By Ernest Scheyder
April 10 (Reuters) - USA Rare Earth shareholders should not be concerned by the terms of the U.S. Commerce Department's pending investment in the company, which gives equity to Washington even if funding for the deal falls apart, CEO Barbara Humpton told Reuters.
The $1.58 billion debt-and-equity funding package announced in January was the latest in a string of critical-minerals investments by the Trump administration, part of a push to bolster U.S. production of the building blocks
for electronics, weapons and a plethora of other products.
Terms of the USA Rare Earth deal and how it was negotiated, though, are sparking concern from some lawmakers. One issue is the close ties between the company and Cantor Fitzgerald, the financial firm previously led by Commerce Secretary Howard Lutnick and now helmed by his sons.
A top House Democrat called the deal "highly concerning" in a letter to Lutnick last month, adding that it is "deeply strange" that the government would retain its equity stake even if it does not fund the deal or funding is clawed back.
When asked in an interview if shareholders should be concerned by the deal's structure, Humpton said: "Not at all."
"With all of the work we've done to show our shareholders their path to the future and value creation, they'll be delighted that we've had this engagement," Humpton said, in her first public comments on Democrats' concerns about the deal, slated to close by the end of the month.
Humpton referred any questions on the congressional letter to Lutnick to the Commerce Department, which did not respond to requests for comment.
The letter was widely seen as a preview of the types of investigations Democrats could pursue if they regain power in Washington after the November midterm elections, as lawmakers scrutinize the use of federal financing and equity stakes to reshape minerals supply chains.
The government funds are slated to help the company develop a mine in Sierra Blanca, Texas, expected to open by 2028, and a magnet manufacturing plant in Stillwater, Oklahoma, which is due to open this year.
CEO DISMISSES CRITICS OF MINE ECONOMICS
Humpton, who was previously an executive at Siemens, defended USA Rare Earth's work with Cantor in the Commerce Department negotiations and noted the financial firm helped the company go public in March 2025.
"Our best move was to go with the team who knew us," said Humpton.
While the Texas mine is central to the company's magnet plans, it has a relatively low grade of rare earths compared with peers, the company has acknowledged.
That is a geological limiting factor that some have described as an economic risk, even though the deposit's mix of rare earths skews toward heavy rare earths, which are used for extremely high-heat applications and thus are more appealing to some customers.
A preliminary feasibility study for the mine — usually a requirement for many investors — will not be finished until the end of the year, fueling more questions about its economics.
Humpton quoted pop singer Taylor Swift when asked about the negative reaction by some to its Texas plans: "Haters gonna hate."
"Sheer grade is not the determining factor," Humpton said. "The true factor is the recoverable heavy-rare-earth components."
The mine is expected to produce yttrium, used to make specialty alloys and one of the heavy rare earths on which China has imposed export restrictions.
"We weren't even tuned in to the critical need for yttrium until we did our work with the Department of Commerce," Humpton said. "Commerce made it clear that this is the number-one demand from the semiconductor field."
(Reporting by Ernest Scheyder in Houston; Editing by Veronica Brown and Matthew Lewis)
