Trump administration is investing $1.6 billion into USA Rare Earth

The Trump administration is throwing $1.6 billion into USA Rare Earth, the largest move it’s made yet in the rare earths sector. The company, listed publicly and based in Oklahoma, holds major deposits of heavy rare earths across the U.S.

The funding comes as Washington scrambles to secure control of materials key to national defense, energy, and tech supply chains.

The federal government will take a 10% stake in the miner through 16.1 million shares priced at $17.17 each, and warrants for another 17.6 million at the same price.

The total equity buy is worth $277 million, but the government is already looking at an implied profit of $490 million based on the company’s current stock price of $24.77. That’s just the equity side.

A separate $1.3 billion in senior secured debt is also being handed over, coming from a finance facility inside the Commerce Department, created under the CHIPS and Science Act of 2022.

Government boosts rare earth output with direct investment

One official at the Chips office, the group that led the negotiations, said they’re “focused on onshoring critical and strategic mineral essential to the semiconductor supply chain and U.S. national security.”

The office operates under the National Institute of Standards and Technology, which falls under the Commerce Department. That department has so far refused to comment publicly on the transaction.

The debt portion of the deal will be issued at market rates and structured directly with USA Rare Earth. The move comes as investors are swarming around anything linked to rare earths.

Earlier this week, Trump said the U.S. had finalized a “framework” that might lead to deals involving Greenland’s untapped mineral reserves. One insider made it clear, though: this deal has nothing to do with Greenland.

Shares in USA Rare Earth have more than doubled this year, with a 40% jump just this week. The company is now valued at $3.7 billion and is working on a massive rare earth mine in Sierra Blanca, Texas.

It says the site holds 15 out of 17 rare earth elements used to build phones, fighter jets, and missiles. It’s also building a magnet production plant in Stillwater, Oklahoma.

Cantor joins private financing while Trump expands control

This federal funding isn’t happening in a vacuum. USA Rare Earth is also raising over $1 billion in private equity through a separate deal.

That effort is being handled by Cantor Fitzgerald, the Wall Street giant once owned by Howard Lutnick, who is now Trump’s Commerce Secretary. His sons run it now.

The private money raise is not connected to the government investment, but it’s part of a bigger push. The company only needed $500 million to satisfy the terms of the government deal, it’s already cleared that number.

The funding method used is known as a Pipe (private investment in public equity). Demand for the deal has been high, according to sources close to the company.

Cantor helped the company go public last year via a blank cheque vehicle in March. While Cantor didn’t advise on the federal deal, the firm’s role is clearly growing under Trump’s America First push. And this isn’t the administration’s first rodeo in this space.

Just last year, it poured money into MP Materials, Lithium Americas, Trilogy Metals, and others. Some of those deals raised eyebrows. For example, the government invested in Vulcan Elements, a rare earth start-up, three months after Donald Trump Jr’s venture group bought in.

The defense and commerce departments have been working closely to boost local production. USA Rare Earth is the latest piece of that effort, but it won’t be the last.

The White House is serious about locking down minerals supply, and Trump is making sure that happens by getting the government directly involved in ownership. Including rare earths. Including chips. Including steel. Including whatever else they decide matters to the flag.

Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program