Shares in USA Rare Earth (USAR +10.89%) spiked higher by as much as 11% by 2 p.m today. The move comes as the speculation mounts that a regime change in Venezuela will lead to favorable trading relationships with U.S. companies, and that could include USA Rare Earth.
Why USA Rare Earth could benefit
The Orinoco Mining Arc in Venezuela reportedly has 300,000 metric tonnes of rare-earth deposits, including lanthanum, thorium, and neodymium. The latter of which USA Rare Earth could potentially use as a source of supply for its Stillwater, Oklahoma facility, which it plans to start producing rare-earth magnets this year.
NASDAQ: USAR
Key Data Points
As a reminder, the company's business model involves first producing rare-earth magnets at Stillwater in 2026 and then beginning commercial development of the Round Top mining deposit in Texas in late 2028. However, to do this, it needs to secure a non-China feed source of rare-earth materials.
That's where the rare-earth materials in Venezuela could come into play.
Where next for USA Rare Earth
The speculation is understandable, as securing a domestic supply of rare-earth magnets is a critical strategic interest for the U.S. Still, it's far too early to conclude anything from recent events, let alone incorporate a potential flow of rare-earth materials from Venezuela into USA Rare Earth's business plans.
Image source: Getty Images.
The good news is that it may not even need Venezuela, thanks to its acquisition of Less Common Materials in late 2025. An action that significantly derisked the company's plans.
