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In a bid to reduce China’s dominance in the rare-earth magnet sector, two U.S. startups have secured a $1.4 billion deal with the Trump administration and private investors.
American Resources Corp. (NASDAQ:AREC), through its holdings in ReElement Technologies and with Vulcan Elements, announced a $1.4 billion deal to build a fully domestic rare earth magnet supply chain.
The agreement features a $620 million loan from the U.S. Department of War's Office of Strategic Capital to build and operate a U.S. magnet facility expected to produce 10,000 metric tons of magnets annually. Additionally, the Commerce Department will provide $50 million, while private investors will contribute $550 million.
This deal comes at a time when China has agreed to lift its rare earth mineral export restrictions as part of a broader trade agreement with the U.S. The move has led to a decline in rare-earth stocks, as investors fear a potential oversupply in the market. However, the Trump administration’s backing of these startups indicates a long-term strategy to reduce U.S. reliance on Chinese rare-earth magnets.
This deal also follows the Trump administration’s acquisition of stakes in five major publicly traded companies, including a 15% stake in rare earth producer MP Materials (NYSE:MP). These interventions are part of a national security strategy to secure domestic supply chains for critical minerals, semiconductors, and steel.
Last month, Pakistan dispatched its first shipment of processed rare earth elements and critical minerals to the U.S., marking the launch of a $500 million partnership signed in September.
Meanwhile, in August, Energy Fuels Inc. (NYSE:UUUU) announced a partnership with Vulcan Elements to build a U.S.-based supply chain for rare-earth magnets.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
