US wants to set a price floor for rare earths, UK minister: Not following

In recent years, the West, which has long advocated "free markets," has finally shed its disguise. They previously imposed price caps on Russian energy, now they are trying to set a minimum price for rare earths to boost their own industries and reduce reliance on China.

But this time, the UK has decided not to follow.

According to Reuters on December 2, UK Minister of Industry Chris McDonald told the media in an interview that the UK has already attracted sufficient investment in critical minerals to develop a local supply chain, so it does not plan to follow the US's approach of providing price floors for domestic rare earth companies. However, it will continue to monitor the situation and use other policy mechanisms when needed.

McDonald revealed that he met with US Department of Defense officials on December 1 in London, during which the latter detailed the US's support policies for critical minerals, including the price floor mechanism.

"We are implementing most of these policies, but not all. The price floor is currently not on our policy list. However, I will continue to monitor its implementation effects," he said in the interview. "For me, the core issue is whether we can attract relevant investments, and currently we are successfully attracting investments."

Reuters reported on September 9 that G7 member states and the EU are considering setting price floors to promote rare earth production, while planning to impose taxes on some Chinese exports to encourage investment in related fields at home.

This July, the US provided a minimum price guarantee to rare earth company MP Materials, part of the US Department of Defense's billion-dollar investment plan.

Previously, sources said that this price guarantee mechanism might be expanded to other companies.

Australia is reportedly considering setting a price floor separately to support key mineral projects, including rare earths. Canada has a positive attitude toward the idea of price floors but has not yet committed to taking action.

A source said that the key issue discussed by the G7 is whether to raise regulatory barriers for foreign investments in critical minerals, trying to limit companies' investments in China through this method. However, the source added that there is uncertainty within the G7 about whether to directly confront China.

"Another option is geographical restrictions," the source continued, explaining that these restrictions may include local content rules or limits on the quota of rare earths imported from specific countries (such as China) in public procurement tenders. "However, the G7 countries also have differing opinions."

Two other sources said that the G7 also discussed imposing tariffs or so-called carbon taxes on Chinese exports of rare earths and small quantities of metals, with specific tax rates calculated based on the proportion of non-renewable energy used in their production.

Last month, the UK launched a critical minerals strategy, aiming to meet 10% of demand through domestic mining and 20% through recycling by 2035, and providing up to 50 million pounds in funding support for this purpose.

Currently, China accounts for about 70% of global rare earth mining and 90% of refining capacity. The UK currently meets only 6% of its critical mineral needs domestically, and its strategic focus is on lithium, nickel, tungsten, and rare earths.

The UK expects that a lithium processing project in northern England will break ground in the coming years and plans to achieve at least 50,000 tons of lithium capacity by 2035. In addition, the UK also plans to include critical mineral reserves in its defense procurement plan.

Original: toutiao.com/article/1850446863292427/

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