USA Rare Earth (USAR) signed a non-binding agreement with the US Department of Commerce (DoC) under the CHIPS Act to support the development of USA Rare Earths’ planned integrated mine-to-magnet supply chain.

The letter of intent from the DoC includes US$277M in federal funding and a US$1.3Bn senior secured loan. At the same time, USAR announced it also raised US$1.5Bn through a PIPE financing with entities affiliated with the SPAC with which it previously completed its merger, bringing the total amount of potential capital to US$3.1Bn.

The funding would help accelerate development of the US$4.1Bn Round Top rare earth project in Texas, USA, alongside a magnet manufacturing facility in Oklahoma, and potential expansion of metallisation capabilities in the USA. The agreement, however, remains subject to securing US$500M in additional equity financing, due diligence, final documentation, and regulatory approvals.

USAR is targeting commercial production from 2028 and a ramp-up by 2030 towards 8ktpy of heavy rare earth processing and 10ktpy of NdFeB magnet capacity. The company also plans to extract 40,000tpd of rare earth and critical mineral feedstock.

With few fully integrated projects in development outside of China, the agreement highlights a growing reliance on government support to accelerate critical mineral supply chains, with heavy rare earths and NdFeB magnets viewed by the US government as strategically important to national security.

The move extends recent US intervention in critical materials projects and operations, following deals involving MP Materials, Trilogy Metals, Vulcan Energy and Lithium Americas.

Project Blue estimates that China accounted for 91% of global rare earth element processing output in 2025, a share which is forecast to fall to around 80% by 2030, underscoring the scale of supply diversification that is still required.

Execution risk remains, however, given the vast capital expenditure and technical complexity of building a fully integrated rare earth mining, separation, refining and magnet supply chain. Nevertheless, the proposed government backing, and private financing, signal strong intent from the DoC and may further encourage investment across Western markets.