The U.S. government will secure 10% equity in domestic rare earth corporations USA Rare Earth and inject a massive sum totaling 2.32 trillion won. The goal is to raise self-sufficiency in critical minerals and reduce dependence on China. It is seen as an intention for the government to participate as a private-sector shareholder and directly manage a national security asset.
The Financial Times reported on the 24th that the Trump administration finalized a $1.6 billion (about 2.3 trillion won) investment plan combining the acquisition of USA Rare Earth equity and financial support. The government will purchase 16.1 million shares at $17.17 per share. That is below the current market price of $24.77. The government will also receive 17.6 million warrants, the right to buy additional shares. Funds committed to the equity purchase are estimated to total $277 million (about 400 billion won).
The remaining $1.3 billion will be provided as loans. The funds will come from a financing facility set up within the Commerce Department under the CHIPS Act enacted in 2022. A Commerce Department CHIPS Act office official said, "This investment focuses on bringing into the United States the core strategic minerals that are essential for the semiconductor supply chain and national security." The support funds are slated for Texas mine development and construction of a processing facility in Oklahoma.
USA Rare Earth is a company developing a large rare earth mine in Sierra Blanca, Texas. According to the company, the mine holds 15 key elements. In Stillwater, Oklahoma, it plans to build a plant to process rare earths and produce magnets.
Recently, the U.S. government has been pursuing security-related policy by directly holding equity in private corporations. The U.S. government has already secured 10% equity in semiconductor manufacturer Intel. It also signed a contract with steel corporation US Steel that grants participation rights in major decision-making. Separately from this government support, USA Rare Earth is seeking to raise more than $1 billion in additional funding in the private market. In this process, investment bank Cantor Fitzgerald, run by the son of Commerce Secretary Howard Lutnick, served as advisor.
USA Rare Earth's share price rose 40% in the third week of Jan. The cumulative gain so far this year exceeds 100%.