Canberra’s support for a United States-led initiative to set a floor price for rare earth elements has energised investor interest in Australian producers Lynas Rare Earths Ltd (ASX:LYC, OTC:LYSCF) and Iluka Resources Ltd (ASX:ILU), with both stocks climbing on above-average trading volumes.
Lynas shares gained 5% to trade at A$11.84, while Iluka rose 4.7% to A$5.57, as investors responded to growing momentum behind efforts to reduce Western reliance on Chinese rare earth supply chains.
The rally follows last week’s agreement between the US Department of Defense and MP Materials Corp — a move both Lynas and Iluka publicly welcomed.
Lynas backs US-led support for rest-of-world supply
Western Australia-based Lynas — which earlier this year marked the first commercial production of separated heavy rare earths outside China in decades at its Malaysian plant — said it welcomed “the recent industry-shaping initiatives by the US administration”.
“We believe this innovative support will lead to a much larger and more vibrant ‘rest of world’ rare earths industry,” the company stated.
The US deal includes an equity investment and financing commitment for a new rare earth magnet manufacturing facility, alongside a price floor and purchase commitments designed to support long-term supply resilience.
Iluka sees US price floor as critical signal
Iluka, which is developing the Eneabba rare earths refinery in Western Australia, noted in its quarterly report that the US$110 per kilogram price floor for neodymium-praseodymium (NdPr) products reflected “an acknowledgement by the US government that higher prices for separated rare earth oxides are essential to building a sustainable Western and likeminded supply chain”.
“Iluka has consistently advocated for independent pricing mechanisms that are not linked to the Asian Metals Index; these recent developments are encouraging and support Iluka’s pricing approach,” the company told investors.