturing plant in the first quarter of 2026, Steele said. He said the company aims to start commercial mining operations at Round Top in late 2028.
Steele said the company needs about $4.1 billion to implement its plan. He said about $3.5 billion would remain between current cash and government loans and private financing announced Monday. This will require USA Rare Earths to raise an additional $600 million.
“We believe the remaining capital can be raised from attractive sources. This should be considered equity capital, but it could also come from institutional investors as well as strategic investments,” Steele said.
Funding conditions
However, USA Rare Earths must meet several conditions before the agreement with Commerce can be finalized. That includes raising at least $500 million from non-federal sources, which will be met with private funding announced Monday.
The company is also required to enter into two memorandums of understanding with end-users or midstream users of semiconductors, obtain raw material supply contracts through 2027, and define power plans for the magnet facility, among other terms, according to SEC filings.
The planned investment in USA Rare Earths comes after the Department of Defense signed a landmark contract with a rare earth mining company last summer. MP material This included equity stakes, price floors, and offtake agreements. The Trump administration also invested lithium america And last year it was Trilogy Metals.
The agreement with U.S. Rare Earths does not include price floors or offtake agreements.
The United States has relied on rare earth imports from China, which dominates global supply chains. Last year, the Chinese government tried to cut off rare earth exports during a trade dispute with the Trump administration.
“The U.S. Rare Earth Critical Minerals Project is essential to restoring America’s critical mineral independence,” Secretary of Commerce Howard Lutnick said in a statement. “This investment will ensure that our supply chain becomes more resilient and less dependent on foreign countries.”
