USA Rare Earth jumps 21% on U.S. government equity stake, $1.6 billion funding offer

USA Rare Earth stock shot up 21% on Monday after the company said the U.S. Department of Commerce would take an ownership stake.

The deal comes with a $1.3 billion loan and $277 million in federal support. It’s a major bet from Donald Trump’s administration, which is pushing hard to kick China out of the rare earth supply game and bring that control back home.

Commerce will get 16.1 million shares of common stock and 17.6 million warrants, based on a new filing with the Securities and Exchange Commission. Depending on whether those warrants are exercised, the U.S. government’s stake in the company could land between 8% and 16%.

Traders didn’t wait. The stock jumped more than 20% premarket as soon as the announcement hit. On top of the public funds, USA Rare Earth also pulled in $1.5 billion from private investors.

Trump funds Round Top and magnet factory in supply chain push

The new capital will support USA Rare Earth’s plans to build a magnet plant in Stillwater, Oklahoma, and develop a rare earth mine in Texas known as Round Top. Both projects are considered key to breaking dependence on Chinese supply lines. The Trump administration has been lining up big checks to make it happen.

“USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence,” Commerce Secretary Howard Lutnick said in a statement. “This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”

This isn’t the first time Trump’s team has used equity to get leverage. Last year, the government struck a deal with MP Materials, which included a price floor, equity stake, and offtake agreement.

The feds also grabbed pieces of Lithium Americas and Trilogy Metals. Every move has the same goal: stop the U.S. from having to rely on China’s grip on minerals needed for things like semiconductors, EVs, defense tech, and robotics.

U.S. eyes Greenland rare earths as China’s control faces pushback

China still controls most of the rare earth supply chain, and that power showed up last year when Beijing tried to block exports during trade fights with Trump.

But Trump isn’t just targeting China’s mainland holdings. His administration is now circling Greenland, home to the world’s eighth-largest rare earth reserves at 1.5 million metric tons, based on 2024 numbers from the U.S. Geological Survey.

Beijing, through Shenghe Resources, is also invested in Greenland’s Kvanefjeld mining project, which holds the third-largest known rare earth deposit on land.

China’s partner in that project is Australia’s Energy Transition Minerals. That project, though, hit a wall after Greenland banned uranium mining in 2021. It’s now stuck in court battles.

Ryan Castilloux, who runs the research firm Adamas Intelligence, said that locking in U.S. priority over Greenland’s supply would “ensure that a Chinese partner or somebody else doesn’t come back to the table to develop those resources.”

Trump said at Davos that his plan for Greenland isn’t even about mining. “I want Greenland for security. I don’t want it for anything else,” he told reporters just before meeting with the NATO Secretary General. “We have so much rare earth, we don’t know what to do with it. We don’t need it for anything else.”

Castilloux added that the U.S. supply pipeline is now “full” after the administration made big steps in the past year to get a domestic rare earth network up and running.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.