USA Rare Earth, Inc. (Nasdaq: USAR) has taken a major step toward reshaping America’s rare earth industry. The company announced a non-binding Letter of Intent (LOI) with the U.S. Department of Commerce under the CHIPS Act, alongside a collaboration with the U.S. Department of Energy (DOE). Together with a large private investment, the move could bring $3.1 billion in total capital to the company.
This funding supports USAR’s goal to build a fully domestic, mine-to-magnet platform—from raw materials to finished magnets—critical for national security, clean energy, semiconductors, and advanced manufacturing.
Barbara Humpton, Chief Executive Officer of USA Rare Earth
“This landmark collaboration with the U.S. Government represents a transformative step in USAR’s mission to secure and grow a resilient, independent domestic rare earth value chain. We are grateful to President Trump, Secretary Lutnick, and Secretary Wright for their support and recognition of the strategic importance of rare earth materials and permanent magnets. With this unprecedented show of public and private support for our Company, we are positioned to accelerate the build-out of important domestic capabilities that are essential to U.S. national security, global economic competitiveness, and critical technologies of the future.”
CHIPS Act Support Underscores Strategic Importance
Under the LOI, the Department of Commerce’s CHIPS Program outlined support totaling $1.6 billion. This includes $277 million in proposed federal funding and a $1.3 billion senior secured loan under the CHIPS Act
In addition, USAR would issue 16.1 million common shares and about 17.6 million warrants to the Department of Commerce.
While the LOI is non-binding and subject to further diligence, approvals, and final agreements, it highlights the U.S. government’s growing focus on securing domestic supplies of rare earth elements and critical minerals.
These materials are essential for semiconductors, defense systems, aerospace applications, electric vehicles, and energy technologies—sectors where the U.S. currently relies heavily on imports.
$1.5 Billion PIPE Brings Total Capital to $3.1 Billion
Alongside government support, USA Rare Earth announced a $1.5 billion private investment in public equity (PIPE). The deal is anchored by Inflection Point, with participation from large mutual fund groups and other strategic investors.
Key details of the PIPE transaction include 69.8 million shares issued at $21.50 per share. The expected closing date is January 28, 2026, subject to standard conditions
If completed, the PIPE and the proposed CHIPS Act funding would give USAR the financial firepower to accelerate development across mining, processing, metal-making, and magnet manufacturing.
USAR’s Round Top Project Aims to Power U.S. Tech and Defense by 2030
The capital is expected to fast-track USAR’s long-term growth strategy, centered on its Round Top rare earth and critical minerals project in Texas and its downstream manufacturing assets.
By 2030, the company aims to:
- Extract 40,000 metric tons per day of rare earth and critical mineral feedstock from Round Top, with commercial production targeted for 2028
- Process 8,000 metric tons per year of third-party mixed rare earth concentrates and heavy rare earth elements (HREEs), including dysprosium, terbium, yttrium, gadolinium, hafnium, and gallium
- Reshore 10,000 tons per year of heavy rare earth metal and alloy production—capabilities that currently do not exist in the U.S.
- Expand NdFeB magnet production to 10,000 tons per year, more than double earlier plans
- Recycle 2,000 tons per year of magnet swarf, improving material efficiency
Many of these elements are critical for chips, defense systems, aerospace components, and clean energy infrastructure—and are largely unavailable from domestic sources today.
Q4 2025: Key Milestones Reached
USA Rare Earth also shared several operational updates for the fourth quarter of 2025, showing steady execution.
Major highlights included:
- Completion of the Round Top process flow sheet, validated through pilot-scale testing
- Acceleration of Round Top’s production timeline to late 2028, two years earlier than planned
- Progress toward commissioning the Stillwater, Oklahoma magnet facility in Q1 2026
- Completion of the acquisition of Less Common Metals Ltd. (LCM), a specialist in rare earth metals and alloys
LCM has already strengthened USAR’s downstream position by forming strategic supply agreements with Solvay, Permag, and Arnold Magnetic Technologies.
After the quarter ended, USAR also announced plans for a 3,750-ton-per-year metal and alloy plant in France, and selected Fluor Corporation and WSP Global as EPCM partners for Round Top.
USAR Stock Rallies Above 15%
Following this announcement, USA Rare Earth’s shares jumped more than 15% during the day, rising to $28.57 from the previous close of $24.77. At one point, the stock even reached nearly $32.
The stock had climbed as much as 27% earlier in the session, following strong gains of 9% and 17% over the previous two trading days.
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Why Rare Earths Matter More Than Ever
Rare earths are not actually rare in nature, but economically viable deposits are limited. As per USGS data, in 2024, the U.S. produced about 45,000 tons of rare earth oxide in mineral concentrates, valued at roughly $260 million. Most production came from the Mountain Pass mine in California.
Even so, the U.S. still imported around $170 million worth of rare earth compounds and metals in 2024. Many rare earths also enter the country embedded in finished goods, especially permanent magnets.
Measured and indicated rare earth resources are estimated at 3.6 million tons in the U.S. and over 14 million tons in Canada, underscoring the long-term potential—if domestic processing and manufacturing capacity can be built.
Thus, USA Rare Earth’s proposed $3.1 billion capital package marks a clear shift in how the U.S. approaches critical minerals. Instead of relying on fragmented supply chains, the focus is moving toward fully integrated, domestic systems.
If finalized, the CHIPS Act support and PIPE financing could position USAR as a cornerstone of America’s rare earth ecosystem—helping close supply gaps, reduce import dependence, and support industries vital to economic growth and national security.
For the U.S. rare earth sector, this announcement may prove to be a defining moment.
Last but not least, U.S. Energy Secretary Chris Wright hailed President Trump, saying:
“Thanks to President Trump’s leadership, the Department of Energy is ending America’s reliance on foreign nations for the critical materials essential to our economy and national security. The DOE is partnering with USAR to rebuild the critical minerals supply chain. By expanding domestic mining, processing, and manufacturing capabilities, we are creating good-paying American jobs and safeguarding our national security.”