US Government Takes Equity in Miner to Secure Critical Supply Chain
Washington, Sunday, 25 January 2026.
Washington commits $1.6 billion for a 10% stake in USA Rare Earth, aiming to onshore critical minerals while raising eyebrows over the Commerce Secretary’s family ties to the financing.
Structuring a Historic Intervention
The federal government’s plan involves a direct equity injection of $1.6 billion, aimed at securing a 10% ownership interest in the Oklahoma-based company [1][2]. According to reports surfacing on Saturday, the deal is structured to provide the government with 16.1 million shares, alongside warrants for an additional 17.6 million shares, with both instruments priced at $17.17 [1][2]. This transaction, expected to be formally announced on Monday, runs parallel to a separate $1 billion private financing effort intended to further capitalize the miner [1][3]. The valuation implies a significant premium and a massive expansion of the government’s balance sheet exposure to the mining sector, with the company’s market capitalization standing at $3.45 billion prior to the announcement [1][2].
Strategic Pivot to Onshoring
This move represents a materialization of the “historic deals” Washington teased in December 2025, designed to bolster the domestic mining sector against foreign dominance [1][2]. The primary economic driver is the reduction of reliance on China, which has historically leveraged its mineral prowess as a bargaining chip in trade negotiations [1][2]. An official from the Commerce Department’s CHIPS office—which typically incentivizes semiconductor investment—noted that this specific deal is focused on onshoring minerals essential to the semiconductor supply chain and national security [1][2]. This follows a precedent set last year when the administration acquired equity positions in other key players, including MP Materials, Lithium Americas, and Trilogy Metals [1][2].
Intersection of Policy and Finance
While the strategic intent is clear, the financial mechanics of the deal have introduced a layer of political complexity. USA Rare Earth has retained Cantor Fitzgerald to lead the concurrent efforts to raise more than $1 billion in fresh equity [1][2]. The investment banking firm is chaired by Brandon Lutnick, the son of current U.S. Secretary of Commerce Howard Lutnick [1][2]. This familial link between the cabinet official overseeing the department aimed at boosting domestic commerce and the firm facilitating the private side of this major government-backed transaction is likely to generate significant discussion regarding the intersection of public policy and private financial interests.
Operational Timeline and Market Position
USA Rare Earth is aggressively scaling its operations to meet these new federal mandates, having emerged as one of the larger-scale U.S. neo-magnet manufacturers [1][2]. The company is currently developing a mine in Sierra Blanca, Texas, alongside a neo-magnet manufacturing facility in Stillwater, Oklahoma [1][2]. The Oklahoma facility is projected to reach commercial viability in the first half of 2026, aligning with the government’s accelerated timeline for supply chain independence [1][2]. Investors have been watching the stock closely even before this news; earlier in January, shares spiked following speculation regarding geopolitical shifts in Venezuela, closing near $15.80 on January 5 [4].