Shares of USA Rare Earth (NASDAQ:USAR) climbed about 5% on Wednesday morning after the company announced it had finalized definitive agreements with the U.S. Department of Commerce that make available up to $1.6 billion in funding to advance its rare earth value chain.
The announced package includes up to $277 million in direct federal funding and up to $1.3 billion in senior secured loan capacity under the CHIPS Act. The agreements specify that disbursements will be phased and contingent on the company meeting agreed project milestones.
When combined with the $1.5 billion private investment in public equity that closed in January 2026 and prior capital raises, USA Rare Earth says the newly finalized agreements bring the total committed capital backing its growth plan to approximately $3.5 billion.
The funding is earmarked to support development of the Round Top heavy rare earth and critical mineral deposit in Hudspeth County, Texas. The company targets commercial production at Round Top to begin in 2028. The agreements also extend to processing and separation capacity for output from Round Top, including dysprosium, terbium, yttrium and other critical minerals identified by the company.
Part of the deployment plan includes reshoring capabilities through the company's Less Common Metals subsidiary. USA Rare Earth says it intends to bring online 10,000 tons per annum of heavy rare earth element metal- and alloy-making capacity that it asserts do not currently exist in the United States.
Separately, the company plans to scale neodymium-iron-boron magnet manufacturing capacity to 10,000 tons per annum across facilities in Stillwater, Oklahoma and Blacksburg, South Carolina.
Under the terms of the Commerce Department agreements, USA Rare Earth will issue 16.1 million shares of common stock and approximately 17.6 million warrants to the Department of Commerce. Funding will be released in phases tied to achievement of the company’s project milestones.
The financing package is structured to support both mining and downstream processing and manufacturing steps in the company’s stated rare earth supply chain. The combination of federal support under the CHIPS Act and prior private financing represents the bulk of the $3.5 billion in committed capital cited by the company.
Market reaction and context
Market reaction to the announcement was immediate, with the stock rising roughly 5% on the morning that the agreements were finalized. The company’s plan links federal loan capacity and grant funding to clearly defined project milestones, which will determine disbursement timing.
What remains to be seen
The agreements set out a phased funding approach dependent on milestone achievement, and the company will issue stock and warrants to the Department of Commerce as part of the arrangement. How quickly milestones are met and funds are drawn will shape the pace of project development and manufacturing ramp-up.