USA Rare Earth Secures Up to $1.6B in CHIPS Funding

USA Rare Earth announced definitive agreements with the U.S. Department of Commerce that provide access to as much as $1.6 billion in CHIPS Act funding. The package includes $277 million in federal funds and up to $1.3 billion in senior secured loan capacity to advance the Round Top rare earth project in Texas and to build U.S. processing, metal‑making and magnet manufacturing facilities.

Under the agreements, disbursements will depend on the achievement of predefined project milestones and the receipt of required technical and permitting approvals. As part of the transaction, the company will issue 16.1 million common shares and 17.6 million warrants to the Commerce Department.

The funding supplements a $1.5 billion private capital raise completed in January, bringing the company’s committed capital to about $3.5 billion. USA Rare Earth’s stock fell roughly 5.3% in morning trading after the announcement.

The company plans to use CHIPS program support to accelerate development of Round Top, a heavy rare earth and critical minerals project targeted for initial production in 2028. The funding is intended to finance on‑site processing and separation of heavy rare earth oxides, concentrates and other critical minerals produced at Round Top.

Agreements also cover expansion of domestic metal‑making, alloy production and strip‑casting to supply downstream customers and to feed planned magnet manufacturing operations. A portion of the funding is allocated to projects outside Texas; USA Rare Earth previously announced plans for a $1.2 billion magnet manufacturing and refined metals facility in South Carolina.

The Commerce Department assistance is expected to support scaling neodymium‑iron‑boron (NdFeB) magnet production in Oklahoma and South Carolina to a combined capacity of about 10,000 tons per year. Company plans call for reshoring roughly 10,000 tons per year of heavy rare earth metal‑making and alloy capacity as it builds an integrated mine‑to‑magnet supply chain.

The agreements formalize an earlier White House pledge for a $1.6 billion debt‑and‑equity package intended to strengthen domestic supply of critical minerals. The funding flows through the Commerce Department’s CHIPS program and will be available as the company meets contractual milestones and secures necessary approvals.

U.S. officials have sought to expand domestic production of rare earths and critical minerals to reduce dependence on foreign processing. China currently dominates global rare earth processing and magnet manufacturing, and the U.S. aims to increase onshore capacity for mining, refining and advanced magnetic materials used in electric vehicles, wind turbines and defense applications.