US House Democrat blasts Commerce's 'highly concerning' $1.6 billion USA Rare Earth deal

By Jarrett Renshaw, Ernest Scheyder and Gram Slattery

WASHINGTON, March 20 (Reuters) - A elder House Democrat accused U.S. Commerce Secretary Howard Lutnick connected Thursday of structuring Washington's $1.58 cardinal concern into USA Rare Earth successful a mode that gives the authorities "highly ‌concerning" leverage implicit the institution portion boosting Lutnick's family-run concern firm.

In a 10-page letter, Representative Zoe Lofgren, the ranking subordinate of ‌the House Committee connected Science, Space, and Technology, wrote that the projected woody would fto the Commerce Department support an equity involvement adjacent if it decides not to ​invest portion besides leaving the institution reliant connected a $1.5 cardinal backstage superior rise led by Cantor Fitzgerald, the fiscal steadfast antecedently led by Lutnick and present tally by his sons.

"This woody creates a monolithic idiosyncratic struggle by granting the Secretary of Commerce overwhelming leverage to power the behaviour of a backstage institution portion positioning him to beforehand the interests of his sons arsenic a information of his support," wrote Lofgren, a California Democrat.

The missive offers ‌a glimpse into the types of investigations Democrats ⁠could prosecute if they regain powerfulness successful Washington aft the November midterm elections, arsenic lawmakers scrutinize the administration's assertive usage of national financing and equity stakes to reshape proviso chains for captious minerals and different strategical ⁠industries.

CEO Barbara Humpton and a spokesperson for USA Rare Earth were not instantly disposable to comment. The Commerce Department did not instantly respond to requests for comment.

FUNDING IN EXCHANGE FOR EQUITY STAKE

The Commerce Department's CHIPS Program Office successful January signed a non-binding missive of intent to supply up to $1.58 cardinal successful backing ​to ​USA Rare Earth — including a $277 cardinal assistance and a $1.3 cardinal indebtedness — successful speech ​for an equity involvement of betwixt 8% and 16%.

The ‌funds are slated to assistance the institution make a excavation successful Sierra Blanca, Texas, slated to unfastened by 2028, and a magnet manufacturing works successful Stillwater, Oklahoma, which is expected to unfastened this year.

According to the company's regulatory filings, the authorities could clasp its equity involvement adjacent if the woody falls done oregon if backing is clawed back, a proviso Lofgren called "deeply strange" for a national investment.

The institution indispensable conscionable a bid of milestones to person the funding, including raising further backstage capital, completing method studies and demonstrating marketplace request for its manufacturing plans, ‌according to the filing.