WASHINGTON, Jan 25, 2026, 08:29 (EST)
- Sources say the U.S. government will acquire a 10% stake in USA Rare Earth as part of a $1.6 billion deal
- Deal and separate $1 billion private financing set to be announced Monday
- Investment zeroes in on Texas mine and Oklahoma magnet plant amid U.S. efforts to reduce dependence on China
The Trump administration is set to take a 10% stake in USA Rare Earth (USAR.O) as part of a $1.6 billion debt-and-equity deal designed to develop a domestic rare earth mine and magnet factory, according to two sources who spoke to Reuters. Alongside this, a separate $1 billion private investment is also expected to be announced Monday, with USA Rare Earth planning an investor call that morning, one source said. The White House didn’t immediately comment, and USA Rare Earth declined to respond.
Rare earths comprise 17 minerals essential to various electronics and military gear. China dominates global processing, while U.S. production remains minimal. Washington has been pushing to narrow this gap by funding new domestic projects.
Timing is everything. Supply chains for minerals—and the components derived from them—have turned into key tools in trade disputes. Magnets, in particular, represent a bottleneck that simply can’t be solved by mining more ore.
According to Financial Times, the government is set to get 16.1 million shares in USA Rare Earth, plus warrants for another 17.6 million shares, both priced at $17.17 each. The deal also includes $1.3 billion in senior secured debt financing connected to projects under the CHIPS and Science Act. Senior secured loans take priority over other debts if the borrower defaults, while warrants give the holder the option to buy stock later at a fixed price. FT noted the investment hinges on the company raising at least $500 million more from investors, calling the private fundraising a “PIPE” — private investment in public equity — a quick way for publicly traded firms to secure capital. Financial Times
Sources told Reuters the government stake will come via 16.1 million shares plus warrants for an additional 17.6 million, priced close to the stock’s trading level earlier this month. The funds aim to support USA Rare Earth’s mine project at Sierra Blanca, Texas, which is being developed alongside Texas Mineral Resources (TMRC.PK), as well as a magnet manufacturing plant in Stillwater, Oklahoma, set to start operations later this year.
The administration has already acquired equity stakes in several U.S.-connected critical minerals companies, such as MP Materials (MP.N), Lithium Americas (LAC.TO), and Trilogy Metals (TMQ.TO), Reuters reported. The USA Rare Earth agreement pushes this strategy further, relying on ownership and funding instead of regulation to channel investments into sectors officials label as strategic.
USA Rare Earth has brought on Cantor Fitzgerald to assist with fundraising, a source revealed. Reuters reports that Cantor is led by Brandon Lutnick, who is the son of U.S. Secretary of Commerce Howard Lutnick.
For investors, the deal’s structure is nearly as crucial as the headline figure. PIPEs move quickly but usually come with a discount to attract buyers. On top of that, government warrants could trigger further dilution if exercised.
Washington’s clear advantage lies in rare earth magnets, essential for electric motors, wind turbines, and much defense gear. Producing them domestically cuts reliance on foreign processing hubs. The challenge, though, is in the details — mining schedules, permits, building facilities, and whether these products can cost-effectively rival established suppliers.
The risks are clear. The deal hasn’t been announced yet, and terms might change before Monday. The company still needs to lock down private funding in addition to government support. Projects planned years ahead often face delays or budget overruns. Even if plants come online as scheduled, rare earth markets are volatile, and China’s pricing can undercut new ventures once supply surges.
