USA Rare Earth completes $1.55 billion government-backed capitalization

Lockheed Martin Corp. (NYSE: LMT ), RTX Corp. (NYSE: RTX ) and Northrop Grumman Corp. (NYSE: NOC ) could all be indirect beneficiaries of the Trump administration ‘s latest $1.55 billion push to secure rare earth supplies, as Washington deepens its effort to reduce dependence on China for minerals critical to advanced weapons systems.

On Monday, USA Rare Earth Inc. (NASDAQ: USAR ) announced the completion of a $1.55 billion capitalization for a government-backed special purpose vehicle tied to its planned acquisition of Brazil’s Serra Verde rare earth operation.

The financing package includes a $750 million investment from the U.S.

Department of War, a $500 million senior debt facility and a five-year, $300 million government forward purchase agreement for rare earth materials.

The deal underscores Washington’s growing willingness to use government capital to reduce U.S. dependence on China for minerals essential to military hardware.

Read Also: Trump's Rare Earths Champions Were Supposed To Fight China.

Instead, They're Fighting Each Other Rare Earths Are More Than An EV Story Rare earth elements are equally critical to national defense as they are to electric vehicles and wind turbines.

Neodymium, praseodymium, dysprosium and terbium—the four magnetic rare earth elements produced by Serra Verde—are used in high-performance permanent magnets found in fighter aircraft, guided missiles, radar systems, drones, submarines and precision-guided weapons.

They’re also essential for numerous aerospace and defense electronics.

That explains why the Department of War isn’t just helping finance the project—it’s also committing to purchase material over the next five years.

Why Investors Should Watch Defense Stocks The announcement doesn’t immediately change earnings forecasts for major defense contractors.

However, it reinforces a broader trend that investors have been watching closely: securing domestic and allied supply chains has become a strategic priority alongside increasing defense spending.

Companies such as Lockheed Martin, RTX and Northrop Grumman all manufacture advanced weapons systems that depend on rare earth magnets and critical minerals.

While these companies source components through complex supplier networks, a more resilient supply chain could reduce long-term procurement risks tied to geopolitical disruptions.

A Bigger Bet On Supply Chain Security The financing package also signals that the Trump administration is expanding its critical minerals strategy beyond traditional grants and loans.

Rather than simply funding production, the government is now taking on multiple roles—as investor, financier and customer.

The structure includes a $750 million government investment, support for a $500 million revolving credit facility and a commitment to purchase at least $300 million of rare earth products over five years.

That combination provides both capital and demand visibility for strategic projects, potentially creating a blueprint for future critical mineral investments.

The Stocks To Watch While USA Rare Earth is the immediate beneficiary, investors may also keep an eye on other companies exposed to the domestic rare earth supply chain.

MP Materials Corp. (NYSE: MP ) remains the largest U.S. rare earth producer and has previously received Pentagon backing as Washington sought to expand domestic processing capacity.

Meanwhile, companies involved in downstream processing, magnet manufacturing, and defense production could continue to benefit if federal support for critical mineral projects accelerates.

For investors, Monday’s announcement sends a broader message: the race to secure rare earth supplies is no longer just about electric vehicles or clean energy.

It’s increasingly becoming a defense strategy—and Washington appears willing to spend billions to make it happen.

Read Also: Trump's $500 Million Critical Minerals Push: 5 Battery Stocks That Could Benefit Image via Shutterstock