Highlights

• The U.S. government is acquiring a 10% equity stake in USA Rare Earth for $1.6 billion.
• This includes $1.3 billion in CHIPS Act debt financing and discounted shares at $17.17.
• The move represents a strategic shift from grants to direct ownership in critical mineral assets.
• USA Rare Earth's Round Top deposit in Texas targets heavy rare earths such as dysprosium for defense and EV magnets.
• The production is planned to start in 2028.
• USA Rare Earth plans to have integrated magnet manufacturing in Oklahoma by late 2024.
• This deal is similar to equity investments in Lithium Americas, Trilogy Metals, and MP Materials.
• The strategy is part of a new U.S. industrial policy playbook leveraging balance sheets and cap table positions.
• The goal is to secure supply chains that are currently dominated by China.

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The deal, translated and stripped of drama. According to Chinese-language reporting published by the China Rare Earth Industry Association and covered by Rare Earth Exchanges™, the U.S. government plans to acquire an approximately 10% equity stake (on a fully diluted basis) in USA Rare Earth (USARE). The move sits within a $1.6 billion federal support package intended to stand up a domestic mine-to-magnet supply chain.

Citing as well the Financial Times, Washington is to receive 16.1 million common shares plus warrants for an additional 17.6 million shares, both priced at $17.17 per share—roughly a 25% discount to USARE’s prior $22.71 close. The implied equity valuation is ~$3.4 billion.

In parallel, the government is offering $1.3 billion in debt financing through a Commerce Department facility enabled by the CHIPS and Science Act. Investor briefings are expected, and another $1 billion may be earmarked for similar critical minerals investments.

Industrial Policy by Capitalization Table

This is not a one-off. It follows earlier government-linked transactions involving Lithium Americas and Trilogy Metals, and a multibillion-dollar arrangement with MP Materials at Mountain Pass. The pattern is clear: equity + debt + offtake-adjacent support to de-risk assets Washington deems strategic. This is industrial policy executed through balance sheets, not just grants.

Round Top: Why This Asset Matters

USARE’s Round Top deposit near Sierra Blanca, Texas—targeting late-2028 production—is unusually rich in heavy rare earths, notably dysprosium, essential for high-temperature permanent magnets used in EVs, wind turbines, and defense systems.  A 2019 technical report projected a 20-year mine life and ~2,213 tpa of rare earths, including ~1,900 tpa of heavy rare earths. In January last year, the project produced 99.1%-pure dysprosium oxide—a real, if early, milestone.

The broader vision includes a 5,000-tpa magnet plant in Stillwater, Oklahoma, targeted for initial commercialization this year, and a processing and separation lab in White Ridge, Colorado.

What’s Solid—and What’s Framed to Persuade

Solid: pricing discount, CHIPS-enabled debt, Round Top’s heavy-REE profile, and Washington’s expanding equity playbook.

Speculative: timelines. Mine-to-magnet integration at scale remains chemically, capital-, and talent-intensive. Equity does not erase those constraints.

Narrative framing to note: state-linked Chinese reporting casts U.S. action as reactive; the structure suggests a deliberate shift from subsidies toward partial ownership.

Why Investors Should Care

This is precedent, not just funding. The U.S. is signaling a willingness to sit on the cap table to secure critical materials—especially heavy rare earths that China still dominates midstream. That changes risk calculus, valuation logic, and exit assumptions.

Sources: China Rare Earth Industry Association, citing Mining.com, Financial Times, and Reuters.

Rare Earth Exchanges™