USA Rare Earth Inc. (NASDAQ: USAR) shares rose 3.1% in premarket trading Thursday following the company’s announcement that it has been selected to enter negotiations for federal funding from the U.S. Department of Energy.
The potential award would provide up to $19.3 million under the DOE program named "Critical Materials Innovation, Efficiency and Alternatives." The funds are intended to support the development of a pilot-scale separations project for rare earth elements, with the goal of strengthening domestic processing capacity for materials deemed essential to U.S. energy, defense and advanced manufacturing supply chains.
USA Rare Earth says the total project is valued at approximately $50.5 million. That figure includes the proposed DOE contribution of up to $19.3 million and about $31.2 million in non-DOE funding. The company noted that final funding amounts and the project budget will be set through negotiations with the DOE.
According to the company, the work will focus on advancing technology to process rare earth elements sourced from domestic resources and on building pre-commercial separations capacity within the United States. USA Rare Earth emphasized that the definitive project scope, timeline and budget remain to be agreed with the DOE.
"We are honored to be selected by the Department of Energy under its critical materials innovation program," said Barbara Humpton, Chief Executive Officer of USA Rare Earth. "This selection is an important validation of our team’s cutting edge work to build a resilient rare earth value chain."
The company also cautioned that being selected for award negotiations does not equate to a binding commitment of federal funds. Any final award would require successful completion of negotiations and execution of a definitive funding agreement with the Department of Energy.
For investors and market watchers, the announcement underlined federal interest in bolstering domestic rare earth processing capabilities, while the company proceeds through the negotiation and contracting phase that will determine final project details.
Context and next steps
- Selection initiates negotiation and does not guarantee an executed award.
- Final project scope, budget and timeline will be established through DOE negotiations.
- Project aims to create pilot-scale separations capacity for rare earth elements in the U.S.