The stock of USA Rare Earth (USAR) is up 20% after the U.S. Department of Commerce announced plans to take an equity stake in the mining company.
The Commerce Department has issued a letter of intent that would provide USA Rare Earth with a $1.3 billion U.S. loan and $277 million U.S. in federal funding.
In exchange, USA Rare Earth will issue the Commerce Department 16 million shares of common stock and 17.6 million in warrants.
The agreement is subject to finalization. USA Rare Earth has also announced that it raised $1.5 billion U.S. from private investors.
The capital infusion from the U.S. federal government will help USA Rare Earth advance its plan to build a magnet manufacturing plant in Oklahoma and a rare earth element mine in Texas.
The administration of U.S. President Donald Trump is building its own rare earth and critical minerals supply as it seeks to lessen America’s dependence on China.
The Trump administration struck a landmark deal last year with rare earth miner MP Materials (MP) that included an equity stake.
Rare earths are metals and minerals widely used in electronics ranging from smartphones and robots to electric vehicles and semiconductors.
The U.S. is dependent on rare earth imports from China, which dominates the global supply chain. Beijing briefly cut off rare earth exports to the U.S. last year during a trade dispute.
Prior to today (Jan. 26), USAR stock had risen 103% over the past 12 months to trade at $24.77 U.S. per share.
