Commerce Department backs USA Rare Earth with $1.6B package to build ‘mine-to-magnet’ supply chain
The U.S. Commerce Department is investing in USA Rare Earth through a proposed $1.6 billion package that includes $277 million in direct funding and a $1.3 billion senior secured loan, in exchange for an equity stake and warrants. The move is part of a broader effort to reduce dependence on China for rare-earth processing and strengthen domestic supply chains for manufacturing and national security. USA Rare Earth plans projects in Texas and Oklahoma to support a vertically integrated path from mining to magnet production.
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A major federal push into critical minerals
The U.S. Commerce Department, through its CHIPS program, announced a proposed investment package totaling about $1.6 billion for USA Rare Earth, a company headquartered in Stillwater, Oklahoma. The package combines proposed federal funding with a large loan intended to accelerate projects spanning mining, processing, and manufacturing. The stated goal is to reduce national security vulnerabilities created by heavy U.S. reliance on foreign rare-earth supply chains.
What the deal includes
According to the announcement, the proposal includes up to $277 million in direct funding and up to $1.3 billion in a senior secured loan. In return, the U.S. government would receive a minority equity position via common shares and additional warrants. The structure reflects a government strategy of pairing financial support with ownership exposure in assets considered strategic to U.S. industrial policy.
Texas mining, Oklahoma manufacturing
USA Rare Earth says the funding would support work on a mine in Texas and the buildout of a magnet manufacturing facility in Oklahoma. Officials emphasize that magnets made from rare earths are essential inputs across high-tech manufacturing, including defense applications and parts of the semiconductor ecosystem. The company’s broader pitch is “mine-to-magnet” vertical integration, aiming to keep more of the value chain onshore.
Market and policy implications
The announcement drove a sharp move in the company’s shares and adds to a sequence of federal actions designed to loosen China’s hold over processing capacity. Supporters argue that the investment can stimulate domestic production and de-risk supply chains, while critics of industrial policy often warn about execution risk, cost overruns, and the challenge of building competitive processing at scale. Either way, the deal signals sustained political priority around critical minerals.