USA Rare Earth tipped as next big winner in Trump’s $3B mineral push
Back in August, the US Department of Defense made a $400 million investment in MP Materials (MP), becoming the largest shareholder of the Nevada-based rare earth company.
The 10-year public-private relationship with the Pentagon will allow MP Materials to construct its second domestic magnet manufacturing facility — called the 10X Facility — at a soon-to-be-named location that will serve both defense and commercial customers.
The investment also supports the Trump administration’s mission to ramp up domestic rare earth manufacturing in order to lessen its reliance on China.
Top Trump officials made it clear at the time that the investment in MP Materials was “not a one-off,” and Reuters reported that additional government-backed deals were said to be in negotiation.
And with President Trump and Australian Prime Minister Anthony Albanese announcing at a joint White House briefing on Monday that the two governments plan to invest more than $3 billion in critical mineral projects in the next six months, it opens the door for those additional deals to possibly begin happening.
William Blair senior analyst Neal Dingmann sees four US companies as being prime candidates for government backing: USA Rare Earth (USAR), American Resources (AREC), United States Antimony (UAMY) and NioCorp Developments (NB), as Investor’s Business Daily, reported.
Dingman is especially bullish on USA Rare Earth, even though the company is not yet generating any revenue yet.
“If you’re looking at these rare earth names like USAR and taking the traditional methods of value, it doesn’t make any sense right now because we’ve never been here before,” he said in an interview with CNBC on Monday
As long as Beijing continues to limit the export of critical minerals as part of its trade war with the US, then “the government is going to have to nationalize what I think is a wartime effort in these industries,” Dingmann added. “And US financial institutions are also going to likely help.”
Dingmann noted that he’s made a few trips to USA Rare Earth’s facility in Oklahoma and is confident that the company could begin production by the end of the year. And just as importantly, the company will be manufacturing magnet, which is a material that faces a “big bottleneck” in the US, according to Dingmann.
“If you are looking a year or two down the line, there is going to be sizable, not only revenue, but cash flow,” he said.
Dingmann initiated coverage on USA Rare Earth on Monday with an Outperform rating, but did not disclose a price target.
He said in his note that the company is “one of few fully integrated rare earth companies” in the United States and has the production lined up to “generate long-term shareholder return.”
“USA Rare Earth has signed over a dozen partnership agreements for magnets and is in active discussions with more than 70 customers,” Dingmann said. “The largest indirect customer will likely be the US government, as the company highlighted its positive discussions with the Trump administration.”
USA Rare Earth’s stock is up 132.8% for the year.