USA Rare Earth (USAR) stock jumped more than 14% on Monday after the miner announced it would receive $1.6 billion from the Department of Commerce in exchange for an equity stake in the company.
Industry peers MP Materials (MP), Energy Fuels (UUUU), and Trilogy Metals (TMQ) all jumped in early trading.
USA Rare Earth said it entered a letter of intent with the Department of Commerce, which also includes a collaboration with the Department of Energy for a $1.3 billion loan and $277 million in federal funding.
Read more: What are rare earth minerals, and why are they important?
As part of the deal, USA Rare Earth will issue to the Department of Commerce 16.1 million shares of common stock and approximately 17.6 million warrants.
The company also announced a $1.5 billion capital raise.
The new funding is expected to accelerate USA Rare Earth’s mining, processing, and metal-making operations, including its magnet manufacturing plant in Stillwater, Okla., and its Round Top deposit in West Texas, which is expected to begin commercial production in 2028.
The US’s stake in USA Rare Earths is part of the US government’s efforts to reduce China’s rare earth metal dominance.
Last year, the Pentagon became MP Materials’ largest shareholder as it announced the purchase of $400 million of the producer’s shares.
The government also took stakes in Lithium Americas (LAC) and Trilogy Metals in deals announced last year.
Rare earth minerals support some of the biggest sectors the United States is racing to dominate, including AI and data centers, advanced manufacturing, defense, energy and technology infrastructure.
Strategists note that growing US investment in rare earth miners provides the industry with a powerful tailwind as companies are no longer reliant solely on risk capital.
“Public sector participation is enhancing revenue visibility, mitigating project risk and increasing the likelihood that new capacity is actually implemented,” Sprott Asset Management’s Paul Wong and Jacob White wrote in a note earlier this month.
Most recently, President Trump said the “framework” of a future deal with NATO over Greenland would include rights to rare-earth minerals.
“They’re going to be involved in mineral rights, and so are we,” Trump told CNBC after announcing the development in a social media post last week.
Ines Ferre is a senior business reporter for Yahoo Finance, focusing on energy, commodities and industrials Follow her on X at @ines_ferre.
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