USA Rare Earth defends US investment

The U.S. government is trying to buy its way into a rare-earth supply chain, and one of the strangest terms in the deal is that Washington could keep stock in the company even if the money never fully arrives. USA Rare Earth chief executive Barbara Humpton said on April 10 that shareholders should not worry about that structure. (reuters.com) The company is waiting on a Commerce Department package worth up to $1.58 billion, made up of $277 million in direct funding and a $1.3 billion senior secured loan. The agreement was announced on January 26 as a non-binding letter of intent, not a final closed deal. (nist.gov) In exchange, the Commerce Department would get about 16.1 million shares and warrants for another 17.6 million shares. That would leave the federal government with roughly 8% to 16% of USA Rare Earth, depending on whether the warrants are exercised. (cnbc.com) Rare earths are the metals that go into the strongest permanent magnets, and those magnets end up inside electric vehicles, missiles, robots, wind turbines, and chipmaking equipment. The Commerce Department said USA Rare Earth would be the only U.S. company trying to do the whole chain in one place: mine ore, separate minerals, turn them into metal, and make neodymium iron boron magnets. (nist.gov) The plan ties together two sites. Round Top near Sierra Blanca, Texas, is supposed to open in 2028, while the Stillwater, Oklahoma, magnet plant is due to open in 2026 and scale toward 10,000 tons a year of magnet capacity. (reuters.com) (nist.gov) The political fight started because the money is not automatic. USA Rare Earth still has to hit milestones, raise extra private capital, complete technical studies, and show customers actually want the output before Commerce disburses funds between 2026 and 2028. (cnbc.com) (mining.com) That is where lawmakers jumped in. Representative Zoe Lofgren, the top Democrat on the House Science Committee, wrote in March that it was “deeply strange” for the government to keep an equity stake even if it decides not to invest or later claws the money back. (mining.com) A second problem is Cantor Fitzgerald. The firm helped USA Rare Earth go public in March 2025, led the company’s $1.5 billion private investment in public equity financing in February 2026, and was previously run by Commerce Secretary Howard Lutnick before his sons took over. (reuters.com) (dlapiper.com) (metaltechnews.com) Three Democratic senators, including Elizabeth Warren, also pressed Lutnick in February over whether his family could benefit financially from the arrangement. Their letter said federal investments in strategic industries should be made on the merits and free of conflicts of interest. (cnbc.com) Humpton’s answer is that investors should see the government’s involvement as a vote of confidence, not a trap. She told Reuters the deal is still slated to close by the end of April and said shareholders would be “delighted” by the company’s path to future value creation. (reuters.com) What makes this worth watching is that the United States is no longer just handing out grants to strategic industries. In this case it is offering loans, taking stock, setting milestones, and trying to build a domestic mine-to-magnet business line by line, while Congress argues over how much leverage the government should have over the companies it is trying to create. (nist.gov) (reuters.com)