USA Rare Earth Faces Probe After Zero Production Milestones
USA Rare Earth holds no federal loan funds and faces a congressional probe amid questions over Round Top Mine viability.
Key points
- USA Rare Earth has met zero milestones despite a $1.6 billion federal deal.
- The Round Top Mine has never produced ore and requires moving up to 150 times more rock than competitors.
- A congressional probe is investigating potential conflicts of interest linked to the deal's structure.
USA Rare Earth holds a $1.6 billion federal deal but has met zero milestones. The company’s flagship mine has produced no ore. A congressional probe now investigates potential conflicts of interest.
The government holds a 10% stake via a $277 million check and a $1.3 billion loan. Yet, not one dollar of the loan has been disbursed. The company confirms government ownership of shares and warrants.
Federal Stake Meets Legislative Scrutiny
Senator Elizabeth Warren leads a probe into conflict of interest allegations. Democratic lawmakers wrote to Cantor Fitzgerald regarding the deal terms. They raised questions about potential bribery law exposure.
Cantor Fitzgerald collected $50 million in fees for a $1.5 billion private placement. This deal occurred a week before the federal announcement. The firm was led by the sons of Commerce Secretary Howard Lutnick.
Commerce Secretary Lutnick states he never discussed the industry with Cantor. The department claims Lutnick had no role in negotiations. The firm says its relationship with USA Rare Earth predates his cabinet post.
Round Top Mine Lacks Viable Ore
The Round Top Mountain deposit in West Texas has never produced a ton of ore. It is billed as America’s largest rare earth resource. However, it has hit no technical or financial targets.
The Center for Strategic and International Studies noted low ore grades. The company must move 100 to 150 times more rock than top-tier Australian deposits. This makes extraction significantly more difficult and costly.
Former Defense Department officials said the Pentagon deemed the deposit uneconomical in the 1990s. A recent review reached the same conclusion. The Pentagon did not respond to requests for comment.
Global Acquisitions Replace Domestic Focus
With Round Top production not scheduled until 2028, USA Rare Earth bought other assets. It acquired Britain’s Less Common Metals and took a stake in France’s Carester SAS. These moves target processing know-how.
