Key Points
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USA Rare Earth is trying to create a rare-earth supply chain in the U.S.
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The company has several assets under its control, including the Round Top deposit in Texas.
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The company has several capital-intensive projects underway, and it might take awhile before it generates significant revenue.
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What happens when the United States decides it can no longer depend on China for some of the world’s most strategically important minerals?
For mining companies like USA Rare Earth (NASDAQ:USAR), the answer could be a once-in-a-generation growth opportunity. As Washington endeavors to break China’s dominance over the rare-earth supply chain, this American company has suddenly found itself at the center of a much bigger geopolitical struggle.
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And as that struggle plays out, the question becomes more interesting: Could tension between two of the world’s superpowers be enough to send USA Rare Earth’s stock soaring tenfold? Let’s take a look.
USA Rare Earth is building a mine-to-magnet empire
USA Rare Earth is trying to build something the U.S. badly wants: a rare-earth supply chain. This involves more than just digging minerals out of the ground. The ore must be processed, and its rare-earth elements separated. Those elements are then turned into metals and alloys, which can then be used to make powerful permanent magnets.
Image source: Getty Images.
USA Rare Earth wants to control each stage of this process. And, indeed, it has several assets to do just that. For starters, it controls the Round Top deposit in Texas, a massive rare-earth deposit containing many of the critical minerals needed to make permanent magnets. It also has a magnet manufacturing facility in Stillwater, Oklahoma, as well as a second magnet factory under construction in South Carolina.
The Round Top deposit isn’t operable yet (commercial production is expected there in 2028). But USA Rare Earth has another source of rare-earth minerals that is already producing: Serra Verde, a mine in Brazil which the company acquired in September 2026.
This acquisition was especially important because Serra Verde produces heavy rare earth elements, a class of rare-earth elements that is mostly found in China. At the same time, this acquisition gave USA Rare Earth something it badly needed: an operating mine that can generate revenue while its American operations are still being developed.
How USA Rare Earth could deliver a 10X return
Right now, USA Rare Earth has a market cap of about $3.1 billion. For its stock to grow tenfold, that valuation would need to climb to about $31 billion, assuming share count stays the same.
Over the long term, reaching that valuation could be possible, but I would not expect it to happen within this decade. The thing is, USA Rare Earth’s future earnings are still largely projections, and it has several capital-intensive projects ahead, not the least of which is opening a brand-new mine.
As such, there are significant risks to consider before investing in this rare-earth miner. I think it has exciting growth potential, but I’d approach it as a speculative stock rather than one that’s likely to grow my money tenfold.
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Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
