USA Rare Earth Surges 24.68% on Strategic Supply Pact and LCM Acquisition Trading Volume Ranks 315th Amid Geopolitical Push for Rare-Earth Independence

Market Snapshot

, 2025, , . The stock’s sharp rise followed the announcement of a strategic supply agreement between its subsidiary, Less Common Metals (LCM), and Arnold Magnetic Technologies (a Compass Diversified subsidiary), alongside European chemical company Solvay. This marked a significant reversal from earlier volatility, . , , signaling mixed short- and long-term sentiment. , though the company remains pre-revenue and reports substantial net losses, .

Key Drivers Behind the Rally

The immediate catalyst for USAR’s 24.68% gain was the announcement of a supply agreement between LCM and Arnold Magnetic Technologies, which will provide high-grade rare-earth materials for advanced permanent magnet production. This partnership, framed as a critical step in establishing a U.S.- and Europe-centric supply chain, aligns with broader geopolitical efforts to reduce reliance on China, which dominates 70% of global rare-earth mining and 90% of processing. CEO emphasized the strategic importance of the deal, noting it “rebuilds strength and resilience” in the rare-earth ecosystem outside China. The agreement also secures feedstock for USAR’s Stillwater, Oklahoma magnet manufacturing plant, slated for Q1 2026 commissioning, addressing a key bottleneck in the company’s path to commercial production.

The acquisition of LCM in November 2025 for $100 million in cash and stock further underpinned the rally. LCM, based in the U.K., is the only known ex-China producer of both light and heavy rare-earth metals at scale, offering high-grade neodymium-praseodymium (NdPr) alloys critical for magnet production. This acquisition not only bolsters USAR’s vertical integration but also positions it to supply surplus materials to third parties, diversifying revenue streams. The integration of LCM into USAR’s operations is seen as a critical milestone, as it reduces dependency on external suppliers and accelerates the timeline for the Stillwater plant’s operational readiness.

Government support and industrial policy also played a pivotal role in the stock’s performance. Recent announcements of U.S. federal funding for rare-earth supply chains, including a $134 million DOE initiative, underscore the sector’s strategic importance. USAR’s alignment with these initiatives—particularly its focus on domestic production of critical minerals—has attracted attention from policymakers and investors alike. Additionally, the company’s inclusion in the Russell 2000 index, effective December 22, 2025, is expected to drive passive institutional demand, further stabilizing liquidity. The stock’s rally coincided with reports of a official signaling plans to take equity stakes in critical minerals companies, reinforcing the narrative of government-backed industrial growth.

However, the bullish sentiment is tempered by risks highlighted in the news. Short-seller reports, such as Night Market Research’s analysis, question the economic viability of USAR’s Round Top Project in Texas, citing low ore grades and historical operator exits. Skeptics also challenge the company’s ability to execute on its magnet manufacturing plans, noting reliance on second-hand equipment and lack of proprietary IP. Despite these concerns, the recent partnership with Arnold and Solvay, combined with the acquisition of LCM, has shifted market focus toward execution progress rather than speculative risks. Analysts at Canaccord Genuity and William Blair have upgraded their price targets, reflecting confidence in USAR’s strategic positioning and potential for government support.

The broader rare-earth sector remains sensitive to geopolitical dynamics, with China’s recent export policy adjustments adding to market uncertainty. USAR’s ability to navigate these challenges while advancing its Stillwater plant and LCM integration will be critical. For now, the stock’s surge reflects a combination of strategic milestones, policy tailwinds, and the growing urgency to secure non-Chinese supply chains in key industries like defense and energy. Investors will closely watch Q1 2026 commissioning of the Oklahoma plant and the outcomes of the pre-feasibility study for Round Top, which could further validate or undermine the company’s long-term thesis.