Trump supports U.S. rare earth firm in move to ease China stranglehold
Add Axios as your preferred source to
see more of our stories on Google.
A sample of dysprosium oxide at a rare earth and raw materials storage warehouse in Germany. Photo: Alex Kraus/Bloomberg via Getty Images
The Trump administration plans to provide USA Rare Earth with $1.6 billion in mostly loan financing to extract and process the materials and manufacture rare earth magnets.
- The agreement will provide the U.S. government a stake somewhere between 8% and 16%, depending on how the agreement is executed, a filing states. The company announced a separate $1.5 billion in private finance.
Why it matters: Staking the Oklahoma-based firm is among the most aggressive Trump administration steps to ease China's stranglehold on supply chains for the materials needed in key defense and industrial applications.
- "This investment ensures our supply chains are resilient and no longer reliant on foreign nations," Commerce Secretary Howard Lutnick said in a statement.
Driving the news: The company has a letter of intent with the Commerce Department for $1.3 billion in loans and $277 million in direct funding under the 2022 CHIPS and Science Act, the announcement states.
- The agreements boost "U.S. national security and competitiveness by developing essential domestic supply of critical minerals, metals, and magnets currently unavailable outside China," it states.
- USA Rare Earth's shares are surging in pre-market trading.
What we're watching: USA Rare Earth plans to extract 40,000 metric tons per day of rare earth and critical mineral feedstock from a Texas site that it hopes to bring into commercial production in 2028.
- It also calls for processing of a dozen materials like dysprosium, terbium, and yttrium that are "essential to semiconductors, aerospace, defense and energy production, and largely unavailable domestically," it states.
- The wide-ranging plan also includes expanded manufacture of rare earth magnets.
Catch up quick: It's the latest of several direct U.S. investments in the materials space, including rare earths developer MP Materials and Lithium Americas.
Reality check: Eroding China's dominance is a very long-term project.
What we're watching: The announcement doesn't say when the transaction with the Trump administration is slated to close.
- It's "subject to further diligence, finalization of agreements, customary closing conditions, and approvals," the parties said.
Editor's note: This story has been updated with additional details about the planned U.S. equity stake.
