U.S. rare earth stocks soared 21% on Monday after the company announced the U.S. Department of Commerce would take ownership.
The deal includes a $1.3 billion loan and $277 million in federal support. This is a big gamble by President Donald Trump’s administration, which is keen to force China out of the race for rare earth supplies and regain control of it.
Under the new filing with the Securities and Exchange Commission, Commerce will acquire 16.1 million shares of common stock and 17.6 million stock acquisition rights. Depending on whether these warrants are exercised, the U.S. government’s stake in the company could range from 8% to 16%.
Traders didn’t wait. As soon as this announcement was made, the stock price soared more than 20% in pre-market. In addition to public funding, USA Rare Earths has raised $1.5 billion from private investors.
President Trump funds Round Top and Magnet factories to boost supply chain
The new capital will support USA Rare Earths’ plans to build a magnet factory in Stillwater, Oklahoma, and develop a rare earth mine in Texas known as Round Top. Both projects are seen as key to breaking dependence on Chinese supply lines. The Trump administration is preparing a large check to make that happen.
“The U.S. Rare Earth Critical Minerals Project is essential to restoring America’s critical mineral independence,” Secretary of Commerce Howard Lutnick said in a statement. “This investment will ensure the resilience of our supply chain and eliminate our dependence on foreign countries.”
This isn’t the first time the Trump campaign has used stocks to gain influence. Last year, the government signed a deal with MP Materials that included a price floor, equity investment and an off-take agreement.
Federal authorities also seized pieces of Lithium America and Trilogy Metals. All movements have the same goal. That means the United States will have to rely on China’s dominance for the minerals it needs for semiconductors, electric vehicles, defense technology, robotics, and more.
US eyes Greenland’s rare earths as Chinese dominance faces backlash
China still controls much of the rare earth supply chain, and its power was on display last year when it tried to block exports during a trade war with President Trump.
But President Trump isn’t just targeting assets in mainland China. The administration is currently orbiting Greenland, which has the world’s eighth-largest rare earth reserves at 1.5 million tons, based on 2024 figures from the U.S. Geological Survey.
Beijing, through Shenghe Resources, is also investing in the Kubaneveld mining project in Greenland, which holds the third largest known rare earth deposit on land.
China’s partner in the project is Australia’s Energy Transition Minerals. But the project hit a wall when Greenland banned uranium mining in 2021, and is now mired in a legal battle.
Ryan Castilleux, who runs the research firm Adamas Intelligence, said locking in U.S. priority over Greenland supplies would “keep Chinese partners or anyone else from coming back to the table to develop those resources.”
President Trump said in Davos that his plan for Greenland is not about mining. “We want Greenland for security reasons. We don’t want it for any other purpose,” he told reporters shortly before a meeting with the North Atlantic Treaty Organization (NATO) secretary general. “There are so many rare earths that we don’t know what to do with them. We don’t need them for any other purpose.”
Castilleux added that the U.S. supply pipeline is currently “full” after the administration took major steps to get the country’s rare earth network up and running over the past year.
