By Mucahithan Avcioglu
ISTANBUL (AA) - The US Commerce Department announced Monday that it will take an equity stake in mining and manufacturing company USA Rare Earth for around $1.6 billion.
In a letter of intent, the Commerce Department offered USA Rare Earth $277 million in federal funding and a $1.3 billion loan from the CHIPS Act.
The department will get 17.6 million warrants and 16.1 million shares of common stock from USA Rare Earth. The agreement is subject to finalization of agreements and approvals.
"In conjunction with this announcement, USAR has raised a common stock PIPE in the amount of $1.5 billion anchored by Inflection Point with participation from large mutual fund complexes," it said.
"USA Rare Earth's heavy critical minerals project is essential to restoring U.S. critical mineral independence," said Commerce Secretary Howard Lutnick. "This investment ensures our supply chains are resilient and no longer reliant on foreign nations."
USA Rare Earth shares surged over 16% in Monday's premarket trading after the announcement.
The Trump administration's investment will support USA Rare Earth's plans to develop a mine at the Round Top rare earth deposit in Texas and a magnet production facility in Stillwater, Oklahoma.
In an effort to lessen reliance on China, the Trump administration has made creating a Western supply chain for crucial minerals and rare earths a key goal of its industrial policy.