In mid-November 2025, the U.S. Geological Survey (USGS) published its list of critical minerals. According to the government agency, the list includes “60 minerals that are essential to the U.S. economy and national security.” Rare earth elements account for every fourth position on the list. This is where USA Rare Earth comes into play. The company controls the “Round Top” deposit in western Texas, which contains 15 of the 17 known rare earth elements. “These products are critical components of various technologies, particularly in the areas of energy, mobility and defense,” USA Rare Earth writes on its website. This assessment aligns 1:1 with the government’s credo. The Trump administration is making every effort to become less dependent on foreign supplies - particularly from China - when it comes to rare earths. “In 2024, the United States imported 80% of the rare earth elements it used,” the USGS notes.
To achieve this goal, the government is committing substantial funds and taking equity stakes in companies across the sector. Washington has now moved to invest in USA Rare Earth. The Department of Commerce is providing a total of approximately USD 1.6 billion to the start-up, most of it in the form of a loan. In return, the state will receive 16.1 million common shares as well as options for a further 17.6 million shares, giving it direct influence over USA Rare Earth. “This investment ensures that our supply chains are resilient and no longer dependent on other countries,” commented U.S. Secretary of Commerce Howard Lutnick on the transaction. At the same time as the government’s entry, USA Rare Earth announced that it had raised an additional USD 1.5 billion from private investors. With fresh capital totaling USD 3.1 billion, management aims to accelerate the build-out of the value chain spanning mining, processing and the production of permanent magnets.
Commercial production at “Round Top” is scheduled to begin in 2028. Two years later, the company aims to extract 40'000 tons of rare earths and critical minerals per day from the deposit. In addition, management plans to increase production capacity for neodymium-iron-boron (NdFeB) magnets to 10,000 tons. This would put the output of the manufacturing facility in the U.S. state of Oklahoma at more than double the originally planned capacity. Investors reacted enthusiastically to the latest news: shares of USA Rare Earth, listed on the NASDAQ technology exchange, started the week up nearly 24%. However, the stock was unable to hold on to its early gains on Monday. In any case, it remains some distance below the peak of nearly USD 44 reached last autumn. At that time, the U.S. government had already taken stakes in several companies in the sector, and speculation that USA Rare Earth might also be on the White House’s shopping list pushed the share price higher.
It remains to be seen whether the company, which has been listed since March of last year, will succeed in allocating the fresh capital effectively. CEO Barbara Humpton said during a conference call that she was “confident” the targeted project milestones would not fail due to a lack of equipment. What is clear is that the company has not yet generated any revenues. Consequently, expenses are fully reflected in the bottom line. For 2025, the top executive expects an operating loss of between USD 56 million and USD 62 million. As a result, the stock is likely to remain a hot topic even after the latest bombshell announcement. For investors who are reluctant to make a direct investment, soft callable reverse convertibles could represent an interesting alternative. Leonteq has launched two structures based on USA Rare Earth. In the product currency USD, the volatile underlying allows for a coupon payment of 20.00% p.a. For the CHF-denominated RC, the payout amounts to 15.60% p.a. The strike price is set at a low 49% of the initial level. If the share price is not trading 51% lower after one year, investors will receive full repayment of the nominal amount. Should USA Rare Earth decline and be trading at least 51% lower after one year, investors will receive the shares in their portfolio at a 51% discount compared to today's price.