Lynas Rare Earths Ltd. is in advanced discussions with the U.S. government to establish a price floor mechanism for rare earth elements, aiming to stabilize supply chains and ensure long-term viability of its Australian processing operations.
- Lynas Rare Earths Ltd. in talks with U.S. government on price floor for rare earth oxides
- Pilot program targets 15,000 metric tons annually over five years starting Q2 2027
- Kalgoorlie facility to expand with $250 million investment to boost output by 40%
- U.S. Department of Defense and Department of Energy involved in evaluation
- Price floor aims to stabilize supply chains and reduce reliance on China
- Potential model for future Western supplier agreements on critical materials
Lynas Rare Earths Ltd. is actively negotiating a strategic agreement with the U.S. federal government to implement a price floor for key rare earth oxides, including neodymium and praseodymium, critical for defense and clean energy technologies. The proposed framework would guarantee minimum prices for deliveries to U.S. customers, helping mitigate volatile global market swings and secure investment in downstream processing capacity. The discussions center on a pilot program targeting 15,000 metric tons of rare earth oxides annually over a five-year period, with initial deliveries expected to commence in Q2 2027. The U.S. Department of Defense and the Department of Energy are involved in evaluating the structure, with potential federal funding covering a portion of the price gap if market prices fall below the agreed floor level. Lynas’ Kalgoorlie processing facility in Western Australia, currently operating at 70% capacity, is slated to expand to support the increased output. The company has committed $250 million in capital expenditures to upgrade separation capabilities and increase throughput by 40% by 2028. These upgrades are essential to meet U.S. industrial demand and comply with critical materials sourcing requirements under the 2022 CHIPS and Science Act. The proposed agreement would strengthen U.S. strategic autonomy in rare earth supply chains, reducing reliance on China, which produces over 60% of the world’s rare earth output. If finalized, the mechanism could serve as a model for similar arrangements with other Western suppliers, influencing global rare earth pricing dynamics and supply chain resilience.