Highlights

• The U.S. government plans to invest $1.6 billion in USA Rare Earth for a 10% equity stake at a $16 billion implied valuation—nearly 5× its current $3.45 billion market cap.
• The company currently has no revenue, $285 million in losses, and unproven midstream separation capabilities.
• The investment targets critical midstream gaps in rare earth processing, including separation, oxide-to-metal conversion, and alloy production.
• The U.S. remains heavily dependent on China for these processes.
• Execution risk of the investment now largely shifts to taxpayers, while existing shareholders capture disproportionate upside.
• Strategic concerns include technical challenges and the involvement of Cantor Fitzgerald, chaired by Commerce Secretary Howard Lutnick's son.
• More than $1 billion has been raised, raising transparency questions in a sector already shaped by industrial policy and national security imperatives.

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According to reporting by Reuters, citing the Financial Times, the U.S. government plans to inject $1.6 billion into USA Rare Earth in exchange for a 10% equity stake, alongside a separate $1 billion private raise. If confirmed, this would rank among the largest direct federal equity interventions in the U.S. rare earth sector—following earlier stakes in MP Materials, Lithium Americas, and Trilogy Metals.

Officially, the deal is framed as “onshoring critical and strategic minerals essential to the semiconductor supply chain and U.S. national security.” Unofficially, it reflects a more urgent reality: the U.S. still lacks reliable midstream rare earth separation and refining capacity, and time is no longer on Washington’s side.

What the Money Is Likely For—And Why It Matters

Despite the headline focus on mining and magnet manufacturing, the real gravity of this investment sits between the mine and the magnet.

USA Rare Earth’s most acute challenges are not branding or demand—they are feedstock security, separation scale-up, and oxide-to-metal conversion. The company’s Sierra Blanca, Texas, deposit is heavy rare earth–leaning and technically complex, meaning consistent, economic production is not a given. Even if the ore performs as hoped, proving out midstream separation at commercial scale remains the gating risk.

This is where partnerships matter. The involvement of Less Common Metals is strategically notable. Oxide-to-metal and alloying capabilities are among the least replicated, most China-dependent segments of the supply chain. Funding will almost certainly be directed toward validating these steps on U.S. soil—because without them, magnets remain theoretical.

The Comparison Investors Should Make

Compared with MP Materials, which already operates an integrated mine-to-separation pathway at Mountain Pass (albeit still reliant on downstream partners), USA Rare Earth is considerably earlier in the execution curve. MP’s risk today is margin and geopolitics; USA Rare Earth’s risk is technical and operational proof.

Importantly, that distinction matters. Capital can accelerate timelines, but it cannot shortcut feedstock security, metallurgy, permitting, or workforce depth. $1.6 billion buys time—not certainty.

Politics, Proximity, and Perception

Investors should not ignore the optics. The reported role of Cantor Fitzgerald, (opens in a new tab) chaired by the son of Commerce Secretary Howard Lutnick, in raising over $1 billion in private equity invites scrutiny—even if no rules are broken. In a sector already shaped by a form of industrial policy, perceived conflicts matter almost as much as real ones. Transparency will be essential. Anything less risks undermining the very credibility Washington is trying to build around its rare earth strategy.

The Real Test Ahead

This deal, if finalized, signals seriousness. But seriousness is not the same as success. The U.S. rare earth problem is not capital alone—it is execution across geology, chemistry, and manufacturing. USA Rare Earth now has a rare asset: patience backed by public money. What it must deliver next is proof.

Follow the Money: What the Balance Sheet Really Says

At roughly $24–25 per share, USA Rare Earth carries a market capitalization of about $3.45 billion, up sharply from under $500 million earlier in 2025. Yet the fundamentals remain unmistakably pre-revenue and loss-making. The company reports no meaningful revenue, negative EBITDA of $39 million, and net losses of ~$285 million TTM, with a return on assets of –12%. Cash on hand ($258 million) is solid for now, and debt is minimal—but this is still a capital-consuming development story, not an operating business. In other words, today’s valuation is pricing in future execution across mining, separation, refining, and magnet manufacturing, not current cash flows.

Is Washington Overpaying—or Buying an Option?

If the reported deal is accurate—$1.6 billion for 10%—the implied valuation is ~$16 billion post-money, nearly 5× the current public market cap. On a pure financial basis, that looks rich—arguably very rich—for a company with no revenue, negative cash flow, and unproven midstream scale. But this is not a conventional financial investment. What the government would be buying is a strategic option: time, control, and a seat at the table in a fragile supply chain segment the U.S. cannot afford to lose.  Plus, the Trump administration would be able to, in theory, run a separate supply chain.  That said, even strategic capital should demand discipline.

At this implied valuation, execution risk shifts almost entirely onto the taxpayer, while equity upside disproportionately benefits existing shareholders.  And without a more comprehensive industrial policy of the type Rare Earth Exchanges™ has called for, such risks amplify. The burden is now on USA Rare Earth to prove that this capital converts into secured feedstock, working and scalable separation lines, oxide-to-metal capability at scale, and, of course, commercial magnets—not just a higher ticker.

Source

Reuters. US to inject $1.6 billion into rare earths miner for 10% stake, FT reports. Jan. 24, 2026.