Rare earths miners are backing in the government's plan to underwrite supply, as talk of a potential price floor sends stocks soaring.
Setting a taxpayer-guaranteed minimum price for rare earths sold by Australian miners would be "well worth a look at", Resources Minister Madeleine King said at the Diggers and Dealers mining forum at Kalgoorlie, raising hopes among producers of the critical minerals.
The weapons and electronics ingredients, with hard-to-pronounce names such as praseodymium and neodymium, have become the centre of a geopolitical tussle between China and the US.
To shore up Australian access to the minerals, the federal government in April announced it would set up a national reserve, which would include off-take agreements to buy agreed volumes of supply from producers and establish a stockpile of critical minerals.
But how that would work in practice was still being ironed out, Ms King said.
What was clear was the importance of securing supply, following China's decision to restrict exports of rare earths in retaliation to Donald Trump's tariffs.
"The floor price is but one means of how you establish a reserve," Ms King told reporters on Tuesday.
"And we've always said this, there are many tools that can go into that ... and stockpiles can take many forms, too. I think there's sometimes a vision of it being some gargantuan pile and it's not necessarily the case."
Traders cheered reports of the government's support for a price floor.
Lynas shares jumped more than five per cent, ASM surged more than fix per cent, while Arafura Rare Earths - whose Nolans project in the Northern Territory has already received more than $1 billion in government investment - rocketed more than eight per cent.
The US has grasped the importance of securing sovereign supplies of rare earths, given China controls almost the entire global market.
For aspiring vertically-integrated rare earths producer Australian Strategic Minerals, that presents an attractive opportunity.
The ASX-listed firm is busy working on getting its Dubbo mine online, but has already been inundated with orders for its South Korea processing plant.
"The Korean metals plant, particularly in recent months since those restrictions that we saw imposed by China, has had a huge influx of inquiry. So we're busy ramping up our facility there," ASM chief executive Rowena Smith said on Monday.
The plant is one of a few facilities outside of China capable of refining rare earths into the high-tech metals and alloys turned into magnets essential for making electronic devices.
In July, the US Department of Defence invested $US400 million in rare earths miner MP Materials, including a generous guaranteed price floor of $US110 per kilogram for neodymium and praseodymium.
The decision put a rocket under rare earth prices.
The US government had been "extremely supportive" about funding support to put an ASM facility in their jurisdiction, Ms Smith said.
Lynas, the biggest non-Chinese producer of rare earths, initially criticised the strategic reserve proposal, concerned the government would undercut it by buying at uneconomic prices.
The company's general manager of development, Alex Logan, wouldn't comment on the specific mechanisms floated, but said the company was "very enthusiastic about that consultation process".
Arafura chief executive Darryl Cuzzubbo was supportive of Australia following the US lead in establishing a floor price.
"We have been advocating both with Canberra, but also publicly that the strategic reserve presents an incredible opportunity for Australia and the Australian government to show global leadership in a high-impact, low-risk way," he said.
Despite Chinese rare earths selling for about half the $US130 per kilogram price Western producers were targeting, customers would be happy to pay the premium to avoid the risk of not having supply, Mr Cuzzubbo said.
"The downside of not having supply is massive," he said.
"When you've invested billions in production lines and you're running at below capacity, versus paying $70 extra, potentially for supply of rare earths."
