USA Rare Earth Wins Up to $1.6B Commerce LOI for Magnet Production
USAR•Commerce issued a non-binding letter of intent to USA Rare Earth for up to $1.6 billion to fund domestic rare-earth magnet production under DFARS 252.225-7052, ahead of the January 2027 defense sourcing deadline. The pact complements broader critical-minerals initiatives but must be finalized and converted into binding contracts to unlock funding.
1. Commerce Issues Non-Binding LOI to USA Rare Earth
Commerce has delivered a non-binding letter of intent to USA Rare Earth for up to $1.6 billion to purchase domestically produced rare-earth magnets. The LOI targets compliance with DFARS 252.225-7052, which will bar defense contractors from using Chinese magnets in qualifying weapons systems from January 1, 2027.
2. Next Steps and Project Implications
USA Rare Earth must finalize detailed project proposals, secure site approvals and financing arrangements to convert the LOI into binding contracts. This funding pledge aligns with federal critical-minerals initiatives, including a $12 billion strategic reserve, designed to reduce reliance on Chinese magnet supply and accelerate U.S. production capacity.
