The Trump administration is pressing ahead with an investment strategy that places the U.S. government directly inside industries it considers vital to national security and technological leadership, with a planned 10% stake in USA Rare Earth marking the latest and one of the clearest examples yet of that approach.
Under the deal, Washington will take equity in USA Rare Earth as part of a $1.6 billion debt-and-equity package designed to accelerate the development of a domestic rare earth mine and a magnet manufacturing facility, according to two sources familiar with the transaction, who spoke with Reuters.
A separate $1 billion private investment is also expected to be announced. The package is set to be unveiled on Monday, when the Oklahoma-based company plans to brief investors on a conference call.
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The transaction sits squarely within a broader investment plan being sustained by President Donald Trump’s administration on behalf of the U.S. government, one that goes beyond regulation or subsidies and instead relies on direct financial participation, long-term offtake arrangements, and strategic access agreements. Recently, this approach has already seen Washington back major domestic manufacturing efforts, including financial support for Intel to expand advanced chip production in the United States, and secure priority access arrangements linked to exports of Nvidia’s high-end chips, which are central to artificial intelligence and defense applications.
Officials view rare earths as the next critical front. China remains the world’s dominant processor of rare earth elements, a group of 17 minerals essential for smartphones, electric vehicles, wind turbines, advanced weapons systems, and AI-related hardware. The United States produces only limited quantities, leaving supply chains exposed to geopolitical pressure and trade disruptions.
USA Rare Earth is positioned as a potential anchor for rebuilding part of that supply chain domestically. The company is developing a rare earth mine in Sierra Blanca, Texas, in partnership with Texas Mineral Resources, with operations targeted for 2028. It is also preparing to launch a magnet manufacturing facility in Stillwater, Oklahoma, later this year, a key step given that rare earth magnets are among the most strategically sensitive parts of the value chain.
As part of the investment, the U.S. government will receive 16.1 million shares in USA Rare Earth, along with warrants for an additional 17.6 million shares, the sources said. Both are priced at $17.17 per share, close to where the company’s stock traded earlier this month. The Financial Times first reported the government’s planned stake.
Over the past year, the Trump administration has taken equity positions in MP Materials, Lithium Americas, and Trilogy Metals, signaling a willingness to use the federal balance sheet to steer capital toward projects that might otherwise struggle to attract long-term funding in volatile commodity markets. A senior administration official said last month that more large-scale agreements with U.S. miners were being prepared, describing them as “historic deals” aimed at boosting production of lithium, rare earths, and other materials tied to defense systems, artificial intelligence, and advanced manufacturing.
Behind the scenes, USA Rare Earth has enlisted Cantor Fitzgerald to support its fundraising efforts, one of the sources said. The firm is chaired by Brandon Lutnick, the son of U.S. Secretary of Commerce Howard Lutnick.
The logic is consistent across sectors for the administration. By investing directly, securing equity, or locking in supply and access arrangements, Washington is attempting to reduce reliance on foreign producers while ensuring that critical inputs for chips and defense technologies remain available on U.S. terms. The USA Rare Earth deal shows how that strategy is now extending beyond semiconductors into the raw materials that underpin them, embedding the federal government deeper into the industrial economy it sees as essential to long-term national power.