Direct hit on the rare earth lifeline! The Trump administration is throwing $1.6 billion into the stock of USA Rare Earth (USAR.US), with an estimated valuation reaching $16 billion!

According to news from last Saturday, the Trump administration plans to invest $1.6 billion in USA Rare Earth (USAR.US) in exchange for a 10% stake in the company. This will be the largest single investment by the US government in the rare earth sector to date. The report further indicates that the federal government's investment, along with a $1 billion independent private financing agreement led by Cantor Fitzgerald, is expected to be formally announced to the public this Monday. According to the disclosed transaction details, the total $1.6 billion investment package includes approximately $277 million in equity purchase and $1.3 billion in government loans, allowing the US government to hold a 10% stake in the company. In the equity structure arrangement of this transaction, the US government will acquire 16.1 million shares of USA Rare Earth stock at a price of $17.17 per share, as well as an additional 17.6 million warrants. Given that the market price of USA Rare Earth has recently been around $24.77, the government's investment price represents a discount of approximately 30.7% compared to the market price, which means that the investment has already generated hundreds of millions of dollars in immediate gains on the books. In addition to the direct funding support provided by the government, investment bank Cantor Fitzgerald will lead a $1 billion private financing plan to raise the overall valuation of USA Rare Earth to around $16 billion through a public-private collaboration. This amount far exceeds the company's current secondary market value, reflecting a high level of consensus between Wall Street and the White House on the premium for strategic mineral resources. Furthermore, USA Rare Earth will also receive a $1.3 billion priority guaranteed debt financing from the US government, with interest rates determined at market levels. This funding comes from a special financing tool established by the US Department of Commerce under the CHIPs and Science Act passed in 2022. It is understood that USA Rare Earth, headquartered in Oklahoma, is a core company in the current vertical integration process of rare earths in the United States. Its controlled Texas Round Top heavy rare earth mine is expected to start production in 2028. More strategically, the company's rare earth magnet manufacturing plant in Stilwell is scheduled to start production within the year 2026, filling a long-standing gap in the US high-performance permanent magnet manufacturing industry. Such products are essential raw materials for manufacturing missile guidance systems, fighter jet engines, and cooling devices for artificial intelligence data centers. Through this investment, the Trump administration will not only be able to directly supervise the progress of rare earth mining and processing, but also ensure through equity ties that this capacity is prioritized for supply to US defense contractors and key technology companies. This move, which has strong shades of "national capitalism," is the latest manifestation of the Trump administration's accelerated efforts to reduce reliance on critical mineral resources. Since the end of 2025, the US government has consecutively invested in resource giants such as MP Materials (MP.US), Lithium Americas (LAC.US), and Trilogy Metals (TMQ.US) through similar patterns to build a government-backed mineral security alliance. Market analysis suggests that this behavior of directly holding equity signals that the US will further utilize the national machinery to intervene in the allocation of resources in key industrial chains. It is worth mentioning that the stock price of USA Rare Earth has more than doubled this month, with a 40% surge this week playing a significant role.