US, government to invest 1.6 billion in US rare earths company
The US government will acquire a 10% stake in USA Rare Earth, a publicly traded mining company based in Oklahoma
The Trump administration plans to invest $1.6 billion in a US rare earths company, its largest investment in the sector, in Washington's latest initiative to support private industry to secure supplies of strategic minerals. The Financial Times writes this.
The US government will acquire a 10% stake in US Rare Earth, a publicly traded mining company based in Oklahoma that controls major US deposits of heavy rare earths, according to sources familiar with the matter. The government investment and a separate $1 billion private financing agreement should be announced on Monday, according to the same sources.
A source said that the government will receive 16.1 million shares of US Rare Earth and warrants for an additional 17.6 million shares, both at a price of $17.17. The government agreed to pay $277 million for the shares, resulting in an implied gain of $490 million for the shares and warrants, based on the current share price of $24.77. U.S. Rare Earth will also receive $1.3 billion in guaranteed debt financing at market rates from the government. The money will come from a financial instrument created for the Department of Commerce under the Chips and Science Act passed in 2022, under President Biden.
Last December, Washington said it was planning more 'historic deals' with the US mining sector to increase domestic production of lithium, rare earths and other minerals used for national defence and rely less on China, which has used minerals as leverage in trade negotiations.
The deal with US Rare Earth is "focused on the on-site transfer of critical and strategic minerals essential to the semiconductor supply chain and to the national security of the United States", wrote the Financial Times quoting an official from the US Department of Commerce's CHIPS office, which provides incentives for investment and equipment in the US.
