USA Rare Earth DOE Funding Selected For Pilot

USA Rare Earth, Inc. (NASDAQ: USAR) said in a May 21, 2026 press release that the Department of Energy selected it for negotiations for up to $19.3 million under the Critical Material Innovation, Efficiency, and Alternatives (CMIEA) program. The funding would support designing, building, and operating a pilot-scale rare-earth separations facility.

DOE Selection and Program Details

The DOE’s Office of Critical Minerals and Energy Innovation announced on May 19 that it allocated $45.7 million to 19 projects under Funding Opportunity Announcement DE-FOA-0003105 to address domestic critical minerals and materials supply-chain gaps. USA Rare Earth and Big Blue Technologies were the two projects selected for negotiation under Area of Interest 1B, which focuses on advancing technologies from continuous bench-scale operations to pilot-scale pre-commercial production.

The DOE noted that more than 95% of the U.S. supply for rare earth elements comes from foreign sources. USA Rare Earth said the award depends on finalizing definitive documentation, negotiating a cooperative agreement, and providing a company cost share. The funding aims to support a pilot-scale rare-earth separations facility to demonstrate commercial-scale processing capabilities for critical rare earths used in permanent magnets.

Capital Plans and Strategic Context

Secondary reports indicate USA Rare Earth ended the first quarter of 2026 with $1.75 billion in cash after raising $1.5 billion from a private investment offering. The company expects to complete definitive documentation for $1.6 billion in Department of Commerce financing in May.

USA Rare Earth plans a $2.8 billion acquisition of Serra Verde, which it describes as the first scaled producer of all four magnetic rare earth elements outside Asia. The deal would involve issuing 127 million shares against a nearly 233 million share count and is expected to close in the third quarter of 2025. The combined entity targets an EBITDA run rate of $550 million to $650 million by the end of 2027 and a cash position of $3.2 billion.

The DOE selection reinforces USA Rare Earth’s positioning as a vertically integrated, mine-to-magnet domestic supplier. It aligns with the company’s broader government financing and M&A initiatives, intensifying investor focus on execution and financing risks as the firm seeks to close gaps in the rare earth supply chain.

Outlook and Next Steps

Near-term milestones include negotiating the DOE cooperative agreement and finalizing documentation for Department of Commerce financing pursued in May. Progress on these fronts will affect how quickly the pilot separations operation can scale toward commercial processing and integrate with the company’s planned manufacturing and acquisition agenda.

The DOE’s CMIEA program aims to build a secure domestic supply of critical minerals from sources across the United States, including ore deposits, mine and industrial waste, and recycled materials. The pilot-scale projects under Area of Interest 1B are intended to advance technologies from bench-scale to pre-commercial production, supporting U.S. processing capacity for magnets and other critical applications.