In a historic move to counter China’s dominance over rare earth supply chains, the U.S. government announced on January 26, 2026, a sweeping $3.1 billion financing package for USA Rare Earth (USAR). The deal includes a $1.6 billion letter of intent from the Department of Commerce’s CHIPS Program — comprising $277 million in proposed federal funding and $1.3 billion in a proposed senior secured loan — alongside $1.5 billion in private sector investment.
As part of the arrangement, the U.S. government is acquiring a 10% equity stake in USAR, signaling an unprecedented level of federal commitment to domestic critical mineral production.
The funding targets USAR’s Round Top Mountain project in Hudspeth County, Texas, which holds one of the largest identified deposits of heavy rare earth elements in North America. The deposit contains significant concentrations of dysprosium, terbium, and yttrium — elements essential for permanent magnets used in electric vehicles, wind turbines, and military systems.
USAR’s subsidiary, Less Common Metals, already produces rare earth metals and alloys for magnets and other applications. The new funding will support mine development, processing facilities, and downstream magnet manufacturing — building a fully integrated domestic supply chain from ore to finished product.
The Department of Energy is also collaborating on the project, reflecting the cross-agency priority placed on critical mineral independence. Industry analysts have called the deal a “turning point” for American rare earth self-sufficiency, coming amid heightened tensions with China over mineral export controls.
This investment follows a broader trend of federal critical mineral initiatives, including the 2026 Critical Minerals Ministerial hosted by Secretary of State Marco Rubio, which brought together allied nations to reshape global mineral supply markets.