USA Rare Earth: A Look at Rare‑Earth Independence and Why It Matters
Rare earth elements (REEs) power much of the modern world. They sit inside electric motors, wind turbines, missiles and smartphones. If you’re reading this on a phone, you’re holding them. Despite how common their end uses are, the supply chains that feed these products are precariously concentrated in China. Roughly 70 percent of mining and 90 percent of processing happens there
. That dominance creates obvious strategic vulnerabilities for the West, especially when Beijing’s export controls have already sent tremors through global markets.
Why governments care so much about REEs
The past few years have been a wake‑up call for policymakers. Forecasts suggest that by 2035 Western miners might cover less than a third of heavy rare‑earth demand
. High‑performance magnets, which need elements like dysprosium and terbium to handle heat and stress, are especially exposed. Without a domestic supply, every electric vehicle and guided missile is effectively tethered to Chinese policy. That has spurred the United States, Europe and Japan to scramble for alternatives.
In Washington the tone has shifted from “we should probably do something” to “we’re going to throw money at this”. Since 2024 the Pentagon has awarded hundreds of millions of dollars to projects like MP Materials’ processing expansion in California and Lynas USA’s heavy rare‑earth facility in Texas. Tax credits under the Inflation Reduction Act are being used to subsidise magnet plants, and higher tariffs on imported magnets are making domestic production more attractive. Viewed together, it’s a playbook reminiscent of China’s own industrial policy: direct grants, cheap debt and market protection.
Meet USA Rare Earth (USAR)
Amid this geopolitical backdrop, USA Rare Earth is positioning itself as a “mine‑to‑magnet” supplier. Its vision is simple in theory but ambitious in practice: own the ore, process it into separated oxides, and then manufacture finished magnets all under one corporate roof.
The upstream asset: Round Top
USAR’s cornerstone is the Round Top deposit in Texas, one of the largest known heavy rare‑earth deposits in the world. It contains 15 of the 17 rare‑earth elements and is particularly rich in heavies such as dysprosium and terbium, plus lithium, zirconium and hafnium
. At present USAR is working toward an 80 percent operating interest and sees Round Top as the key to long‑term supply security. The project is still early‑stage, so Round Top’s contribution is more of a future promise than a current reality.
Downstream: magnet manufacturing in Oklahoma
On the opposite end of the value chain, USAR is building a NdFeB magnet plant in Stillwater, Oklahoma, targeting start‑up in the first quarter of 2026. NdFeB magnets are among the strongest permanent magnets commercially available, and they are critical for electric motors and defence systems. USAR plans to feed the plant with material from Round Top once production ramps up; until then it will rely on third‑party supply and recycling. The facility is designed to produce a wide range of magnet shapes and sizes, which is attractive to customers in automotive and aerospace.
Bridging the gap: Less Common Metals and Wheat Ridge
Earlier this year USAR acquired Less Common Metals (LCM) in the UK, a veteran producer of rare‑earth metals and strip‑cast alloys. LCM brings three decades of metallurgy experience and, more importantly, an established supply of alloys like samarium‑cobalt and NdFeB. Integrating LCM means USAR controls not just the raw ore and magnets but also the intermediary alloys. USAR also owns a pilot processing facility in Wheat Ridge, Colorado, which can be scaled up to process Round Top material. Together these assets give USAR a credible claim to full vertical integration.
Why Uncle Sam might take notice
Several factors make USAR a potential beneficiary of US government support:
Timing – The magnet plant is slated to come online in 2026, and Round Top is advancing toward production. That near‑term readiness aligns with Pentagon and Department of Energy timelines. Funding could meaningfully de‑risk the project and accelerate its timeline.
Heavy rare‑earth exposure – Most American deposits are skewed toward light REEs. Heavy REEs like dysprosium and terbium are the bottleneck, and Round Top has an abundance of them. That makes USAR uniquely attractive for defence and EV applications.
Domestic footprint – While the LCM acquisition gives USAR a base in the UK, the bulk of its operations remain in the United States, which is politically advantageous. Policymakers want headlines about American magnets made with American ore.
Support could take the form of grant funding, equity investments or multi‑year offtake agreements with price floors, similar to what the government has done with MP Materials. However, that support isn’t guaranteed, and policy priorities can shift as administrations change.
Market positioning: reading the tea leaves
Beyond the macro tailwinds, it’s worth acknowledging the market’s near‑term view on USAR’s stock. Options positioning suggests that the stock could remain volatile in the coming months. In late November options dealers were heavily hedging around the $11.50 strike, creating a level where the stock might either bounce or break down, depending on whether hedging flows turn from buying to selling
. Put open interest is clustered at the same level, meaning a breakdown could trigger further selling as dealers adjust their hedges. Conversely, a bounce could attract new buyers who view the level as a floor.
Dark‑pool data has also shown a switch from net selling to net buying around that time, although one day doesn’t make a trend. This kind of positioning analysis is more speculative and should be weighed alongside the fundamental story rather than as a crystal ball.
Risks you should not ignore
Even if you buy the long‑term story, a few clear risks stand out:
· Execution risk – Round Top is not yet producing, Stillwater isn’t making magnets, and integration of LCM will take time. Delays are almost inevitable, and they can erode investor confidence.
· Financial and political risk – Building mines and magnet plants is expensive. While USAR currently has over $400 million in cash thanks to recent capital raises, those funds will burn quickly. The investment thesis also depends partly on receiving government support, which could be delayed or redirected.
· Market volatility – The stock is volatile, and options markets suggest that volatility will persist. If you’re uncomfortable with roller‑coaster price swings, USAR might not be a fit.
My take
I believe USA Rare Earth has considerable long‑term potential. Its integrated strategy, heavy rare‑earth focus and alignment with government priorities make it one of the most compelling rare‑earth stories in North America. I own the stock and plan to hold it for the long haul. However, this is not a fully mature business; it’s an early‑stage company with a narrative that needs to become reality. Expect volatility, be patient, and size your position accordingly.
In short, USAR is speculative but promising. If the company executes on its plans and secures the expected policy support, the upside could be significant. Just don’t bet more than you can stomach on a journey that may get bumpy before it pays off.