USA Rare Earth Announces Landmark Funding Agreement with U.S. Government

USA Rare Earth, Inc. (NASDAQ: USAR), a leading U.S. rare earth mining and advanced materials company, today announced it has entered into a non-binding Letter of Intent (LOI) with the U.S. Department of Commerce’s CHIPS Program for access to up to $1.6 billion in funding. This significant government support is designed to accelerate the development of a full domestic supply chain for heavy rare earth elements, critical minerals, and related technologies in the United States.

In conjunction with the government agreement, USA Rare Earth also unveiled the successful completion of a private investment in public equity (PIPE) financing round that has raised approximately $1.5 billion, anchored by Inflection Point with participation from major institutional investors.

This dual funding package positions the company to scale its vertically integrated “mine-to-magnet” platform, unlocking new capabilities in rare earth mining, processing, metal manufacturing, and permanent magnet production that are vital to U.S. national security and advanced industries.

Funding Structure and Strategic Components

The Letter of Intent with the Department of Commerce’s CHIPS Program outlines a proposed financial package of:

• $277 million in federal funding;
• $1.3 billion in a senior secured loan under the CHIPS Act.

This $1.6 billion commitment is subject to customary closing conditions, due diligence, and formal documentation. USA Rare Earth will also issue the Department of Commerce approximately 16.1 million shares of common stock and 17.6 million warrants as part of the arrangement.

The proposed funding is specifically structured to support the construction and expansion of critical mineral infrastructure across the entire supply chain, including:

• Mining and extraction of rare earth and critical mineral feedstock;
• Heavy rare earth element processing;
• Metal and alloy production;
• Manufacturing of neodymium-iron-boron (NdFeB) permanent magnets.

By enabling integrated development, the investment aims to reduce U.S. reliance on foreign sources—especially China—for these essential materials that are crucial for semiconductors, defense technologies, renewable energy, and electric vehicles.

Private Investment Strengthens Financial Backing

In parallel with the U.S. government’s support, USA Rare Earth successfully raised $1.5 billion through a PIPE financing. This capital came from leading institutional investors anchored by Inflection Point, reflecting substantial private sector confidence in the company’s long-term business strategy and growth potential.

The proceeds from this private investment will be used to complement federal funding, helping to accelerate construction timelines and expand the company’s operations across multiple key segments of the rare earth value chain.

Expanding Domestic Heavy Rare Earth Production

USA Rare Earth’s approach centers on a fully integrated “mine-to-magnet” model, meaning it plans to control critical steps from raw material extraction through magnet production. This strategy is designed to:

• Boost U.S. production of strategic minerals;
• Create jobs in high-tech manufacturing and skilled labor;
• Enhance supply chain resilience;
• Support critical sectors such as aerospace, defense, and semiconductors.

As part of its longer-term plan, the company has outlined growth objectives that include:

• Extracting 40,000 metric tons per day of rare earth and critical mineral feedstock from its Round Top deposit in Texas upon reaching full commercial production around 2028;
• Processing a combined 8,000 metric tons per year of heavy rare earth elements and critical mineral concentrates, including dysprosium, terbium, yttrium, and others that are currently not readily available from U.S. sources;
• Reshoring up to 10,000 metric tons per year of heavy rare earth element metal, alloy, and strip casting capacity through its subsidiary, Less Common Metals;
• Increasing NdFeB magnet making capacity to more than 10,000 metric tons per year, a significant expansion over prior planning; and
• Processing up to 2,000 metric tons per year of production swarf from magnet manufacturing.

Government Collaboration and National Security Implications

Top U.S. officials have highlighted the strategic importance of expanding domestic rare earth capabilities:

Barbara Humpton, CEO of USA Rare Earth, noted that the collaboration with government agencies represents a “transformative step” toward building a resilient and independent critical materials supply chain. She emphasized the company’s role in supporting national and economic security by providing essential materials for advanced technology manufacturing.

Secretary of Commerce Howard Lutnick stated that investing in USA Rare Earth’s integrated facilities ensures a more robust supply chain that no longer depends on foreign sources, particularly for heavy rare earth elements that are vital for defense systems, energy equipment, and semiconductor manufacturing.

Energy Secretary Chris Wright added that the Department of Energy’s collaboration with USA Rare Earth will involve the development of advanced processing technologies, including the use of digital twin tools to enhance rare earth element separation capabilities—an innovation that could set new standards in domestic materials processing.

Broader Context: U.S. Efforts to Strengthen Critical Mineral Supply Chains

The federal government’s support for USA Rare Earth comes amid a broader push to reduce U.S. dependence on other nations, particularly China, for rare earth elements and critical minerals. China currently dominates global production and processing of rare earths, making the U.S. vulnerable to supply disruptions that could impact industries ranging from defense to consumer electronics.

This strategic investment aligns with previous government support for other domestic critical mineral companies and reflects a concerted effort to build a vertically integrated supply chain within the United States.

By onshoring these capabilities, the U.S. aims to ensure long-term access to materials essential for emerging technologies, including artificial intelligence, electric mobility, robotics, renewable energy systems, and advanced military platforms.

Market Reaction and Industry Impact

Following the announcement of the LOI and private financing, USA Rare Earth’s stock experienced significant gains in trading, reflecting investor optimism around its expanded access to capital and strengthened strategic position.

Additionally, news reports have noted that rare earth and critical mineral stocks have generally responded positively to increased government investment in the sector, though analysts caution that the industry remains volatile and subject to broader market and geopolitical dynamics.

Still, the combination of private capital and federal resources has reinforced confidence in long-term growth prospects for companies pursuing domestic production of essential materials.

Looking Ahead: Implementation and Future Milestones

While the Letter of Intent sets forth the framework for collaboration and funding, final agreements and financial closing are expected in the coming months. The company will work with government partners and private investors to finalize terms and begin implementation across multiple project phases.

Key milestones to watch include:

• Finalization of the CHIPS Program funding agreement;
• Construction and commissioning of mining, processing, and magnet production facilities;
• Scaling production capacity to meet commercial and defense industry demand; and
• Deployment of advanced processing technologies in partnership with government research laboratories.