The Trump administration is planning to invest $1.6bn in Oklahoma-based mining company USA Rare Earth in its latest and biggest deal, reported the Financial Times (FT), citing unidentifiable sources.
In return, the US Government will receive a 10% stake in the company, as it continues efforts to onshore rare earth element (REE) projects.
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It will receive $16.1m in shares in the company and warrants for another 17.6m shares, both at a price of $17.17m, according to one of the sources.
USA Rare Earth will also receive $1.3bn in senior secured debt financing at market rates from the government, funded by a finance facility created for the Department of Commerce as part of the CHIPS and Science Act. The facility helps finance activities that create incentives to manufacture semiconductors in the US.
REEs and other critical minerals are essential in manafacturing products such as semiconductors, medical equipment, industrial magnets and defence systems.
Alongside government investment, a $1bn private financial deal with USA Rare Earth is expected today.
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By GlobalDataUSA Rare Earth is jointly developing a mine in Sierra Blanca, Texas, with Texas Mineral Resources. It is to produce 15 of the 17 REEs, along with lithium and other metals. The mine is scheduled to open in 2028, boosting the US-based magnet supply chain.
The company has hired financial services firm, Cantor Fitzgerald, chaired by the sons of US Secretary of Commerce, Howard Lutnick, to help raise funds in a deal unrelated directly to the US Government’s.
The Trump administration’s move follows senior White House official, Jarrod Agen, announcing last month that it will continue to invest in critical mineral projects. This comes as it attempts to reduce imports of the materials, including REEs, from China. The country currently contributes around 70% of the world’s mined REEs and processes 90% of the materials. Meanwhile, the US imports 56% of the REEs it uses from China, according to the US Geological Survey.
The Trump administration has invested more than $1bn over the past year to acquire stakes in critical minerals companies.
Recent deals include a $400m investment for a 15% stake in MP Materials. It has also invested $670m for a stake in magnet producer Vulcan Elements. Another deal saw the US government exchange $35.6m for a 10% stake in Canadian minerals explorer Trilogy Metals.
