US Announces $389M Critical Materials Funding Plan. 5 Critical Mineral Stocks to Watch

Educational content, not investment advice. 

By Ben McGregor

On October 22, 2026, the US Commerce Department said it plans to give up to $389 million in research money to four companies working on power chips and critical materials, and it will take a small ownership stake in each one. All four are private, so this round of US critical materials funding gives everyday investors no direct way in. The five critical mineral stocks to watch are listed companies that already hold similar US government deals: MP Materials (NYSE: MP), USA Rare Earth (NASDAQ: USAR), Lithium Americas (NYSE: LAC; TSX: LAC), Trilogy Metals (NYSE American: TMQ; TSX: TMQ) and Ucore Rare Metals (TSXV: UCU).

This article explains what the $389 million actually pays for, why the equity stake matters more than the dollar amount, and what each of the five companies does. It also covers one real risk for each, because government support can help a company without removing the hard parts of building a mine or a plant.

What does the $389M US critical materials funding actually pay for?

The money comes from the CHIPS and Science Act, a 2022 law that set aside federal money to rebuild computer chip research and manufacturing in the United States. According to the Commerce Department's release on October 22, 2026, the awards are split four ways:

• Helion, up to $175 million, for high-voltage power chips used in its fusion power machines.
• Commonwealth Fusion Systems, up to $85 million, for chips used in fusion plasma heating and in electronics that can survive radiation.
• Vertical Semiconductor, up to $73 million, for power chips made from gallium nitride, a compound of the metal gallium that handles high power with less wasted heat.
• Sibelco, up to $56 million, for better ways to purify ultra-high-purity quartz, a very clean form of silica used to make the containers and glassware in chip factories.

So most of the money goes to chips and fusion energy, and only the $56 million for quartz is aimed squarely at a raw material. The headline calls it a critical materials plan because the chips depend on scarce inputs, especially gallium.

These are letters of intent, which means both sides have agreed on the main terms but have not signed final contracts yet. Commerce did not give a date for the final awards in its release. As a condition of the money, the government will receive "a minority, non-controlling and non-voting equity stake" in each company, which means it will own a small slice of the business without getting a vote on how it is run (Commerce Department, October 22, 2026).

Why does gallium matter to the critical minerals supply chain?

Gallium is a soft metal used in power chips, radar and communications gear. China produces about 99% of the world's primary gallium, according to a May 11, 2026 analysis by the Center for Strategic and International Studies (CSIS), a Washington research group.

China banned gallium sales to US buyers in December 2024 and then paused that ban for one year in November 2025. Even so, CSIS found that very little Chinese gallium was reaching the United States in 2026. Gallium prices outside China hit a record of about $1,850 per kilogram in April 2026, up more than 200% since the start of 2025, based on Fastmarkets data cited by CSIS (May 11, 2026).

That is why a chip award can also be a critical minerals investment. If the United States wants to make gallium nitride chips at home, it also needs a supply of gallium that China cannot switch off. The same logic drives the deals at all five companies below.

Why does the government equity stake matter for critical mineral stocks?

An equity stake means the government becomes a part-owner, so it gains if the company does well. Washington used to support mining and materials mostly through grants and loans. Since mid-2025, it has also been taking shares or warrants, which are rights to purchase shares later at a set price.

For investors, this changes two things. First, a government shareholder has a reason to help the company with permits, contracts and financing, because it now shares in the result. Second, new shares or warrants for the government add to the total share count, so each existing share owns a slightly smaller piece of the company. Both effects show up in the five companies below.

Which 5 critical mineral stocks are linked to US funding?

1. MP Materials (NYSE: MP)

What it does: MP Materials mines and processes rare earth elements, a group of 17 metals used in the strong magnets inside electric motors, wind turbines, drones and missiles. It runs the Mountain Pass mine in California and makes magnets at its Independence plant in Fort Worth, Texas.

Why this news matters: MP Materials has the largest existing deal of this kind. In July 2025, the Department of Defense (now called the Department of War) agreed to purchase $400 million of MP's preferred stock, a special class of shares, plus a warrant. Together they could give the government about 15% of the company. The department also set a 10-year price floor of $110 per kilogram for NdPr, the neodymium and praseodymium mix used in magnets, which means it pays MP the difference when market prices fall below that level (MP Materials, July 10, 2025).

The floor already shows up in results. In the second quarter of 2026, MP produced 840 tonnes of NdPr and reported $108.5 million in revenue plus $17.6 million of "price protection agreement income," the payment from the floor. It still posted a net loss of $20.3 million (MP Materials Q2 2026 results, August 6, 2026). A second magnet plant, called 10X, is under construction in Northlake, Texas, with commissioning targeted for 2028.

One real risk: Much of the plan depends on Washington keeping its side of the deal. MP's own filings list the risk that Congress may not provide the funding for the agreements, and that a court or a future government could decide parts of them were unauthorized (MP Materials, August 6, 2026).

2. USA Rare Earth (NASDAQ: USAR)

What it does: USA Rare Earth is building a supply chain from rare earth ore to finished magnets. It owns the Round Top deposit in Hudspeth County, Texas, a magnet plant in Stillwater, Oklahoma, and Less Common Metals, a rare earth metal maker in the United Kingdom.

Why this news matters: This company already received money from the same CHIPS program now funding the $389 million round. On June 3, 2026, it signed final agreements with Commerce for up to $277 million in direct funding and up to $1.3 billion in loans. In return, Commerce will receive about 16.1 million shares and about 17.6 million warrants (USA Rare Earth, June 3, 2026). The money is paid out only when the company hits set building milestones.

One real risk: The company is still early. Revenue was $5.8 million in the second quarter of 2026, while the loss from operations was $46.3 million (USA Rare Earth Q2 2026 results, August 10, 2026). Round Top's feasibility study, the detailed engineering report that shows whether a mine can make money, is due for completion in the fourth quarter of 2026 and publication in early 2027. The funding deal also requires the company to raise $375 million in new equity, plus the cost of a planned Brazilian acquisition, by March 31, 2027, and another $875 million by the end of 2027 (SEC Form 8-K, June 2026). Raising that much usually means issuing more shares.

3. Lithium Americas (NYSE: LAC; TSX: LAC)

What it does: Lithium Americas is building the Thacker Pass lithium mine and processing plant in Humboldt County, Nevada. Lithium is the key metal in rechargeable batteries for electric vehicles and power storage. The company has Canadian roots and trades on the Toronto Stock Exchange as well as in New York.

Why this news matters: The US Department of Energy lent the project up to $2.23 billion, and by June 3, 2026, the company had drawn $1.209 billion of it. In January 2026, the department also received warrants for a 5% stake in Lithium Americas and a 5% economic stake in the Thacker Pass joint venture, which is the shared company that owns the project with partner General Motors (Lithium Americas proxy circular, May 6, 2026; Q2 2026 results, August 2026). This is the same "money plus ownership" pattern seen in the new Commerce awards.

One real risk: The plant still needs money and time. The company targets mechanical completion, the point when construction is basically finished, in late 2027. Meanwhile, it has been issuing new shares to raise cash. Under a share sale program that started in March 2026, it sold 13.0 million shares by June 30 at an average of $5.36, then 1.1 million more after June at an average of $3.87, and it agreed in August to issue $150 million of convertible debt that can turn into shares (Lithium Americas Q2 2026 results, August 2026). More shares can mean a smaller slice for each existing shareholder.

4. Trilogy Metals (NYSE American: TMQ; TSX: TMQ)

What it does: Trilogy Metals is a Vancouver-based company that owns half of Ambler Metals, which holds copper, zinc, lead, gold and silver deposits in northwestern Alaska. Its partner in that joint venture is South32, a large Australian miner.

Why this news matters: On September 11, 2026, the US Department of War completed a $35.6 million investment and became the owner of about 9.1% of Trilogy's shares. It also holds warrants that can only be used after the first phase of a planned 211-mile road to the district is finished. The department agreed to help arrange financing for that road with the State of Alaska (Trilogy Metals, September 11, 2026). For Canadian investors, it shows Washington is willing to take stakes in companies listed in Toronto when the minerals are on US soil.

One real risk: This is a long wait. The project has no mine yet, and the federal permit decision for its Arctic deposit is targeted for September 2028 (Trilogy Metals Q3 fiscal 2026 results, October 2026). The road also needs its own funding, which the CEO has said will likely be decided around 2028 (Kitco News interview, October 21, 2026).

5. Ucore Rare Metals (TSXV: UCU)

What it does: Ucore is a Halifax, Nova Scotia company that separates mixed rare earths into individual pure products, using its own process called RapidSX. It is building its first commercial plant, the Louisiana Strategic Metals Complex, in Alexandria, Louisiana.

Why this news matters: On September 14, 2026, Ucore received another $4.6 million from the US Department of War, bringing its total government grant funding to $27.0 million. The new money supports samarium and gadolinium, two rare earths used in heat-resistant magnets and nuclear reactors. Starting January 1, 2027, US defense rules will restrict magnets whose supply chain runs through China, which could raise demand for separation outside China (Ucore, September 14, 2026). Ucore also raised about C$69 million from investors in August 2026.

One real risk: RapidSX has worked in testing but has not yet run at full commercial scale. Ucore also depends on buying its raw feed from other mining companies, so a shortage of feed would leave the plant idle. The company lists both risks in its own filings (Ucore, September 14, 2026).

How could US critical minerals funding affect mining stocks?

US funding can affect mining stocks in three main ways, and only the first is clearly positive.

It can lower the risk of a project. When a government lends money, sets a price floor, or promises to purchase output, a company is less likely to run out of cash halfway through building a mine. This kind of purchase promise is called an offtake agreement. For example, MP's $110 floor means its NdPr revenue has a minimum per kilogram even if Chinese prices drop.

It can dilute existing shareholders. Government shares and warrants, plus the extra equity that lenders often require, increase the number of shares. If a company's value stays the same, each share is worth a bit less. USA Rare Earth and Lithium Americas both show this clearly in their 2026 filings.

It can tie a company to politics. Deals signed by one government can be changed by the next one or by Congress. Payments also depend on milestones, which means delays can hold back money the market already expects.

Other recent programs show how wide this support has become. The Department of Energy offered up to $500 million for battery material processing and recycling on March 13, 2026, and up to $69 million for critical materials technology on April 7, 2026 (Department of Energy). For the critical minerals market outlook, the pattern matters more than any single award: Washington is spending on supply chains where China holds a large share, and it increasingly wants ownership in return.

What comes next for these critical minerals mining companies?

Three things will show whether this support turns into real production. First, watch whether Commerce turns the four letters of intent into final awards, and on what terms. Second, watch the milestone dates already set out above: USA Rare Earth's feasibility study, Lithium Americas' late-2027 completion target, and Trilogy's 2028 permit decision. Third, watch China's gallium and rare earth export rules, because a change there can move prices for every company on this list.

Mining stocks to watch in this group carry very different levels of risk. MP Materials already sells product, while Trilogy is years from a mine, so comparing them on the same terms can be misleading.

Frequently asked questions

Can I invest directly in the companies getting the $389 million?

Not through a public stock exchange today, because none of the four companies is listed. Helion, Commonwealth Fusion Systems and Vertical Semiconductor are private, and Sibelco is a privately held Belgian group.

Are rare earth stocks the same as critical mineral stocks?

Rare earth stocks are one part of a bigger group. Critical mineral stocks also include companies working with lithium, copper, gallium, graphite and other metals the government lists as important to the economy and defense.

Does a government stake mean a company will succeed?

Not necessarily, because it lowers some risks, such as funding, but projects can still face delays, cost overruns and weak metal prices.

Sources

1. US Department of Commerce / NIST, "Department of Commerce Announces Letters of Intent With 4 Companies for $389 Million of R&D Awards to Strengthen America's Energy Semiconductor Supply Chain," Oct. 22, 2026. Source
2. Reuters via Investing.com, "US to award $389 million in R&D funds for power semiconductors, critical materials," Oct. 22, 2026. Source
3. CSIS, "The U.S.-China Trade Truce Has Not Solved the Gallium Problem," May 11, 2026. Source
4. MP Materials, DoD partnership announcement, July 10, 2025. Source
5. MP Materials, Q2 2026 results, Aug. 6, 2026. Source
6. USA Rare Earth, definitive agreements with Commerce, June 3, 2026. Source
7. USA Rare Earth, Form 8-K (funding agreements and equity raise requirements), June 2026. Source
8. USA Rare Earth, Q2 2026 results, Aug. 10, 2026. Source
9. Lithium Americas, Q2 2026 results, Aug. 2026. Source
10. Lithium Americas, 2026 proxy circular (DOE loan and warrants), May 6, 2026. Source
11. Trilogy Metals, closing of Department of War investment, Sept. 11, 2026. Source
12. Trilogy Metals, Q3 fiscal 2026 results, Oct. 2026. Source
13. Kitco News, interview with Tony Giardini, Oct. 21, 2026. Source
14. Ucore Rare Metals, additional Department of War funding, Sept. 14, 2026. Source
15. US Department of Energy, $500 million battery materials funding opportunity, Mar. 13, 2026. Source
16. US Department of Energy, $69 million Critical Minerals and Materials Accelerator, Apr. 7, 2026. Source