00:00Congratulations on this story. It's a great piece. I encourage everybody to check it out.
00:05Before we get into some of the numbers here, the assets that USA Rare Earth has,
00:11what are they and what is available now for them to actually mine?
00:16Okay. They have a mine deposit in Round Top, which is outside of El Paso, Texas, 75 miles or so.
00:25They have a magnet manufacturing plant in Stillwater, Oklahoma that's still getting up to scale.
00:32They now also have a metallization company in the United Kingdom and a processing technology that they've bought into in
00:41France.
00:42And then they now have a Brazilian Rare Earth mine, which we get into the story that they're still trying
00:49to figure that out.
00:50So that is effectively all the assets they have, which, by the way, in 2019, when I first started covering
00:55this company,
00:56they had a stake, a percentage stake in the mine in Texas, and that's all they were.
01:03So, yay. Problem solved.
01:06The U.S. has all the critical minerals or rare materials that it needs, right?
01:09Yeah. I mean, listen, this is like, how do you end up doing a story about a company called USA
01:15Rare Earth that most people have never heard of?
01:17Well, you find out that they get a $1.6 billion commitment from the Commerce Department, led by Howard Lutnick.
01:26And then you find out that they raised a $1.5 billion pipe concurrently with the promise commitment from the
01:34United States federal government.
01:35And the co-placement agents on that pipe were Cantor Fitzgerald and Mollis.
01:41And there were about $50 million in fees that were earned from that.
01:45Now, we don't know how those fees were split.
01:47Explain the Cantor Fitzgerald and Howard Lutnick connection, please, for people who might not be familiar.
01:50Cantor Fitzgerald is the former financial firm that Howard Lutnick ran for a very long time.
01:58And for those who were, you know, paying attention to, unfortunately, the 25-year anniversary of 9-11,
02:05the Commerce Secretary Lutnick did talk about the fact that he lost most of his firm during 9-11 and
02:12devastating, devastating moments.
02:14So there's real history here for Cantor Fitzgerald.
02:17He left Cantor Fitzgerald when he became the Commerce Secretary and his sons took over leading the company.
02:23Now, listen, our story is not going into saying that necessarily something wrong happened here.
02:31But they were the placement agent on this.
02:37The company, Barbara Humpton herself told us, was struggling to get attention in Washington before she came in on October
02:441st of 2025.
02:46Those are her own words in the interview.
02:49And now we're sitting here nine months after the Commerce Department announced that it was going to give a commitment
02:56to USA Rare Earth.
02:58And we finally did a deep dive, connecting all the dots of what this company is now versus what it
03:03was,
03:04all the money that has been swirling around from the private markets, but also from the public money that's been
03:10given to it.
03:11And we felt like there was a whole lot here that readers, Bloomberg followers, could really benefit from hearing.
03:19I just want to say a spokesperson for Cantor said the firm has a longstanding relationship with the USA Rare
03:24Earth that predates Lutnick's appointment and helped with its public listing in early 2025.
03:28Quote, Cantor had no role in USA Rare Earth's negotiations or financing arrangements with the U.S. government, including any
03:36matters involving Secretary Lutnick, who is fully divested from the firm.
03:39The spokesperson said, and then a spokesperson for the Commerce Department said that neither Lutnick nor anyone else at the
03:44agency has interacted with or had any discussions whatsoever with Cantor's jailed regarding the rare earth minerals industry.
03:51Well, then I guess, I don't know if this makes sense, but then one would ask, well, how did that
03:55relationship happen then?
03:56How did that placement happen?
03:58Is it just random?
03:59Like, how does, it's a question.
04:01Listen, we looked at the story at let's talk about the fundamentals of the company.
04:10We, all of us, have spent 18 months talking about questionable connections between the Trump administration and money going out
04:19the door and who's benefiting from it.
04:21One of the things that I have been trying to do is look at the actual companies getting the money
04:27and ask the question, simple question, who's doing the due diligence around this company?
04:32And when you dig into the company, what do they have to offer?
04:36We looked at USA Rare Earth and we said, this is a company that has a mine in Texas that
04:42we have people on the record who have looked at this deposit for years, who said it is a mound
04:47of dirt.
04:48We had people who have looked at the Cerro Verde mine in Brazil and they said, and we have this
04:53in our story, according to people familiar who have, who have seen the mine, who understand the mine.
04:58The trouble they are having is processing the rare earths that are being pulled out of the ground.
05:03Okay.
05:04This is the, the DFC, one of the agencies in the United States government has given major backing to Cerro
05:10Verde.
05:11The DOW has also been giving major backing to Cerro Verde.
05:15USA Rare Earth came in and bought Cerro Verde.
05:19We have been told, according to people familiar, they cannot separate the clay from the rock.
05:25The screen, you have to send a ton of water through this deposit to separate the rare earth rock from
05:32the clay.
05:33The screens are, the grids are too large in the screens or they're ripping through the screens.
05:40People are not, people have told us that these problems on processing at Cerro Verde are enough of a problem
05:47for them to stay away from investing in it.
05:49When you start talking to people in the market who have looked at all these different assets that USA Rare
05:53Earth have, they have major questions around them.
05:56Now, I should be clear.
05:57If there's enough money to make them work in enough time, maybe they can make them work.
06:02But I think what's really interesting and probably smart and to look into is that ultimately it's money from the
06:10U.S. government.
06:11It's taxpayer money, right?
06:13It's taxpayer dollars.
06:13That ultimately goes to this.
06:15Right.
06:15Now, not a dime has gone out the door from the Commerce Department on the USA Rare Earth deal to
06:22be.
06:23They have certain milestones they have to reach in order to get that money from the Commerce Department.
06:27So far, they have not reached those milestones as of the latest public filings that they have out there.
06:33But, you know, you start having the question of you raised a billion and a half dollars from the private
06:37markets on the promise to those investors that the United States government would be backing this.
06:46And I'm not saying they will or they won't.
06:48I'm not saying they will or they won't.
06:50I'm just saying if they never end up getting a dime from the government because they can't reach the milestones
06:56of the original promise they had to the government, then what?
07:01You just raised a billion and a half dollar pipe, you know, back on January that you ended up using
07:07to make all these other investments and purchases.
07:10And then you never came through on the other stuff and the government dollars never came in the first place.
07:13Investors who made the investment based on the assumption that that government money was coming, which was a big endorsement.
07:19It's why we started all talking about the company in a big way.
07:22That's exactly right.
07:23And, you know, this is this is the questions when you talk to investors, right, who are looking at all
07:29these companies that the government's giving money to, not just USA Rare Earth.
07:32They are constantly saying, where's the diligence?
07:36You know, does this technology work?
07:38Does this deposit have what it has?
07:40You know, will this be a solution?
07:43What is the revenue here?
07:44I mean, we look through the public filings.
07:46I mean, you know, Sarah Verde, if it is a great deposit, what we found was they made two point
07:51five million dollars in revenue in 2025 and are operating at a loss.
07:55I talked to a number of investors who go to us in the mining space.
07:59That's not what we technically call a great deposit or or a great mining project.
08:04Maybe eventually it works.
08:05But like right out of the gates, that's not a good sign.
08:08How is this I don't want to call it a deal, but this situation distinct from like a trilogy metals
08:16or an MP materials or or even like an Intel where the U.S. buys a stake?
08:21Like you cover economic statecraft.
08:24I can't remember a time in my lifetime where there's been more involvement in private companies, maybe the bailout and,
08:30you know, post financial crisis.
08:32But yeah, but that was an extent in a moment.
08:35It was right.
08:35We're well more than 12 months into this endeavor now.
08:39How is this distinct from from the other sort of deals that we've seen in the world of economic statecraft?
08:45Well, I mean, to be fair, like I think the USA Rare Earth story is one of of a number,
08:51right?
08:51I mean, we Kate O'Keefe, one of one of our senior reporters down in Washington, she and I did
08:57a story back in May that maybe you remember where we reported that the DOD had raised multiple red flags
09:03around a company called Re-Element Technology.
09:06And they had questions around the technology and the ability of this technology to separate rare earths out of the
09:13ground.
09:13You know, we've been doing these stories, right?
09:15We're diving in and pointing out that there are people around these things saying we have raised red flags.
09:20We have questions about them.
09:22And I would say that this is not so USA Rare Earth is unique in that it's USA Rare Earth.
09:28And they've they said they were a mine to magnet domestic solution and now own a Brazil mine and a
09:34United Kingdom metallization company and have a stake in a French processing technology.
09:40So it's like that's technically like that's fine.
09:45There's a lot of people who say the solution to the rare earth problem is is being global, is bringing
09:49in people.
09:50But your promise initially is that you're a domestic mine to magnet supply chain solution to the Commerce Department.
09:57So, you know, it's just there's a lot going on here.
10:00What are we here?
10:01We just got about 30 seconds.
10:02So we apologize.
10:03What do we get from the government or the Pentagon or from the Commerce Department?
10:08Yeah, I mean, Tim already read what the Commerce Department said.
10:11What you would hear anybody inside the government say, and this is fair, is we are putting money towards projects
10:17that we think can work in and give us a solution to the rare earth problem.
10:22Not all of them will work out, but the one or few that do means it's worth all the money
10:28and all the time.
10:29And you know what?
10:30That could end up being true.
