Trump administration pushes “critical minerals self-sufficiency”… invests $1.6bn in rare-earths company

Korea Economic Daily

Summary

The US government said it will invest a total of $1.6bn, including a 10% stake in rare-earths company USA Rare Earth, to strengthen the critical minerals supply chain and national security.
USA Rare Earth, a Nasdaq-listed company with a $3.7bn market cap, said the package includes a $1.3bn senior secured loan alongside the government investment, as well as $1bn in private fundraising.
The company said its Texas mine contains 15 of the 17 rare-earth elements needed for production, and added that the Trump administration is continuing its stance of investing in at least six minerals companies such as MP Materials and Lithium Americas, following moves including securing a 10% stake in Intel.

Secures 10% stake in USA Rare Earth

“Strengthen national security and industrial competitiveness”

The US government will invest $1.6bn (about KRW 2.3tn) in a rare-earths company to bolster the critical minerals supply chain. With strategic competition with China intensifying, the plan is for the government to step into the private sector to secure both national security and industrial competitiveness.

The Financial Times (FT) reported on the 24th (local time), citing people familiar with the matter, that the US government plans to acquire a 10% stake in Oklahoma-based mining company USA Rare Earth. The deal is seen as the largest government investment in the rare-earths sector under the Donald Trump administration. Alongside the government investment, a $1bn private fundraising will proceed in parallel, with an official announcement slated for the 26th.

The federal government will buy 16.1 million shares of USA Rare Earth at $17.17 per share and receive warrants for 17.6 million newly issued shares. In addition, USA Rare Earth agreed to receive a $1.3bn senior secured loan from the government. The financing will be provided through a program set up at the Commerce Department under the CHIPS Act passed in 2022.

The negotiations gained momentum after President Trump recently suggested the US could invest in Greenland’s undeveloped critical mineral resources, reviving investor interest in critical-minerals plays. However, sources drew a line, saying the USA Rare Earth transaction is unrelated to Greenland. An official at the CHIPS Program Office within the Commerce Department said, “We are focused on domestic production of critical and strategic minerals essential to the semiconductor supply chain and US national security.”

USA Rare Earth is a Nasdaq-listed company with a market capitalization of $3.7bn. The company is developing a large mine in Sierra Blanca, Texas, and said the site contains 15 of the 17 rare-earth elements needed for the production of smartphones, missiles and fighter jets.

Separately from the government investment, the company said it will secure more than $1bn through a new equity financing from Wall Street investment bank Cantor Fitzgerald. Cantor Fitzgerald was previously owned by US Commerce Secretary Howard Lutnick and is now run by his sons. The bank is said not to have been involved in advising on the government investment transaction.

The deal extends a recent trend of the Trump administration’s active intervention in private industries directly tied to national security. Earlier, the government secured a 10% stake in chipmaker Intel and negotiated a so-called “golden share” agreement with US Steel. The Trump administration also invested last year in at least six minerals companies, including MP Materials, Trilogy Metals and Lithium Americas.

New York=Park Shin-young, Correspondent nyusos@hankyung.com