The US government intends to introduce “price floors” in selected sectors to counteract market distortions caused by China. This was stated by Treasury Secretary Scott Bessent in interviews with US media. The focus is on critical raw materials such as rare earths, the processing of which China has dominated for years. In parallel, Washington is considering further investments in strategic companies and the establishment of a state mineral reserve, according to Bessent. The aim is to make supply chains more robust and to systematically use industrial policy instruments.
The statements follow new Chinese export restrictions on rare earths and related products. Beijing recently tightened the rules and now requires permits even for products containing only small amounts of Chinese rare earth materials. The US government responded with the threat of additional tariffs; at the same time, both sides are seeking talks.
MP Materials as a Test Case: Price Floor, Offtake and Government Participation
In July, the US Department of Defense (DoD) concluded a comprehensive agreement with MP Materials (NYSE: MP), which is considered a blueprint for future public-private partnerships. The key points are a ten-year price floor of US$110 per kilogram for neodymium-praseodymium (NdPr), a long-term offtake agreement for all magnets produced at the planned “10X Facility” site, and a capital investment by the DoD via preferred shares and warrants. MP Materials thus remains operationally independent, but receives more predictable cash flows and offtake security, while the state participates in upside scenarios.
The agreement also includes funding to expand processing capacity in Mountain Pass, California, including the separation of heavy rare earth elements. According to the DoD, this is intended to create an end-to-end US value chain from the mine to the magnet. The new magnet factory is scheduled to go into operation in the second half of this decade.
Why Rare Earths are Relevant to Security Policy
Rare earths are indispensable for high-performance magnets – for example, in drives for electric vehicles, wind turbines and numerous electronics applications. In the armaments industry, such magnets are used in guided missiles, radar systems and fighter aircraft, among other things. China’s strong position in processing and refining has repeatedly fueled price fluctuations and dependencies in the past. Beijing’s recent export restrictions are exacerbating concerns about bottlenecks along Western supply chains; accordingly, the US and G7 partners are discussing coordinated countermeasures.
Against this backdrop, the now-promised price floors look like an industrial policy safety net: If the market price falls below the defined threshold, a state mechanism is to take effect – in the case of MP Materials, structured similarly to a “contract-for-difference”. Conversely, the public coffers retain a share of possible upside scenarios. In this way, Washington wants to prevent Western suppliers from being forced out of the market in phases of aggressive pricing.
What Bessent’s Signals could Mean for Companies and Investors
Bessent held out the prospect of further government investments – specifically in sectors considered relevant to security. At the same time, he emphasized the limits of government intervention. For companies along the rare earth value chain – from mining to separation to magnet manufacturing – such instruments tend to increase predictability and could influence the choice of location for new capacities. Which companies are specifically addressed remained open. However, it is clear that the government is linking raw materials policy, trade policy and defense interests more closely in order to reduce dependence on Chinese supply chains.
Meanwhile, the shares of several producers and processors of rare earths and “critical minerals” recently reacted with price gains – an indication that the market is pricing in further industrial policy steps. Whether and how quickly the announced price floors will be implemented across sectors should become apparent in the coming weeks – not least in light of the continued talks between Washington and Beijing on export rules and tariffs.
Ucore Rare Metals is one of the Beneficiaries
Among the companies that have already benefited since the middle of the year from the escalating trade disputes between the US and China and have recently recorded drastic price gains is the Canadian Ucore Rare Metals (WKN A2QJQ4/ TSXV UCU), which has a method for processing rare earth materials called RapidSX that is superior to conventional methods. At Ucore, the looming conflict with China was recognized years ago and a conscious decision was made to establish itself as part of a Western supply chain for rare earths. According to the company, RapidSX is not only faster than the solvent extraction (SX) commonly used in China, but also has a less negative impact on the environment.
Ucore, Goldinvest.de has been reporting on the company for a long time, plans to commission a first rare earth production line as early as the second half of 2026. Further production lines are then to be gradually put into operation in the plant in the US state of Louisiana, which is already being funded with a total of more than USD 22 million by the US Department of Defense. Ucore also recently announced a cooperation with an Australian technology company that will allow it to use material from a wide variety of sources, such as electronic waste.
