Highlights

• USA Rare Earth stock fell over 12% on December 15.
• The U.S. government awarded nearly $2 billion in backing to Korea Zinc for a zinc smelter project.
• USAR was not selected for the federal deal.
• The selloff reflects investor impatience rather than operational failure.
• Washington appears to be prioritizing established players for bulk metals processing.
• USAR's focus is on magnet manufacturing, positioning it later in the policy rollout sequence.
• USAR's strategic relevance in rare earth separation and magnet production remains intact.
• USAR must convert policy alignment into tangible contracts soon.

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Shares of USA Rare Earth (opens in a new tab) (NASDAQ: USAR) slid more than 12% on December 15, not because the company stumbled operationally, but because Washington once again chose a different partner. The Biden—now Trump 2.0—era reality of industrial policy is setting in: being strategic does not guarantee being selected.

When the Music Stops, Who’s Still Standing?

The immediate trigger as reported by Scott Levine writing for The Motley Fool (opens in a new tab) was news that the U.S. government is backing Korea Zinc in a nearly $2 billion zinc smelter project on U.S. soil.

Zinc, notably, sits on the USGS Critical Minerals List, and the deal fits squarely within the administration’s push to rebuild domestic metals processing capacity.

Markets reacted swiftly—and somewhat emotionally. USA Rare Earth had no news of its own, yet investors appeared rattled by the implication: another federal deal, another company not named USAR. After prior government-backed moves involving MP Materials, Lithium Americas, and downstream magnet producers, a quiet assumption had formed that USA Rare Earth would be next. That assumption broke yesterday.

What the Article Gets Right—and What It Overreaches

The piece is directionally accurate in one key respect: government alignment is becoming a material valuation input in the rare earth sector. Companies perceived as “inside the tent” are rewarded; those outside are punished, sometimes abruptly. On the other hand, there is a case to be made that today’s government-related deal could be tomorrow’s liability without a comprehensive, integrated, durable industrial policy in place.

Where the article drifts into speculation is in implying that the Korea Zinc deal meaningfully reduces USA Rare Earth’s strategic relevance. Zinc smelting, while important, sits adjacent—not equivalent—to rare earth separation and magnet manufacturing, which remain among the most geopolitically sensitive choke points in the supply chain. The absence of a USAR announcement is not evidence of exclusion; it is evidence of sequencing.

The Real Supply-Chain Signal Investors Should Watch

What’s notable here is not USA Rare Earth’s share price volatility—it’s the pattern of U.S. industrial policy now emerging clearly. Washington is funding processing and midstream capacity first, often with established global players that already know how to run complex metallurgical systems at scale. This is less about favoritism and more about execution risk management.

USA Rare Earth’s story remains fundamentally different. Its value proposition lies in rare earth magnet manufacturing and domestic integration, not bulk metals smelting. That places it closer to the endgame of supply-chain security—but also later in the policy rollout.

A Market Reacting to Silence, Not Substance

The selloff reflects impatience more than insight. Investors are pricing in disappointment based on what didn’t happen, not on deteriorating fundamentals. That said, the market is also delivering a message: hope is not a strategy, and companies trading at policy premiums must eventually convert alignment into contracts, capital, or offtake certainty, and the cash that ensues.

For USA Rare Earth, the clock is ticking—but it has not struck midnight.

Source: Yahoo Finance / Motley Fool, Dec. 15, 2025

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