Highlights

• Australia and the U.S. are exploring price floor mechanisms to stabilize the rare earths market and reduce dependence on China.
• A successful rare earths strategy requires more than price floors, including direct offtake agreements, financing mechanisms, and downstream integration.
• Less than 10 investable ex-China companies have meaningful magnet production, highlighting the complexity of developing a competitive rare earths ecosystem.

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Rare Earth Exchanges (REEx), the independent market intelligence platform for rare earths, has reviewed Stockhead’s recent article, “A price floor could be just the thing to supercharge the rare earths sector” (Bevis Yeo, August 2025). The article highlights Australia’s consideration of a U.S.-style rare earths price floor at US$110/kg, modeled after the Department of Defense’s agreement with MP Materials.

What Makes Sense

Stockhead is right on one key point: pricing certainty is essential. Without a floor, projects remain hostage to the opaque Asian Metal Index and China’s ability to swing markets. For capital-intensive projects like Iluka’s Eneabba refinery or VHM’s Goschen project, long-term price stability is a prerequisite for financing and final investment decisions. In that sense, the U.S. DoD’s move is an overdue recognition that market forces alone cannot build secure supply chains.

But Price Floors Are Not Enough

A floor price is necessary but far from sufficient based on our understanding of the systemic severity of the underlying problems.  A credible industrial policy requires:

• Direct offtake agreements that guarantee throughput from mine to magnet.
• Financing mechanisms (low-cost credit, grants, tax incentives) that derisk capital expenditure.
• Downstream integration – without domestic magnet manufacturing, floor prices simply subsidize concentrate exports.
• Allied coordination – Japan, Europe, and the U.S. must align on standards and joint procurement, rather than fragmented national schemes.
• Workforce development—especially in the USA, an emerging epicenter of the ex-China market, thanks to ongoing moves made by President Donald Trump
• Demand stimulation—initiative to ensure sufficient demand across defense, green energy, electrification of transport, drones/humanoids, and other electronic activity involving rare earth element magnets, components, and assemblies.

Without these measures, floor pricing risks becoming a subsidy that fails to deliver strategic independence. The Chinese system remains vertically integrated from mining to magnets, with >85% global market share. Matching that requires industrial ecosystems, not just insurance against price swings.

Investor Reality Check

As REEx tracks in its magnet rankings, fewer than 10 investable ex-China companies have meaningful exposure to magnet production. Noveon (USA), Shin-Etsu (Japan), VAC (Germany), and Proterial (Japan) stand out, but capacity outside China remains marginal. Floor prices may stimulate supply, but scaling magnet manufacturing will demand broader interventions.

Conclusion

The U.S. $110/kg floor is a watershed. Australia’s exploration of similar mechanisms is encouraging. But the Stockhead narrative oversimplifies: price floors are a starting point, not a solution. Real independence requires a whole-of-supply-chain strategy—mine to magnet to end-user—backed by coordinated industrial policy across allies. A leap from the status quo? Absolutely.

Source: Stockhead, “A price floor could be just the thing to supercharge the rare earths sector,” Bevis Yeo, August 2025.

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