The U.S. government has moved to acquire roughly a 10% stake in USA Rare Earth, Inc. (USAR) with an investment of $1.6 billion (about RMB 11.1 billion), its largest-ever direct infusion into the rare-earth sector. The purchase is part of a broader push to accelerate domestic extraction and build a homegrown supply chain after a smaller $400 million investment in MP Materials in 2025, which bought the state roughly 15% of that company.
USAR controls significant U.S. rare-earth deposits and is working with partners to develop two domestic projects that would feed American downstream needs. Washington’s bet is that public capital can speed permitting, construction and the creation of refining capacity that has long lagged behind mining, thereby reducing reliance on Chinese processing and exports.
China remains the world’s dominant miner, refiner and exporter of rare-earth elements, and its companies supply the bulk of the specialized processing capacity used in magnets, batteries and defense systems. Even when supplies to the U.S. have been reliable — fulfilment rates to American buyers have often exceeded 90% — the strategic vulnerability is clear: a politically driven curtailment of exports could leave critical industries scrambling.
Yet shifting supply is not simply a matter of opening mines. The United States’ known deposits are concentrated in light rare-earth elements, while heavy rare-earths — which are scarcer and disproportionately important for high-performance permanent magnets and certain defence applications — are much less abundant domestically. Building refining and separation plants, training a skilled workforce, and meeting stringent environmental standards will all add time and cost.
The investment is also part of a wider diversification strategy that includes partnerships with allied producers such as Australia, and incentives for recycling and foreign processing among friendly partners. Still, replicating China’s integrated ecosystem of mining, separation, refining and downstream manufacturing is likely to take years, if not a decade, and will require sustained public and private coordination.
In short, the cash infusion marks a meaningful political signal and a substantive step toward de-risking critical mineral supplies, but it is not a quick fix. The United States can reduce some exposure through investments, partnerships and technology, yet fully disentangling from China’s dominant position will be costly, technically difficult and time-consuming — and outcomes remain uncertain.