The Trump administration will invest $1.6bn (£1.2bn) in a US critical minerals firm, marking its latest push to reduce China’s dominance in the rare earths sector.
The agreement with USA Rare Earth, which will give the US government a stake in the company, comes just days after Donald Trump said he had secured the “framework” of a deal involving Greenland that would include access to rare earth minerals.
The investment follows a series of similar moves since Trump returned to the White House, as officials look to strengthen domestic supply chains for materials essential to smartphones, electric vehicles, and defence technologies.
Government Backing And Funding Structure
USA Rare Earth said the funding will support mining, processing, metal-making, and magnet manufacturing in the United States. The Oklahoma-based company controls deposits of so-called “heavy” rare earths, which are commonly used in advanced defence systems.
US Commerce Secretary Howard Lutnick said the investment would help ensure supply chain resilience and reduce dependence on foreign nations.
The non-binding pledge includes a $1.3bn loan from the Commerce Department, alongside $277m in direct federal funding. USA Rare Earth also announced it had separately raised $1.5bn from private investors, led by Inflection Point, whose chair Michael Blitzer also chairs the company.
Shares in USA Rare Earth rose more than 15% following the announcement.
Rare Earths And US China Trade Tensions
Rare earth minerals have become a central point of leverage in ongoing trade tensions between Washington and China. US companies remain heavily dependent on Chinese supplies, leaving them exposed as Beijing has moved to restrict exports in response to US tariffs and broader geopolitical pressure.
China currently processes around 90% of the world’s rare earths, giving it significant influence over global supply chains. Recent export curbs have been widely viewed as an attempt to extract concessions from the US in trade negotiations.
Broader Push To Build Domestic Supply Chains
The investment in USA Rare Earth is part of a broader effort by the US government to secure domestic sources of critical minerals. Over the past year, Washington has reached a $1.4bn agreement with Vulcan Elements, a rare earth magnet startup, and invested in MP Materials, which owns the only operational rare earths mine in the US.
While the US and its allies are accelerating investment in alternative supply lines, analysts say it will take years to meaningfully challenge China’s near-monopoly on rare earth processing.
The Trump administration has also looked abroad to diversify supply. In October, the US signed an agreement with Australia aimed at boosting production of rare earths and other critical minerals, as part of its longer-term strategy to reduce reliance on China.
Featured image credits: Wikimedia Commons
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