USA Rare Earth announced it has entered into a non-binding letter of intent with the U.S. Department of Commerce’s CHIPS Program that outlines a proposed $1.6 billion package intended to accelerate a domestic heavy rare earth and permanent magnet value chain, alongside a collaboration with the U.S. Department of Energy. The company said the CHIPS LOI covers $277 million in proposed federal funding and a proposed $1.3 billion senior secured loan under the CHIPS Act, subject to further diligence, final agreements, customary closing conditions, and approvals.
Concurrently, the company said it raised $1.5 billion in private capital through a common stock PIPE anchored by Inflection Point with participation from large mutual fund complexes. USA Rare Earth said the PIPE involves the issuance of 69.8 million shares priced at $21.50 per share and is expected to close on January 28, 2026, subject to customary conditions. Combined with the proposed government funding and loan, the company said total capital associated with the transactions would be $3.1 billion, while the CHIPS Program funding and loan are expected to close this quarter, subject to finalization of agreements and other customary conditions.
USA Rare Earth framed the government LOI and the PIPE as a de-risking step for its “mine-to-magnet” strategy, aimed at supplying materials and components used in semiconductors, defense, energy, and advanced manufacturing. The company said the planned build-out is designed to create domestic access to critical minerals, metals, and magnets that it characterized as largely unavailable outside China, and to secure domestic access to 12 of the U.S. Government’s top 30 most essential critical minerals and rare earth elements.
The company outlined a 2030 operating vision that spans extraction, processing, metal and alloy production, and magnet manufacturing. USA Rare Earth said the Round Top deposit is expected to begin commercial production in 2028 and is planned to extract 40,000 metric tons per day of rare-earth and critical-mineral feedstock. It also said it plans to process a combined 8,000 metric tons per annum of third-party MREC and heavy rare earth elements and critical mineral oxides and concentrates at Round Top, including dysprosium, terbium, yttrium, gadolinium, hafnium, erbium, thulium, lutetium, ytterbium, holmium, gallium, and zirconium.
The company said it intends to reshore 10,000 metric tons per annum of heavy rare-earth metal and alloy-making and strip-casting capacity through its subsidiary, Less Common Metals Ltd., and to increase neodymium-iron-boron magnet-making capacity to 10,000 metric tons per annum, along with 2,000 metric tons per annum of swarf processing tied to magnet production.
As part of the proposed CHIPS Program structure, USA Rare Earth said it would issue 16.1 million shares of common stock and approximately 17.6 million warrants to the Department of Commerce. The company said the proposed funding is expected to be milestone-based and structured to align taxpayer returns with institutional investor objectives, and would not require government price supports or government offtake agreements.
USA Rare Earth also said the Department of Energy’s National Energy Technology Laboratory signed a letter of intent to collaborate on advancing heavy rare earth element separation technologies at the company’s Wheat Ridge lab and Round Top deposit, leveraging digital twin technology. The company said the goal of the partnership is to support the development of digital twins to advance separation technologies and ultimately help establish a fully domestic mine-to-magnet supply chain.
The company disclosed recent operational updates, including that its Stillwater, Oklahoma magnet facility remains on track to complete commissioning in the first quarter of 2026, and that it has accelerated plans to begin commercial production at Round Top in late 2028, which it said is two years earlier than previously anticipated. USA Rare Earth also highlighted its acquisition of Less Common Metals, relationships and supply agreements involving Solvay and Arnold Magnetic Technologies, and its selection of Fluor Corporation and WSP Global Inc. as engineering, procurement, and construction management partners for the Round Top mine development.
USA Rare Earth said it expects to report cash and cash equivalents in excess of $350 million as of December 31, 2025. For the year ended December 31, 2025, it provided preliminary estimates for operating expenses and operating loss in the range of $56 million to $62 million, and capital expenditures in the range of $37 million to $43 million, noting the figures are subject to year-end procedures and audit and could change.
Support: Latham & Watkins and White & Case served as legal advisors and Moelis & Company served as exclusive financial advisor to USA Rare Earth in structuring agreements with the U.S. Government, the company said. For the PIPE, Cantor Fitzgerald acted as lead placement agent and Moelis acted as co-placement agent, with White & Case as legal advisor to USA Rare Earth and DLA Piper as legal counsel to the placement agents, according to the release.
KEY QUOTES
“This landmark collaboration with the U.S. Government represents a transformative step in USAR’s mission to secure and grow a resilient, independent domestic rare earth value chain. We are grateful to President Trump, Secretary Lutnick, and Secretary Wright for their support and recognition of the strategic importance of rare earth materials and permanent magnets. With this unprecedented show of public and private support for our Company, we are positioned to accelerate the build-out of important domestic capabilities that are essential to U.S. national security, global economic competitiveness, and critical technologies of the future.”
Barbara Humpton, Chief Executive Officer, USA Rare Earth
“This transformational collaboration with Department of Commerce and the proposed $1.6 billion of CHIPS Act funding, along with $1.5 billion of private sector financial and strategic capital, will help secure the heavy rare earth supply chain for the U.S. and its allies and underscores USAR’s strategic nature in support of national and economic security. USAR and the Department of Commerce will mobilize a multi-year partnership at unprecedented scale and speed to build out capacity across heavy rare earth feedstock, processing, metal, and magnets, and we are proud to partner with the U.S. Government in support of the Company’s next phase of growth. We look forward to successfully implementing this ambitious plan with the goal of generating substantial financial returns for our shareholders.”
Michael Blitzer, Chairman of the Board, USA Rare Earth; Chairman and CEO, Inflection Point
“USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence. This investment ensures our supply chains are resilient and no longer reliant on foreign nations.”
Howard Lutnick, Secretary of Commerce
“Thanks to President Trump’s leadership, the Department of Energy is ending America’s reliance on foreign nations for the critical materials essential to our economy and national security. 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.”
Chris Wright, U.S. Energy Secretary
“Accelerating the onshoring of rare earth minerals, metals, and magnets is paramount to national and economic security. 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.”
Michael Grimes, Executive Director, U.S. Investment Accelerator
“The CHIPS Program’s proposed $277 million funding and $1.3 billion loan will be instrumental for the construction of a domestic integrated supply chain for critical minerals and NdFeB magnets, which are essential for semiconductor chip manufacturing. Yttrium, gallium, terbium, and the other nine critical and strategic minerals that will be mined in Texas, along with the Oklahoma magnet production, provides U.S. semiconductor companies a reliable domestic source and removes choke points in their manufacturing supply chain that enable chemical vapor deposition, high-k materials, compound semiconductors, dopants, and other foundational applications.”
Bill Frauenhofer, Director, CHIPS Program
