USA Rare Earth has been selected by the US Department of Energy (DOE) for a potential $19.3 million funding under its Critical Materials Innovation, Efficiency and Alternatives program. These funds will support the development of a pilot-scale rare earth element (REE) separation plant.

The selection positions the Texas-based firm among a cohort of domestic producers the DOE is backing as part of a broader federal push to rebuild US domestic capacity in rare earth element (REE) extraction and processing.

What the DOE selection means in practice

Being “selected” for DOE funding does not automatically mean a contract has been signed. Federal funding awards of this type typically move through negotiation and due-diligence phases, meaning project scope can change and timelines can shift. Broadly speaking this project aims to advance technology for REE processing from domestic resources and specifically seeks to supports the development of pre-commercial separation capacity in the United States.

USA Rare Earth is building a fully integrated rare earth and permanent magnet value chain across the United States, the United Kingdom, France and Brazil. It operates across the entire value chain from mining, metal-making, alloy production to neodymium magnet manufacturing.

The commercial production at its Round Top Mountain project in Texas, is expected to commence in late 2028. This site has one of the richest known deposits of heavy rare earth elements (HREEs) in the US, with a greater then 70 percent HREE distribution. The deposit contains elements like Dysprosium, Terbium, Yttrium, Gallium, and Hafnium. The company also expects to construct a Hydrometallurgy demonstration facility in Colorado by 2026. This facility will operate five solvent-extraction circuits continuously for 2,000-4,000 hours. Although the details are scanty, the potential DOE funding is likely to be directed towards this demonstration facility.

USA Rare Earth also acquired Less Common Metals (LCM) in 2025. The LCM ownership enabled the company to acquire metal making and strip casting capabilities. LCM is one of the only commercial scale REE metal producers in the Western hemisphere. It has 1500 tonnes per annum (tpa) of metal making capacity and is planning to add an additional 26,000 tpa strip casting capacity in the 2030s. The company`s current magnet making capacity is 4800 tpa with planned capacity increase of 10,000 tpa by 2029.

The supply chain problem the DOE is trying to solve

The United States currently depends on imports, predominantly from China, for the majority of its processed rare earth supply. China controls an estimated 91 percent share of global rare earth refining capacity, which gives it substantial leverage over industries ranging from defense, semiconductors to advanced manufacturing. Federal agencies including the DOE and the Department of War have identified this concentration as a structural vulnerability and have been channeling capital toward domestic alternatives through grant programs, loan guarantees, and offtake support mechanisms.

Engineering and processing challenges remain

Processing rare earth ores into separated oxides and then into refined metals involves solvent extraction circuits and other hydrometallurgical steps that are chemically intensive and generate significant waste streams. Building that processing infrastructure at commercial scale in the US involves not only capital expenditure but also workforce development in a sector where domestic technical expertise has atrophied.

For engineers working in adjacent fields like electric vehicle drivetrains or defense systems the progress of companies like USA Rare Earth has direct material implications. A more reliable domestic source of heavy rare earth oxides and finished magnets would reduce procurement risk for manufacturers and bolster supply chain resilience.