USA Rare Earth secures $3.5 billion in funding as government takes stake

As part of the move to strengthen America’s critical minerals supply chain, USA Rare Earth Inc. (NASDAQ:USAR) has secured access to approximately USD 3.5 billion in capital. The financing signals Washington’s growing urgency to localise magnet production and reduce reliance on overseas suppliers.

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In late January, the U.S. Commerce Department issued a letter of intent to provide the company with a USD 1.3 billion loan and USD 277 million in federal funding, in exchange for 16.1 million shares of common stock and 17.6 million warrants. The transaction could give the US government an 8 per cent to 16 per cent stake, depending on warrant execution,an unusually direct federal alignment with a listed mining and magnet producer.

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Just days later, on January 29, the company completed a USD 1.5 billion PIPE financing, issuing 69.8 million shares at USD 21.50 each, with proceeds earmarked to accelerate its mine-to-magnet value chain strategy.

Shortly after, Cantor Fitzgerald raised its price target to USD 35 from USD 28, maintaining an Overweight rating. The analyst noted that the fresh capital enables a sharper pivot toward magnet production, which could potentially generate USD 1.2 billion in EBITDA by 2030 if executed successfully.

As a domestic supplier of rare earth magnets and heavy rare earth elements, USA Rare Earth’s vertically integrated model aligns with broader industrial policy trends. 

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