ASX Rare Miners Slide After US Pulls Back on Price Floor Support

Key Highlights

• Rare earth stocks fell sharply after reports the Trump administration is stepping away from guaranteed minimum price support for critical minerals.
• Reuters says the shift reflects funding limits and the difficulty of setting market prices, reversing earlier signals to the industry.
• Australian-listed rare earth miners bore the brunt of the sell-off, with double-digit declines across the sector.
• Policy uncertainty is back in focus just as governments push to reduce reliance on China for strategic minerals.
  
   

Australia’s rare earth sector took a sharp knock today, with shares sliding across the board after reports that the United States is retreating from plans to guarantee a minimum price for domestically backed critical minerals projects.

The pullback, caught markets off guard and quickly rippled through Australian-listed rare earth miners, many of which have pinned part of their long-term growth story on stronger Western government support for alternative supply chains.

By early afternoon, the damage was clear. Iluka Resources Ltd fell almost 15 percent, Lynas Rare Earths Ltd slid more than 9 percent, and smaller developers such as Ionic Rare Earths Ltd, Hastings Technology Metals Ltd and Arafura Rare Earths Ltd were all deep in the red.

For a sector that has spent years selling the idea of strategic importance and government backing, the sudden policy shift landed hard.

What changed in Washington

According to Reuters, multiple sources say the Trump administration has briefed critical minerals and rare earth executives that guaranteed price floors are no longer on the table. The reason is twofold: a lack of congressional funding approval and the practical difficulty of setting prices in volatile commodity markets.

At a closed-door meeting earlier this month hosted by a Washington think tank, senior officials reportedly told US minerals executives their projects would need to stand on their own financially.

“We’re not here to prop you guys up,” said Audrey Robertson, assistant secretary at the US Department of Energy and head of its Office of Critical Minerals and Energy Innovation, according to people who attended the meeting. “Don’t come to us expecting that.”

Robertson was joined by Joshua Kroon, deputy assistant secretary at the US Department of Commerce’s International Trade Administration. Both officials told executives that Washington was no longer in a position to offer price floors, Reuters reported.

The message marked a clear change in tone from mid-2025. At a meeting last July, officials had told industry leaders that a price floor extended to MP Materials Corp was “not a one-off” and that similar support could be developed for other projects.

That earlier signal had encouraged optimism across global rare earth markets, particularly in Australia.

Why price floors mattered

For rare earth miners, price floors are more than just a financial safety net. They are seen as a way to counter China’s dominance of the market.

Industry executives have long argued that China’s state-backed producers can flood the market with supply, push prices lower and effectively starve new projects of capital. A guaranteed minimum price, they say, helps de-risk early-stage mines and processing facilities that require billions in upfront investment.

Reuters notes that US mining and processing companies have repeatedly pushed for price floors and other backstops to help them compete. Without them, private capital becomes harder to secure, especially in periods of weak prices.

Critics, however, warn that price floors could expose taxpayers to large and long-lasting liabilities if governments are forced to buy minerals at above-market prices. Legal experts have also raised concerns about whether such guarantees comply with procurement, trade and budget laws without explicit congressional approval.

Those concerns appear to have gained traction inside Washington.

Australian rare earth stocks feel the heat

The policy uncertainty played out quickly on the ASX.

Iluka Resources Ltd was the day’s standout laggard among larger names, down nearly 15 percent to $5.51. Part of the fall reflected a $565 million impairment charge in its mineral sands division, but the broader rare earth sell-off added pressure.

Lynas Rare Earths Ltd, the world’s largest producer of rare earths outside China, dropped more than 9 percent despite being one of the sector’s more established players.

Smaller developers fared little better. Ionic Rare Earths Ltd slid about 10 percent, Hastings Technology Metals Ltd fell more than 9 percent, and Brazilian Rare Earths Ltd lost around 8 percent.

Even explorers with strong one-year gains saw heavy selling, a sign that sentiment rather than company-specific news was driving the move.

A broader reset for critical minerals policy

The US retreat from price floors does not mean Washington is stepping away from critical minerals altogether. Reuters points out that the administration has taken equity stakes in companies such as Lithium Americas Corp, Trilogy Metals Inc and USA Rare Earth LLC.

What it does signal is a preference for other forms of support, including equity investments, stockpiling, deregulation and local content requirements, rather than direct price guarantees.

The White House told Reuters it would continue to pursue targeted investments and tax measures while being “good stewards of taxpayer dollars.”

For markets, the nuance matters less than the headline. The idea of a guaranteed price floor had become a psychological anchor for rare earth valuations, particularly outside China. Removing it forces a reset in expectations.

The China factor still looms large

The irony is that the policy pullback comes at a time when Western governments remain vocal about reducing reliance on China for critical minerals used in electric vehicles, defence systems and electronics.

China still controls a large share of rare earth mining, processing and magnet production. Industry executives argue that without strong government support, competing supply chains will struggle to scale fast enough.

Reuters notes that the economics of the market have also shifted. USA Rare Earth said this week it intends to buy certain rare earth oxides for $125 per kilogram on the open market, compared with the $110 per kilogram floor previously linked to MP Materials. That raises fresh questions about whether price floors are even necessary in a tightening market.

What this means for Australian miners

For Australian rare earth companies, today’s sell-off is a reminder that policy risk can be just as powerful as commodity price risk.

In the short term, volatility is likely to remain elevated as markets reassess how much government backing can realistically be relied upon. Companies with stronger balance sheets, existing production or diversified revenue streams may be better placed to weather the uncertainty.

Longer term, the strategic case for rare earths has not disappeared. Demand from clean energy, defence and advanced manufacturing remains intact. What has changed is the assumption that governments will step in with guaranteed prices to smooth the path.

As one executive put it privately, the message from Washington is clear: prove the economics first, and support may follow.