Arafura Rare Earths boss Darryl Cuzzubbo has beckoned the prospect of a price floor in the government’s critical minerals stockpile, which he says could break China’s price control.
Arafura Rare Earths boss Darryl Cuzzubbo has beckoned the prospect of a price floor in the government’s critical minerals stockpile, which he says could break China’s price control.
The Gina Rinehart-backed project developer's chief executive Mr Cuzzubbo said the critical minerals stockpile plan - and elements such as a price floor - could dismantle Chinese price manipulation and buoy a local industry.
Federal Resources Minister Madeleine King is actively considering a price floor for rare earths within its critical minerals stockpile aimed at incentivising the struggling industry and to be used as bargaining chip.
Ms King is also not ruling out the government taking an equity stake in a local developer, as shares in rare earth hopefuls rallied on Tuesday off the back of stockpile talk.
Taking an equity stake would be in step with the US Department of Defence's landmark investment in MP Materials, which is one of the two rare earths producers alongside ASX-listed Lynas Rare Earths.
Arafura, which considers its Nolans project the next cab off the rank to come into production, Lynas and MP Materials are all backed by mining magnate Mrs Rinehart, who could stand to benefit from government intervention in the industry.
The DoD’s deal with America's only rare earths producer, MP Materials, stipulated a $110 per kg price floor for neodymium-praseodymium in a move to secure its supply chains amid the US-China trade tensions.
Certain rare earth elements are critical in advanced defence technology, such as precision-guided missiles. Rare earth magnets also have applications in the automotive and renewable industries.
Mr Cuzzubbo said the ultimate prize was having a functioning NdPr price index, which he said the Australian government, through the strategic reserve, could help facilitate.
He said a set price floor and a non-China controlled price index would go far to attract investors and solidify a rare earths industry on home soil.
"By introducing the floor pricing, [the US] are basically breaking the mechanism by which China has controlled the rare earths sector," Mr Cuzzubbo said.
"As soon as you've got a functioning NdPr price index then China has lost control."
It comes as the critical minerals stockpile taskforce has started consulting local rare earth industry leaders, including Australian Strategic Materials boss Rowena Smith.
ASM is tossing up which state in America to potentially build a second metals plant in addition to its Korean facility. Its strategy into the US pre-dates the recent trade turmoil, but Ms Smith said it was well-timed.
Looking at the US, Ms Smith said the DoD's investment in MP Materials was a significant statement that put their money where their mouth was.
"I'm not aware that the US has taken an equity position in a private company since World War II," Ms Smith said on the sidelines of Diggers.
When the scarcely-detailed stockpile was first announced in April, it was widely welcomed by rare earths developers who have struggled to get projects off the ground amid weak market conditions and sluggish prices.
But Lynas Rare Earths - also backed by Mrs Rinehart - has been critical of the proposal, which Amanda Lacaze previously asserted could prop-up uneconomical projects and undercut her business.
Lithium miners, such as Liontown Resources's boss Tony Ottaviano, have also cast doubt over the stockpile and the inclusion of lithium. Minister King is yet to rule out any of the 31 critical minerals.
Mr Cuzzubbo said his company and its Nolans rare earths project in the Northern Territory was positioned to bring volumes into the market to help facilitate a functioning NdPr price index.
