USA Rare Earth Inc. (USAR) experienced a significant surge of 5.55% in a 24-hour period on Thursday, as part of a broader rally in rare earth stocks. The company's stock price increase was notably influenced by industry-wide developments, particularly the announcement of a major public-private partnership between MP Materials and the U.S. Department of Defense.

The rare earth sector saw substantial gains across the board, with MP Materials leading the charge with a remarkable 52% increase. Other companies in the sector also benefited, with NioCorp Developments up 19%, Energy Fuels rising 17%, and USA Rare Earth itself climbing 12% during regular trading hours.

The catalyst for this sector-wide rally was MP Materials' announcement of a strategic partnership with the U.S. Department of Defense. This collaboration aims to accelerate the development of a domestic rare earth magnet supply chain, reducing U.S. dependency on foreign sources. As part of the deal, the Pentagon will become MP Materials' largest shareholder, investing $400 million in convertible preferred shares and warrants, potentially representing a 15% stake in the company.

This development highlights the growing strategic importance of rare earth elements in both defense and commercial applications. As investors anticipate increased government support and investment in the domestic rare earth sector, companies like USA Rare Earth are likely to benefit from the heightened interest and potential for future partnerships or initiatives aimed at strengthening the U.S. rare earth supply chain.