Policy Shift Casts Shadow Over MP Materials’ Government Backing

MP Materials US5533681012

Shares of MP Materials faced notable downward pressure this week, driven by a significant change in U.S. policy direction. Reports indicate the administration is stepping back from plans to offer government-guaranteed minimum prices, known as "price-floor" agreements, for projects involving critical minerals. This development has soured sentiment across the sector, even though existing contracts are not automatically impacted.

According to information from Reuters, the government no longer intends to provide these price support guarantees. In a private meeting, senior officials from the Department of Energy and the Department of Commerce reportedly stated that new projects must demonstrate their economic viability without the assurance of state-mandated price floors.

The cited reasons for this reversal include a lack of congressional funding and the practical challenges involved in administratively setting "market prices." This move also appears to distance Washington from its G7 partners, who are currently exploring models for joint price support mechanisms.

Scrutiny Follows a Secured Deal

The policy shift holds particular relevance for MP Materials due to a prior arrangement. In July 2025, the company secured a $400 million investment from the U.S. Department of Defense (DOD). A key component of that agreement was a ten-year price floor of $110 per kilogram for its neodymium-praseodymium (NdPr) output. This deal, finalized before the recent change in stance, is understood to remain binding.

Nevertheless, political oversight is introducing a new layer of uncertainty. Sources cited by Reuters note that the Senate Armed Services Committee has requested meetings with Pentagon officials to examine the rationale behind granting MP Materials such a price guarantee. This very inquiry is likely unsettling for investors, raising questions about the ongoing political acceptability of such instruments and whether they will become a point of contention.

Key Developments:
* A Reuters report states the U.S. government will not commit to new minimum-price guarantees for critical minerals projects.
* MP Materials' 2025 DOD agreement includes a 10-year NdPr price floor of $110/kg.
* The Senate Armed Services Committee is seeking to review the background of MP Materials' price guarantee.

Contrasting Approaches to State Support

The sector received additional attention as USA Rare Earth, in the same week, was awarded a substantial package of government support. This included $277 million in federal funds plus a $1.3 billion loan under the CHIPS Act. Notably, this agreement reportedly contains no price floor, instead linking to market prices—which Reuters indicated were around $125 per kilogram for NdPr.

This highlights the diverging terms of state support: MP Materials operates under an older deal with a price safety net, while newer arrangements evidently rely more heavily on market-based pricing without such guarantees.

Investor focus now turns to MP Materials' upcoming fourth-quarter 2025 results, scheduled for release on February 26. The associated conference call is set for 5:00 p.m. Eastern Time. Beyond operational metrics, management's commentary on how the company views these shifting political parameters will be closely watched.

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