According to a report from last Saturday, the Trump administration is planning to inject $1.6 billion into USA Rare Earth Inc. (USAR.US) in exchange for a 10% equity stake, marking the U.S. government's single largest investment to date in the rare earths sector. The report further indicated that this federal investment, along with a separate $1 billion private financing agreement led by Cantor Fitzgerald, is expected to be officially announced this coming Monday. Based on the transaction details disclosed by both parties, the total $1.6 billion investment package consists of approximately $277 million in equity acquisition and $1.3 billion in government loans, granting the U.S. government a 10% ownership share in the company. Under the equity structure of this deal, the U.S. government will acquire 16.1 million shares of USA Rare Earth stock at a price of $17.17 per share, along with an additional 17.6 million warrants. Given that USA Rare Earth's recent market price has hovered around $24.77, the government's entry price represents a discount of approximately 30.7% to the market price, implying that this investment has already generated hundreds of millions of dollars in immediate, unrealized paper gains. Beyond the direct financial support from the government, investment bank Cantor Fitzgerald will also lead a $1 billion private financing round, which, through this public-private partnership, is set to push USA Rare Earth's overall valuation to approximately $16 billion. This valuation significantly exceeds the company's current secondary market capitalization, reflecting a strong consensus on Wall Street and in the White House regarding the premium for strategic mineral resources. Additionally, USA Rare Earth will receive $1.3 billion in priority secured debt financing from the U.S. government, with the interest rate set at market levels. These funds are sourced from a specialized financing facility established by the U.S. Department of Commerce under the CHIPS and Science Act passed in 2022. It is understood that Oklahoma-based USA Rare Earth is a core enterprise in the current U.S. vertical integration efforts for rare earths, with its Round Top heavy rare earths mine in Texas expected to commence formal production in 2028. More strategically significant is the company's planned start of production at its rare earth magnet manufacturing facility in Stillwater within 2026, which will fill a long-standing gap in the U.S. high-performance permanent magnet manufacturing sector. Such products are indispensable raw materials for manufacturing missile guidance systems, fighter jet engines, and cooling units for artificial intelligence computing centers. Through this equity investment, the Trump administration will not only be able to directly supervise the progress of rare earth mining and processing but also, via the equity link, ensure that this production capacity is prioritized for supply to U.S. defense contractors and critical technology companies. This move, bearing strong characteristics of "state capitalism," is the latest manifestation of the Trump administration's strategy to accelerate the reduction of dependence on external critical minerals. Since late 2025, the U.S. government has successively invested in several resource giants—including MP Materials (MP.US), Lithium Americas (LAC.US), and Trilogy Metals (TMQ.US)—using a similar model, thereby constructing a mineral security alliance backed by the government. Market analysts believe that this direct equity-holding behavior signals that the United States will further employ state machinery to intervene in the resource allocation of critical industrial chains. It is worth noting that USA Rare Earth's stock price has more than doubled this month, with a 40% surge this week contributing significantly to the gains.
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