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USA Rare Earth shares rallied on Monday after the critical minerals startup announced that the Department of Commerce will take an equity stake.
Commerce has issued a letter of intent that would provide USA Rare Earth with a $1.3 billion loan and $277 million in federal funding.
USA Rare Earth will issue Commerce 16.1 million shares of common stock and 17.6 million in warrants. Its stock soared more than 20% in premarket trading after the announcement Monday.
The agreement is subject to finalization of agreements and approvals.
The capital infusion from the Trump administration will help USA Rare Earth advance its plan to build a magnet manufacturing plant in Stillwater, Oklahoma and a mine at a rare earth deposit in Texas called Round Top.
The Trump administration has made building a Western rare earth and critical minerals supply chain a central objective of its industrial policy as it seeks to reduce dependence on China.
“USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence,” Secretary of Commerce Howard Lutnick said in a statement. “This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”
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