Has the policy dividend for the US rare earth sector come to an end? It is rumored that the Trump administration is gradually canceling the "price floor" protection for key mineral resources.

According to reports, the Trump administration is abandoning plans to provide price guarantees for key mineral projects in the United States, which effectively acknowledges the inadequacy of Congressional appropriations and the complexity of market pricing. A Senate committee is currently reviewing the price floor given to MP Materials (MP.US) last year. This move signals a departure by the U.S. government from previous commitments to the industry, and may cause disagreements with G7 member countries on price support or other related measures aimed at boosting the production of key minerals for electric vehicles, semiconductors, defense systems, and consumer electronics. Three participants revealed that at a closed-door meeting held in Washington this month at a think tank, two senior Trump administration officials told American mining industry executives that their projects needed to prove they could achieve financial independence without government price support. U.S. Department of Energy assistant secretary and director of the Office of Critical Minerals and Energy Innovation, Audrey Robertson, told these executives: "We are not here to support you. Don't expect us to do that." Australian rare earth stocks fell in response to this news. This shift will guide future transactions, but will not affect MP Materials' price floor. MP Materials' price floor was set by the U.S. government last July as part of a comprehensive investment plan. Also attending the meeting with Robertson was Joshua Kroon, deputy assistant secretary at the International Trade Administration of the U.S. Department of Commerce, responsible for textiles, consumer goods, materials, critical minerals, and metals. According to sources, these two officials stated at the meeting that Washington could no longer provide price floors. After the report was published, the U.S. Department of Energy issued a statement to the media stating that the article was "untrue and relied on anonymous sources who are either misleading or intentionally deceptive." The statement did not specify the errors the department claimed to have found. The department did not immediately respond to requests for further comment. MP Materials did not respond to a request for comment from Reuters via email, but the company issued a statement on Twitter after the report was published, stating that there had been no changes to its contract or the government's obligations under the contract. The company stated: "Any suggestion that the U.S. government has withdrawn its commitment to MP Materials is incorrect." After the news broke, Australian-listed rare earth company stocks fell, with Lynas Rare Earths, the largest rare earth company globally after China, falling by more than 10% at one point. A company spokesperson stated that the company had benefited from U.S. policy measures that had boosted rare earth prices; price protection was most important for existing producers as it could immediately address market failures. Other policy tools were more applicable to early projects and had already been applied to these projects. Reg Spencer, an analyst at Canaccord in Sydney, commented that the sharp decline in rare earth-related stocks was somewhat exaggerated. He said, "These comments are consistent with our understanding of the White House's strategy, that they do not intend to support every rare earth project through a price floor mechanism - projects must rely on their own strength to develop. The U.S. is still supporting the establishment of key mineral supply chains outside of China. They may just use other methods." Strategic shift The current position of the U.S. government is vastly different from a closed-door meeting held in July. At that time, two officials separately told mining executives that the price floor provided to MP Materials was "not a one-off measure," and the government was working on price support schemes for other projects. Since then, the U.S. government has invested in companies such as Lithium Americas (LAC.US), Trilogy Metals (TMQ.US), and USA Rare Earth (USAR.US). However, these companies have not received price floors, leading to doubts about whether the U.S. government is truly committed to this financial instrument. U.S. mining and processing companies have long been pushing for the U.S. government to provide price floors and other support measures to help them compete with Chinese companies. The White House declined to disclose whether it plans to issue new price floors, but stated that it will continue to push for deregulation, tax cuts, and targeted investments in key industries, "while managing taxpayers' money responsibly." Critics of price floors warn that subsidizing mineral deposits by the U.S. government when market prices fall could expose American taxpayers to significant financial risks and potentially lock in long-term debts if prices remain low. Legal experts also warn that guaranteeing minimum prices may face challenges under U.S. procurement, trade, and budget laws, especially where such support is seen as market-distorting or lacking explicit authorization from Congress. Abandoning price floors does not rule out the possibility that Washington could take other measures to support mineral projects and stabilize prices, including reserves, equity investments, and domestically sourced content requirements. Other countries, including Australia, have also considered setting price floors for key minerals. Attention on MP Materials transaction According to sources, previous investments in MP Materials sparked concerns among some government officials and congressional members who believed that Congress had not authorized price floor guarantees of at least $110 per kilogram for two types of rare earth minerals. Since the investment in MP Materials, the economic situation in the mineral market has changed. USA Rare Earth stated this week its plans to purchase similar rare earth minerals on the open market at $125 per kilogram. The MP Materials investment includes a guarantee purchase agreement, fueling doubts about whether Washington will provide price floor guarantees for other mineral projects. Sources said that following MP Materials, the Trump administration realized it lacked Congressional authorization to provide funding for price floor guarantees when considering other potential equity investments. According to these sources, inquiries from members of the Senate Armed Services Committee played a role in driving this realization. The committee requested a meeting with Pentagon staff last year to explain why MP Materials was able to receive a price floor guarantee and the government's strategy for investing in the mineral sector. Committee staff confirmed the request for this meeting but declined to comment further.