USA Rare Earth shares (NASDAQ: USAR) surged more than 37% in pre-market trading on Monday after news broke that the Trump administration had acquired a 10% stake in the company.
The investment forms part of a $1.6 billion financing package that includes both debt and equity.
Specifically, the funding is designed to accelerate USA Rare Earth’s efforts to expand domestic rare-earth mining and magnet manufacturing, thereby reinforcing U.S. supply chains for strategically critical materials.
Under the agreement, Washington will acquire 16.1 million shares. It will also receive warrants for an additional 17.6 million shares, with both priced at $17.17 each.
By the time of writing, USA Rare Earth stock (NASDAQ: USAR) was trading at $33.94. The shares have risen more than 76% over the past month and are up over 114% year-on-year. Consequently, the company’s market capitalization stands at approximately $3.29 billion.
Strategic Context and Expansion Plans
The strong market reaction highlights the growing strategic importance of rare earth elements. These 17 minerals are vital for a wide range of applications, including electronics, renewable energy systems, and military technologies. Although China dominates global processing capacity, U.S. production remains limited. Consequently, this imbalance has pushed Washington to prioritize domestic supply in recent years.
Against this backdrop, USA Rare Earth is advancing several major projects. One key initiative involves partnering with Texas Mineral Resources to establish a rare-earth mining site in Sierra Blanca, Texas, with production anticipated to start by 2028.
At the same time, USA Rare Earth is set to debut a magnet manufacturing facility in Stillwater, Oklahoma, later this year, further strengthening its vertically integrated domestic footprint.
In addition, the investment aligns with a broader government strategy to support U.S. critical minerals production. For instance, last year, the Trump administration took equity stakes in Lithium Americas (NYSE: LAC), MP Materials (NYSE: MP), and Trilogy Metals (NYSE: TMQ).
Building on those moves, a senior administration official said last month that additional large-scale agreements with U.S. mining companies are in the pipeline. The agreements are aimed at boosting supplies of lithium, rare earths, and other minerals. Ultimately, these resources are essential to national defense and advanced technologies.
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