USA Rare Earth lands up to $1.6B in CHIPS Act funding, hits $3.5B in total liquidity
What's the deal? USA Rare Earth has finalised an agreement with the US Department of CommerceDealroom has a profile for this one. Try Dealroom → for up to $1.6 billion in federal funding under the CHIPS and Science Act. The package includes $277 million in direct grants and up to $1.3 billion in senior secured loan capacity. In return, the government received 16.1 million common shares and 17.6 million warrants.
Combined with a $1.5 billion private placement secured in January 2026, the company now has $3.5 billion in total liquidity to build a domestic "mine-to-magnet" supply chain — from raw extraction to finished rare-earth permanent magnets.
Why now? The US has long depended on China for mining and processing rare-earth elements into refined magnets, a vulnerability that has grown into a national security concern. These magnets are central to electric vehicles, wind turbines, missile guidance systems, and advanced electronics.
Washington is pushing to reshore the entire supply chain. USA Rare Earth has moved fast to position itself as a key player, acquiring UK-based Less Common Metals (LCM) for $100 million in 2025 and Brazil's Serra Verde Group for roughly $2.8 billion in April 2026. Serra Verde's Pela Ema mine is currently the only large-scale producer outside Asia that supplies all four primary magnetic rare-earth elements.
The company also announced a $1.2 billion magnet manufacturing facility in South Carolina and runs active permanent magnet facilities in Oklahoma.
What could go wrong? USA Rare Earth is still pre-revenue in any meaningful sense — it reported a gross margin of roughly negative 4,500%. The company's ambitious targets, including 10,000 tons of rare-earth metal alloys and 10,000 tons of permanent magnets annually, depend on successfully scaling mining, processing, and manufacturing simultaneously.
Its Round Top mine in Texas, rich in heavy rare-earth elements, isn't expected to begin commercial production until 2028 at the earliest. Execution risk is significant.
The signal: The repurposing of CHIPS and Science Act funding — originally designed for semiconductors — to back a pre-revenue rare-earth mining company underscores how broadly Washington now defines critical supply chain infrastructure. USA Rare Earth's late-stage positioning and $3.5 billion war chest make it the West's most capitalised bet on breaking China's near-monopoly, but its roughly negative 4,500% gross margin is a stark reminder that government backing and operational viability are very different things.
Read more: The Motley Fool
