The Trump administration has moved to invest $1.6bn (£1.2bn) in a US critical minerals firm, marking officials’ latest push to reduce China’s dominance over the rare earths sector.
The non-binding agreement with Oklahoma-based USA Rare Earth, announced on Monday, will bolster mining, processing, metal-making and magnet manufacturing, the company said.
The deal includes a $1.3bn loan from the Commerce Department, which will see it take a stake in the firm, and $277mn in federal funding.
Officials are seeking to boost US production of minerals essential to everything from smartphones to defence technologies in a bid to reduce dependence on Beijing.
USA Rare Earth, which controls deposits of so-called “heavy” rare earths that are often used for defence technologies, also said on Monday it raised a separate $1.5bn from private investors.
Shares in the miner rose by as much as 20% following the announcements.
The Commerce Department’s support for USA Rare Earth follows similar agreements with other rare earths firms since President Donald Trump’s return to the White House.
The government last year reached a $1.4bn deal with Vulcan Elements, a rare earth magnet start-up, to bolster the domestic rare earths supply chain. It also invested in US rare earths miner MP Materials, which owns the country’s only operational rare earths mine.
The Commerce Department did not immediately respond to requests for comment on its investment in USA Rare Earth.
China has a near-monopoly on processing rare earths. While the US and other countries are investing heavily to develop alternative supply lines to China, they are some way from achieving that goal.
Rare earths have emerged as a key bargaining chip in trade negotiations between Washington and Beijing in recent months. US companies rely heavily on the materials, leaving them vulnerable this year as China took steps to restrict supplies in response to US tariffs and other tensions.
In curbing exports, China, which processes around 90% of the world’s rare earths, has sought to pressure the US for better trade terms.
The Trump administration has also looked to other countries as part of its push to reduce reliance on China for supply of the critical minerals.
In October, the US and Australia signed a dealintended to boost supplies of rare earths and other critical minerals. Trump has also claimed to have secured the “framework” of a future deal over Greenland, to address defence on the island – a deal that he says includes access to rare earth minerals.
By BBC News
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