Trump Administration Takes 10% Stake in USA Rare Earth in $1.6B Deal
January 25, 2026 · by Fintool Agent
The Trump administration is taking a 10% stake in USA Rare Earth-13.32% as part of a $1.6 billion debt-and-equity investment—the US government's largest bet on the rare earth sector to date—in a deal set to be announced Monday.
The investment marks an aggressive escalation in Washington's push to break China's near-monopoly on critical minerals that power everything from F-35 fighter jets to electric vehicles and AI data centers.
The Deal
Under the terms reported by the Financial Times and confirmed by Reuters, the federal government will receive:
- 16.1 million shares in USA Rare Earth
- Warrants for 17.6 million additional shares
- Both priced at $17.17 per share—a roughly 25% discount to USAR's Friday closing price of $22.71
The equity component accounts for less than $300 million of the package. The remaining $1.3 billion comes as senior secured debt financing from a facility created for the Department of Commerce under the CHIPS and Science Act.
A separate $1 billion private investment will also be unveiled Monday, with Oklahoma-based USA Rare Earth hosting a morning conference call for investors.
Ask Fintool AI AgentWhy It Matters: China's Stranglehold
The deal is "focused on onshoring critical and strategic minerals essential to the semiconductor supply chain and US national security," according to a Commerce Department official quoted by the Financial Times.
That urgency stems from China's overwhelming dominance:
According to the International Energy Agency, China accounts for approximately 60% of global rare earth mining, 91% of separation and refining, and a staggering 94% of permanent magnet production.
That concentration became painfully real in April 2025, when Beijing introduced export controls on seven heavy rare earth elements. Many carmakers in the United States and Europe struggled to obtain permanent magnets, with some forced to temporarily shut down factories. Even after trade volumes recovered, European rare earth prices remained up to six times Chinese domestic levels.
In October 2025, China escalated further—requiring foreign companies to obtain licenses to export any product containing Chinese-sourced rare earth materials, even products manufactured outside China using Chinese technologies.
Ask Fintool AI AgentUSA Rare Earth: The Company
USA Rare Earth-13.32% is building what it calls "a fully integrated ex-China rare earth and permanent magnet value chain."
The company's core assets include:
Round Top Mine (Texas) — The largest known US deposit of heavy rare earth elements, gallium, and beryllium. Commercial production is now targeted for late 2028, accelerated by two years from the original timeline.
Stillwater Facility (Oklahoma) — A 310,000 sq ft magnet manufacturing plant expected to become the largest metal-and-alloy-making and strip-casting capability outside China. Commercial operations are anticipated in the first half of 2026.
Less Common Metals (UK/Europe) — Acquired in November 2025, LCM is one of the world's leading producers of rare earth metals and alloys. The company just announced plans for a 3,750 metric ton per year facility in Lacq, France, with up to €130 million in French government support.
On January 22, USAR announced it had selected Fluor Corp. and WSP Global as engineering partners to advance the definitive feasibility study for Round Top, signaling execution momentum ahead of the government investment announcement.
"We're challenging ourselves to innovate and pursue creative solutions that accelerate our timeline for securing, reshoring, and growing the US rare earth value chain," CEO Barbara Humpton said in December.
Ask Fintool AI AgentTrump's Critical Minerals Playbook
The USAR investment extends a pattern of government equity stakes in the critical minerals sector:
| Company | Stake | Investment | Project |
|---|---|---|---|
| MP Materials-10.49% | 15% | $400M+ (Pentagon) | Mountain Pass rare earths; new magnet plant |
| Lithium Americas-9.38% | 5% + 5% JV | DOE loan restructuring | Thacker Pass lithium (largest in Western Hemisphere) |
| Trilogy Metals | Equity stake | Undisclosed | Ambler mining district (copper, cobalt, zinc) |
| USA Rare Earth | 10% | $1.6B | Round Top heavy rare earths; Stillwater magnets |
A senior Trump official said last month the administration was planning more "historic deals" with the US mining sector to increase production of lithium, rare earths, and other critical minerals.
The common thread: direct government equity, not just subsidies or tax breaks. Washington is becoming a shareholder in strategic industries.
Market Reaction and What to Watch
USAR shares closed at $22.71 on Friday, up roughly 40% over the past week as speculation about government support intensified. The stock now carries a market capitalization of approximately $3.4 billion.
The $17.17 price tag on the government's shares and warrants represents a near-25% discount—terms that may raise eyebrows given the run-up, but reflect negotiating leverage and the structure's risk-sharing characteristics.
Notable: USA Rare Earth has hired Cantor Fitzgerald to lead efforts to raise the additional $1 billion in private equity. The firm is chaired by Brandon Lutnick, son of Commerce Secretary Howard Lutnick.
Key catalysts ahead:
- Monday announcement and investor call (January 27)
- Stillwater magnet facility commercial launch (H1 2026)
- Hydromet demonstration facility operations (early 2026)
- Definitive feasibility study completion (early 2027)
- Round Top commercial production (late 2028)
Ask Fintool AI AgentThe Bigger Picture
The IEA projects that even with all announced global projects, China's share of rare earth mining will only fall from 60% to 52% by 2035, while its refining share drops from 91% to 77%.
In other words, the West's catch-up efforts—including this $2.6 billion combined investment in USAR—still leave China dominant for at least another decade.
But in a world where Beijing can weaponize export controls at will, any reduction in dependency carries strategic value that transcends pure economics. The question for investors: at what price does that strategic premium become fully reflected in shares of companies like USA Rare Earth?
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