Jan. 26 (UPI) — Critical minerals startup USA Rare Earth announced Monday that the Department of Commerce will give the company a $1.3 billion loan and $277 million in federal funding.<\/p>\n\n\n\n
USA Rare Earth will issue Commerce 16.1 million shares of common stock and 17.6 million in warrants. The federal government will have an 8% to 16% stake in the company, depending on whether it uses the warrants, a filing<\/a> with the Securities and Exchange Commission said.<\/p>\n\n\n\n USA Rare Earth shares rose more than 20% Monday after the announcement, CNBC reported<\/a>.<\/p>\n\n\n\n The injection of funds will help the company build a magnet manufacturing plant in Stillwater, Okla., and a mine at the Round Top mineral deposit in Sierra Blanca, Texas.<\/p>\n\n\n\n CEO Barbara Humpton said the government deal will turn USA Rare Earth into an industry leader.<\/p>\n\n\n\n “This is a watershed moment in our work to secure and grow a resilient and independent rare earth value chain based in this country,” CNBC reported that Humpton told analysts Monday.<\/p>\n\n\n\n “We have long said that meeting the urgent call to reassure the rare earth and critical minerals industry will require a multiplayer solution, and this establishes our company as one of the leaders,” she said.<\/p>\n\n\n\n Commerce will allocate the funding from 2026 through 2028 based on milestones in USA Rare Earth’s business plan, Chief Financial Officer Rob Steele told analysts.<\/p>\n\n\n\n The company needs about $4.1 billion for its plan, he said. It still needs to raise about $600 million more capital.<\/p>\n\n\n\n “We believe we can raise the remaining capital from attractive sources, and you should assume that’s equity capital but that can come from strategic investments as well as institutional investors,” Steele said.<\/p>\n\n\n\n China dominates the global supply chain of rare earth materials. During trade disputes with President Donald Trump<\/a>, Beijing tried to cut off<\/a> rare earth exports.<\/p>\n\n\n\n “USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence,” Commerce Secretary Howard Lutnick said in a statement. “This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”<\/p>\n\n\n\n “The Department of Energy is ending America’s reliance on foreign nations for the critical materials essential to our economy and national security,” said U.S. Energy Secretary Chris Wright<\/a> in a statement. “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.”<\/p>\n\n\n\n “Accelerating the onshoring of rare earth minerals, metals, and magnets is paramount to national and economic security,” U.S. Investment Accelerator Executive Director Michael Grimes said in a statement. “With the Department of Commerce’s funding for USA Rare Earth’s vertically integrated mine-to-magnet operations, we will significantly increase the domestic supply of crucial components for semiconductors, defense and numerous other industries strategic to the United States.”<\/p>\n\n\n\n