Vulcan Elements, based in North Carolina, said the US government is to partner with private investors who will inject $550 million into the firm's capital.

The federal government will allocate a $620 million loan and a $50 million grant, for which it will receive Vulcan shares valued at $50 million.

Rare earth materials are essential for sophisticated electronic components across a range of industries including auto, electronics and defense.

"We are laser-focused on bringing critical mineral and rare earth manufacturing back home, ensuring America's supply chain is strong, secure and perfectly reliable," Commerce Secretary Howard Lutnick said in a statement in Monday's press release.

China is the world's leading producer of the minerals. It has required licenses for certain exports of the materials since April, hitting global manufacturing sectors.

Rare earths have been a major sticking point in recent trade negotiations between China and the United States, with Washington accusing Beijing of slow-walking export license approvals.