USA Rare Earth Commits US$203 Million to French Expansion

USA Rare Earth (NASDAQ:USAR) plans to invest up to around US$203 million (175 million euros) through 2030 to expand its permanent magnet, metal, and alloy manufacturing operations in France.

The investment, which is projected to create more than 300 jobs within the French rare earth ecosystem, builds upon the company’s existing operations in the country.

The infrastructure includes a Less Common Metals (LCM) production facility located at Lacq and a joint strategic investment with InfraVia Capital Partners in French processor Carester SAS.

“At USA Rare Earth, we are committed to creating resilient, regional operations as we build out the mine-to-magnet value chain. France is an attractive location, with a strong combination of industrial infrastructure, a re-emerging rare earth processing cluster, skilled workforce, and the policy support to rebuild critical minerals capability,” CEO Barbara Humpton said at the Choose France summit in Paris.

The company said the French government is also evaluating further support mechanisms, including debt guarantees and a potential direct equity investment into the company's European subsidiary.

The capital allocation follows a separate domestic funding initiative. Last May, the US Department of Energy (DOE) selected USA Rare Earth to receive a US$20 million grant under the "Critical Materials Innovation, Efficiency and Alternatives" program.

The federal grant will partially fund a US$50.5 million pilot-scale rare earth element separation project. The final project scope and budget remain subject to negotiations and the execution of a definitive funding agreement with the DOE.

Alongside the expansion, USA Rare Earth is also embroiled in a legal dispute domestically. Last week, California-based MP Materials (NYSE:MP) filed a lawsuit against the company, alleging the company misappropriated proprietary magnet-making formulations through a former employee.

MP Materials utilizes this specific formula to improve a magnet's coercivity, or resistance to de-magnetization. The lawsuit further alleged USA Rare Earth disclosed the information to a third-party technology company.

USA Rare Earth denied the claims. In a public statement, the company maintained that “MP Materials’ complaint has misrepresented our company, our culture, and our people, and we will defend ourselves vigorously.”

The two companies currently operate at different commercial stages. MP Materials reached an agreement with the US government last year that included a minority ownership stake and minimum price guarantees for specific products.

Meanwhile, USA Rare Earth secured US$1.6 billion in conditional US government funding this year to finance a planned mine in Texas and a magnet factory in Oklahoma. The company targets commercial-scale mining operations by 2028.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.