Washington Pulls Back from Critical Mineral Price Floors; Industry Braces for Volatility
WASHINGTON, D.C. — In a significant pivot that has sent shockwaves through the domestic mining sector, the Trump administration is stepping back from plans to guarantee minimum prices for critical mineral projects.
The move, described by multiple sources as a “hard reality check,” marks a departure from earlier promises to insulate American miners from the aggressive pricing tactics of state-backed competitors, particularly China. The shift became public following a closed-door meeting earlier this month, where senior officials reportedly told mineral executives that their projects must now prove they can stand on their own two feet without a government safety net.
A “Bespoke” Precedent Under Fire
The debate over price floors—guaranteed minimum prices for critical mineral price floors at which the government agrees to buy or subsidize materials—reached a fever pitch last year after the Department of War (DOW) executed a landmark deal with MP Materials. That agreement established a price floor of $110 per kilogram for certain rare earth elements, a move officials at the time suggested was “not a one-off.”
However, that deal is now being treated as a “bespoke” exception rather than a blueprint. Since then, while the administration has taken equity positions in companies like Lithium Americas, Trilogy Metals, and USA Rare Earth, none of those deals included price guarantees.
According to sources familiar with the discussions, the administration’s retreat is fueled by a combination of fiscal caution and legal hurdles.
Congressional Pushback: Members of the Senate Armed Services Committee have questioned the legal authority of the executive branch to commit taxpayer funds to long-term price supports without explicit congressional authorization.
Fiscal Stewardship: “We’re not here to prop you guys up,” Audrey Robertson, Assistant Secretary of the Department of Energy, reportedly told executives at the recent D.C. summit. “Don’t come to us expecting that.”
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The “China Trap” and Market Realities
American mining and processing firms have long lobbied for price floors as the only viable way to compete with China’s “predatory pricing.” China currently controls over 80% of the global refining capacity for many critical minerals price floors and has a history of flooding markets to drive down prices, effectively making Western projects unbankable.
“Without a floor, we’re essentially asking private capital to gamble against a state-run monopoly,” says one industry consultant who attended the meeting. “If China decides to tank the price of lithium or cobalt for eighteen months, these American startups will go belly-up before they even start digging.”
The market reaction was swift. Following news of the policy shift, shares in several U.S. critical mineral companies slid in after-hours trading, with MP Materials dropping over 10% and USA Rare Earth losing nearly 9%.
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New Strategy: Permits over Prices
Despite pulling back on price floors, the White House insists it isn’t abandoning the “Energy Dominance” agenda. Instead, the strategy is shifting toward deregulation, tax cuts, and streamlining.
Under the One Big Beautiful Bill Act (OBBBA) and a series of 2025 Executive Orders, the administration is doubling down on:
Fast-Track Permitting: Drastically reducing the time it takes to get a mine approved.
Direct Equity Stakes: Taking ownership positions in strategic companies to provide capital without guaranteeing market prices.
Strategic Tariffs: Investigating Section 232 tariffs to protect domestic producers from “malign” foreign influence.
| Support Mechanism | Old Strategy (Proposed) | New Strategy (2026 Shift) |
| Direct Price Floors | Broadly considered for all projects | Reserved for “strategic exceptions” only |
| Capital Injection | Low-interest loans | Direct equity stakes and PPPs |
| Regulatory Path | Standard environmental review | Fast-tracked “National Emergency” permitting |
| Protectionism | Global coordination (G7) | Unilateral tariffs and “America First” mandates |
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Allies and Adversaries
The U.S. pivot could create a rift with G7 partners. Countries like Australia and Canada have been advocating for a coordinated “Price Support Framework” to stabilize global markets. By moving toward a more market-driven approach, Washington risks leaving its allies exposed or creating a fragmented Western response to China’s dominance for domestic supply chain.
Furthermore, the shift places a heavy burden on the National Defense Stockpile. If the government won’t guarantee prices for producers, it may be forced to use its $2 billion in allocated OBBBA funds to buy minerals aggressively on the open market when prices are low—a strategy that mimics private sector “buy the dip” tactics but at a massive scale.
The Road Ahead
As the Senate continues to review the MP Materials deal and the administration fine-tunes its “common application” for mineral funding, the message to the industry is clear: efficiency is the new security. The administration is betting that American innovation and the lure of a 50% tariff on certain Chinese-processed minerals will be enough to attract investors, even without the comfort of a price floor. It is a high-stakes gamble that will determine whether the next generation of batteries and defense tech says “Made in the USA” or remains under the “boot heel” of overseas competitors.
