The Trump administration has committed $1.6 billion in federal support to USA Rare Earth, an Oklahoma-based critical minerals company, in a significant move to challenge China’s global dominance in the rare earth elements market. This non-binding agreement, announced Monday, represents the latest strategic initiative to secure America’s supply chain for minerals essential to both consumer electronics and advanced defense technologies.
The financing package consists of a $1.3 billion loan from the Commerce Department—which will grant the government a stake in the company—alongside $277 million in direct federal funding. Simultaneously, USA Rare Earth revealed it had secured an additional $1.5 billion through private investment rounds. The company specializes in ‘heavy’ rare earth elements, which are particularly crucial for defense applications.
Market response was immediately positive, with the miner’s shares surging up to 20% following the dual announcements. This investment continues the administration’s pattern of supporting domestic rare earth production, following previous agreements including a $1.4 billion deal with magnet startup Vulcan Elements and investments in MP Materials, operator of America’s sole active rare earth mine.
This development occurs against the backdrop of tense trade negotiations between Washington and Beijing, where rare earths have emerged as a strategic bargaining chip. China currently processes approximately 90% of the world’s rare earths and has previously restricted exports to gain leverage in trade discussions. The U.S. reliance on these materials—vital for smartphones, electric vehicles, and military technologies—has created significant supply chain vulnerabilities.
Beyond domestic investments, the administration has pursued international partnerships to diversify sources. Recent agreements include a minerals partnership with Australia and discussions regarding resource access in Greenland, though full independence from Chinese processing remains a longer-term objective.