U.S. takes stake in USA Rare Earth as Commerce backs Texas mine and Oklahoma magnet plant

Government-backed funding and equity stake

USA Rare Earth says the U.S. Commerce Department plans to support the company with a major package that includes proposed direct funding and a large loan, as part of a broader effort to strengthen domestic supply chains for critical minerals. The arrangement includes government equity, giving Washington an ownership position alongside financial support.

Under the proposal, the CHIPS program framework includes up to $277 million in direct funding and up to $1.3 billion in a senior secured loan. In exchange, Commerce would receive roughly 16.1 million shares and a warrant for an additional 17.6 million shares, tying public financing to a financial stake and potential upside.

Why rare earths and magnets are strategic

Rare earth elements and the high-performance magnets made from them are foundational for a wide range of advanced manufacturing, including defense systems, electric motors, and electronics. U.S. officials and industry analysts have repeatedly warned that heavy reliance on foreign processing creates supply risk, particularly when one country dominates key steps in the chain.

The Commerce Department’s approach emphasizes reducing “choke points” by encouraging onshore capability, not just at the mining stage but through processing and magnet production. Supporters argue that a vertically integrated pipeline can help stabilize long-term access for U.S. manufacturers.

Projects in Texas and Oklahoma

The funding is intended to advance work on a rare earth mine in Texas and support construction of a magnet manufacturing facility in Stillwater, Oklahoma. The stated goal is to accelerate domestic production capacity and move the U.S. closer to a full “mine-to-magnet” operation at commercial scale.

Shares jumped in early trading after the announcement, reflecting investor expectations that federal backing could de-risk timelines, unlock additional private capital, and improve the odds of completing expensive infrastructure required for mining, separation, metal-making, and magnet manufacturing.

Broader push to expand critical minerals supply chains

The USA Rare Earth support is part of a wider U.S. strategy to grow domestic critical mineral and rare earth capacity through targeted investments and financing tools. Advocates say these steps are needed because building mines and processing plants can take years, and supply chains have become a geopolitical lever in trade negotiations.

Critics, meanwhile, often raise concerns about environmental impacts, permitting timelines, and whether government-backed bets will deliver supply quickly enough to match demand growth. The balance between speed, cost, and oversight is likely to remain a central debate as new projects move forward.