USA Rare Earth Secures up to $1.6 Billion in Federal Funding

USA Rare Earth on June 3 announced it had entered into definitive agreements with the U.S. Department of Commerce to access up to $1.6 billion in funding under the department’s CHIPS and Science Act program.

The agreement includes $277 million in federal incentives and up to $1.3 billion in senior secured loan capacity. The funds will be dispersed in phases as USA Rare Earth hits key project milestones in the development of its Round Top mine in Texas and scales magnet manufacturing facilities in Stillwater, Oklahoma, and Blacksburg, South Carolina.

USA Rare Earth said it will issue the Commerce Department 16.1 million shares of its common stock, along with about 17.6 million warrants as part of the transaction. Combined with $1.5 billion in private investment and public equity funding USA Rare Earth raised in January, the company has roughly $3.5 billion in capital commitments to support its growth plans.

“This partnership with the U.S. Government is the largest of its kind in our industry and provides the necessary capital to build the only global platform across light and heavy rare earth mining and processing, metal and alloy making, as well as magnet manufacturing,” USA Rare Earth chair Michael Blitzer said.

“This landmark collaboration reflects the scale and urgency of securing critical supply chains for technologies essential to long-term economic growth.”

USA Rare Earth said it expects to bring its heavy rare earth and critical mineral mine near Sierra Blanca, West Texas, into commercial production in 2028, while its 310,000 square-foot sintered neodymium iron boron magnet production facility in Stillwater was commissioned in March and is slated to produce nearly 3,600 metric tons across four manufacturing lines.

China currently produces about 92 percent of the permanent magnets, which are crucial components of aerospace, defense, energy, semiconductor, consumer electronics, and healthcare industries, the company noted.

“With the definitive agreements, [USA Rare Earth] is positioned to accelerate the building of a global mine-to-magnet value chain that will supply the materials, metals, and magnets that industrial customers depend upon,” CEO Barbara Humpton said.

On June 2, USA Rare Earth announced it would invest $1.2 billion to construct a second magnet manufacturing facility in upstate South Carolina. The magnet-making and rare earth production plant is expected to employ nearly 500 people when it comes online in 2028, the company said.

The Blacksburg facility, which has confirmed energy delivery by Duke Energy, is expected to produce 6,400 metric tons of rare-earth magnets annually, along with 5,000 metric tons of solid-sheet metals and alloys. Combined with Stillwater, USA Rare Earth will create domestic production of 10,000 tons per annum of rare earth magnets, as well as 10,000 tons annually of rare earth metals and alloys.

Rare earth metals consist of a group of 17 elements, including heavy elements neodymium, dysprosium, and terbium. Companies that have benefited from President Donald Trump’s push to wrest control of rare earth minerals from China and onshore domestic extraction and production of these elements include Lithium Americas, Aclara Resources, and MP Minerals.