China currently processes over 90% of the world’s critical minerals and has leveraged its market dominance in the ongoing trade conflict with Washington.
USA Rare Earth announced on Monday that the U.S. Commerce Department will invest $1.6 billion to further develop a mine in Texas and construct a magnet manufacturing facility in Oklahoma.
Shares of USA Rare Earth surged by more than 13% prior to the opening of U.S. markets.
The agreement under the Commerce Department’s CHIPS program encompasses $277 million in proposed federal funding, along with a $1.3 billion senior secured loan. In exchange, the Commerce Department will receive 16.1 million shares of common stock, plus rights to purchase an additional 17.6 million shares.
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“The heavy critical minerals project by USA Rare Earth is crucial for restoring the independence of U.S. critical minerals,” stated Secretary of Commerce Howard Lutnick. “This investment guarantees that our supply chains are resilient and no longer depend on foreign nations.”
The Trump administration is ramping up initiatives to strengthen the critical mineral sector within the U.S. to break the dominance China holds over the global supply chain.
Experts, analysts, and lawmakers have been sounding alarms for years about America’s reliance on China for critical minerals—a category of 50 minerals that includes 17 coveted rare-earth elements—presenting a national security risk.
Efforts by President Donald Trump to acquire Greenland are part of this broader strategy.
Based in Stillwater, Oklahoma, USA Rare Earth is the third U.S. company to receive investment from the Trump administration in recent months.
The Pentagon also invested $400 million into rare-earth producer MP Materials, providing a $150 million loan to the U.S. company in August.
In November, the Trump administration and private investors announced a collaboration with rare earth startups Vulcan Elements and ReElement Technologies. This $1.4 billion partnership aims to enhance U.S. access to essential materials and technologies that are vital for a range of high-tech products and military equipment.
The Trump administration’s tax and spending cut legislation includes $2 billion allocated for the Pentagon to strengthen the U.S. stockpile of critical minerals, along with an additional $5 billion through 2029 for investments in those supply chains.
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From 2020 to 2024, the Pentagon has reported awarding over $439 million to establish domestic supply chains for rare earths.
Earlier this month, a bipartisan group of lawmakers proposed the creation of a new agency with $2.5 billion dedicated to promoting the production of rare earths and other critical minerals.
