The Trump administration is preparing to make its largest investment yet in the rare earth sector, planning a $1.6 billion stake in USA Rare Earth Inc. (USAR). The deal marks another step in Washington's aggressive push to secure domestic supplies of materials deemed critical to national security.

A Strategic Bet on Domestic Mining

Under the agreement, the U.S. government will acquire a 10% stake in the Oklahoma-based miner, which controls substantial U.S. deposits of heavy rare earths. According to the Financial Times, the investment is expected to be announced Monday alongside a separate $1 billion private financing deal.

The government's stake includes 16.1 million shares plus warrants for an additional 17.6 million shares priced at $17.17 each. On top of that, USA Rare Earth will receive $1.3 billion in senior secured debt financing from the government, drawn from a finance facility established under the CHIPS and Science Act of 2022. A commerce department official confirmed the transaction was completed directly with the company.

USA Rare Earth, currently valued at $3.7 billion, is developing a significant mining operation in Sierra Blanca, Texas, and has plans for a magnet production facility in Stillwater, Oklahoma. The Commerce Department and Defense Department have been working together to boost domestic rare earth production capabilities.

Building a National Security Stockpile

This isn't the administration's first rodeo when it comes to strategic investments. The government has already taken a 10% stake in Intel Corp. (INTC) and a 15% stake in MP Materials Corp. (MP), both framed as national security priorities. The goal is straightforward: reduce America's dependence on foreign suppliers, especially China, for materials essential to everything from military hardware to consumer electronics.

In August 2025, the administration converted CHIPS Act grants into a $5.7 billion equity stake in Intel. All told, the administration's investments now exceed $10 billion, spanning steel, minerals, nuclear energy, and semiconductors. It's an industrial policy play that treats critical supply chains like matters of national defense.