USA Rare Earth gets $19.3M DOE nod for domestic processing push

USA Rare Earth's selection for US Department of Energy funding marks the latest federal push to rebuild domestic capacity for processing the critical minerals that power defense systems, EVs and advanced manufacturing.

The US Department of Energy selected USA Rare Earth for a potential $19.3 million award under its Critical Materials Innovation, Efficiency and Alternatives program, the company said June 1. The funding would support development of a pilot-scale rare earth element separation plant, advancing pre-commercial processing capacity on US soil.

"Being selected for this DOE funding is a significant step toward establishing a fully integrated domestic rare earth supply chain," said a company representative. USA Rare Earth is building operations across mining, metal-making, alloy production and neodymium magnet manufacturing, with facilities in the US, the UK, France and Brazil.

The company's Round Top Mountain project in Texas, where commercial production is expected to begin in late 2028, hosts one of the richest known heavy rare earth deposits in the US, with greater than 70 percent heavy rare earth element distribution including dysprosium, terbium and yttrium. USA Rare Earth also plans to construct a hydrometallurgy demonstration facility in Colorado by 2026, operating five solvent-extraction circuits continuously for 2,000 to 4,000 hours — the likely destination for the DOE funds.

Why domestic processing matters

The US depends on imports for the majority of its processed rare earth supply, with China controlling an estimated 91 percent of global refining capacity, according to US government assessments. Federal agencies including the DOE and the Department of Defense have identified this concentration as a structural vulnerability, channeling capital toward domestic alternatives through grants, loan guarantees and offtake support.

USA Rare Earth's acquisition of Less Common Metals in 2025 added 1,500 tonnes per annum of metal-making capacity — one of the only commercial-scale rare earth metal producers in the Western hemisphere — with plans to add 26,000 tonnes per annum of strip casting capacity in the 2030s. The company's current magnet-making capacity stands at 4,800 tonnes per annum, targeted to reach 10,000 tonnes by 2029.

Parallel projects gain momentum

The DOE award comes as multiple rare earth processing initiatives advance across the US. POSCO International and ReElement Technologies signed an agreement to invest $200 million in a US-based rare earth processing plant with annual capacity of 6,000 tonnes, targeting pilot production in the fourth quarter of 2027. REalloys Inc. signed a non-binding memorandum of understanding with Ramaco Resources in May to secure supply rights for up to 20 percent of mixed rare earth carbonate from Ramaco's Brook Mine project in Wyoming, which hosts coal-hosted rare earth deposits with meaningful concentrations of neodymium, praseodymium, dysprosium and terbium.

Engineering challenges remain. Processing rare earth ores into separated oxides involves solvent extraction circuits and hydrometallurgical steps that are chemically intensive and generate significant waste streams. Building that infrastructure at commercial scale in the US requires not only capital expenditure but also workforce development in a sector where domestic technical expertise has atrophied over decades of offshored supply chains.

This article is for informational purposes only and does not constitute investment advice.