USA Rare Earth (USAR) has secured up to $1.6 billion in federal funding through the CHIPS Act, a move that formalizes an earlier Trump administration commitment and significantly expands the company’s ability to build a domestic rare earth supply chain. The announcement came just one day after the company revealed a separate $1.2 billion magnet manufacturing and refined metals facility in South Carolina, sending its shares higher.
Under the definitive agreements with the U.S. Department of Commerce, USAR gains access to $277 million in direct federal funding and up to $1.3 billion in senior secured loan capacity. Disbursements will be tied to project milestones. The fresh capital stacks on top of a $1.5 billion private capital raise completed in January, taking the company’s total committed capital to roughly $3.5 billion. As part of the deal, USAR will issue 16.1 million common shares and 17.6 million warrants to the Commerce Department.
The funds will primarily back the Round Top heavy rare earth and critical minerals project in Texas, which is targeting initial production in 2028. They will also support processing and separation operations, as well as domestic metal-making, alloy production, and strip-casting capabilities. The company aims to reshore 10,000 tons per year of heavy rare earth metal-making and alloy capacity.
On June 2, USAR shares rose more than 4% after announcing its Cherokee County, South Carolina facility at Bailey Industrial Park in Blacksburg. The site is expected to produce 6,400 metric tons of sintered neodymium-iron-boron (NdFeB) rare earth magnets and 5,000 metric tons of strip-cast metals and alloys each year. Combined with the Stillwater, Oklahoma operation, total domestic capacity would reach 10,000 metric tons annually for both magnets and heavy rare earth strip-cast metals. Engineering and procurement are already underway, with site work to begin in the coming months and commissioning targeted for 2028. The project will create about 490 high-skill jobs.
These efforts align with a U.S. Department of Defense policy set to ban Chinese-origin sintered NdFeB magnets in defense applications starting in January 2027. China currently controls 90% of global processed rare earth minerals and magnet production, making supply chain diversification a strategic priority. The funding and construction milestones underscore the U.S. government’s push to onshore critical mineral production, even as scrutiny from some lawmakers over the structure of the funding persists. Despite the funding milestone, USAR shares slipped nearly 5.3% in morning trading following the CHIPS announcement, reversing the previous day's gains.
