Reference News Network, January 26 report: According to the website of the UK's Financial Times, on January 24, the Trump administration is planning to invest $1.6 billion in an American rare earth company, which is the largest investment by the US government in this field, and is the latest move by Washington to enter the private sector to strengthen the supply of critical minerals.

Insiders said that the US government will acquire a 10% stake in the American Rare Earth Company. It is a listed mining company headquartered in Oklahoma, controlling a large amount of heavy rare earth reserves in the United States.

According to insiders, the government investment and another $1 billion private financing deal are expected to be announced on the 26th.

An insider said that the government will receive 16.1 million shares and 17.6 million warrants at a price of $17.17 each. The government agreed to pay $277 million to acquire these equity interests. Based on the current stock price of $24.77, the implied gain from these equity interests and warrants is $490 million.

The American Rare Earth Company will also obtain $1.3 billion in preferred guaranteed debt financing from the government at market interest rates. This funding will come from the financing mechanism established by the Department of Commerce under the CHIPS and Science Act. A department official said that the agency directly completed the transaction with this company.

President Trump said that Washington has reached a "framework" for an agreement that may include acquiring the untapped critical mineral wealth of Greenland, and investors have once again regained interest in critical mineral stocks. In this context, negotiations have progressed rapidly this week. An insider pointed out that the American Rare Earth Company's transaction is unrelated to Greenland.

The American Rare Earth Company declined to comment. The Department of Commerce refused to discuss the transaction. However, an official from the Office of the Chip Affairs, which is affiliated with the Department of Commerce, stated that the office is "focused on bringing back critical strategic minerals that are vital to the semiconductor supply chain and U.S. national security."

According to insiders, the American Rare Earth Company has separately commissioned JDL Capital for a new equity financing of more than $1 billion. This Wall Street firm was previously owned by the son of Commerce Secretary Howard Lutnick and is currently managed by his son.

This transaction is the latest example of the Trump administration's attempt to intervene in the private sector deemed critical to U.S. national security, including acquiring a 10% stake in chipmaker Intel, and negotiating a so-called golden share agreement with U.S. Steel.

The American Rare Earth Company, with a market value of $3.7 billion, is developing a large deposit in Sierra Blanca, Texas. The company says that this deposit contains 15 of the 17 rare earth elements needed for mobile phones, missiles, and fighter jets. The company also plans to open a magnet production plant in Stillwater, Oklahoma.

Last year, the Trump administration invested in at least six mining companies, including Mountain View Materials, Trikal Metals, and America Lithium.

Some of these investments overlapped with the economic interests of government officials. Three months after the Trump son's venture capital group invested in Vulcan Elements, the U.S. government reached a financing agreement with this rare earth startup.

The Department of Commerce works closely with the Department of Defense to promote domestic rare earth production through funding support.

A condition for the government's investment in the American Rare Earth Company is that the company raises at least an additional $500 million from investors. Due to the popularity of this financing plan, the fundraising is expected to exceed $1 billion. The plan uses a financing mechanism known as a "private placement for publicly traded companies" (PIPE).

This year, the stock price of the American Rare Earth Company has already risen more than double, and it rose 40% this week. In March last year, when the company went public, it had also sought advice from JDL Capital. (Translated by Ge Xuele)

Original: toutiao.com/article/7599584884327236148/

Statement: This article represents the views of the author himself.