U.S. Policy Shift Rattles Rare Earths Sector, But MP Materials’ Core Deal Stands Firm

MP Materials US5533681012

Shares of MP Materials experienced a sharp decline, shedding approximately 7% on January 29, 2026. The sell-off was triggered by a Reuters report indicating the U.S. government would halt future minimum price guarantees for producers of critical minerals. However, a closer examination suggests the market reaction may be overstated, as the company's existing landmark agreement with the Department of Defense remains securely in place.

• The specific $110-per-kilogram price floor for MP Materials' neodymium-praseodymium output is contractually protected.
• A $400 million investment in the company from the Pentagon, finalized in July 2025, is not affected.
• The new policy under the Trump administration will only halt similar price support mechanisms for future projects.
• MP Materials is scheduled to release its Q4 2025 financial results on February 26, 2026.

Government Reverses Course on Pricing Strategy

According to an exclusive Reuters report dated January 29, 2026, the current administration is stepping back from earlier proposals to guarantee minimum prices for domestic miners of critical minerals. The policy reversal is attributed to a lack of congressional funding and the inherent difficulties in setting appropriate price levels.

During a private meeting in early January, senior officials informed mining industry representatives that any new ventures would need to demonstrate economic viability without relying on federal price supports. Audrey Robertson of the U.S. Department of Energy delivered a clear message to attendees: "We are not here to prop you up. Do not expect that from us."

Existing Contracts Receive Grandfather Protection

The market's negative response appears disproportionate given the specifics. The Reuters article explicitly notes that the price guarantee extended to MP Materials in July 2025 is cemented in a binding contract. That deal involved the Pentagon purchasing $400 million in convertible preferred shares and signing a ten-year supply agreement, which includes the fixed $110/kg floor for neodymium-praseodymium.

While future projects will not benefit from such support, MP Materials' arrangement is legally intact. Furthermore, the current spot market price of $125 per kilogram already trades above the guaranteed minimum, a point underscored by USA Rare Earth's announcement this week to make open-market purchases at that level.

Legislative Scrutiny Follows Major Investment

The significant government investment has not gone unnoticed by lawmakers. The Senate Armed Services Committee is now seeking a detailed explanation for the terms provided to MP Materials. Legislators aim to review the Pentagon's overarching strategy for investing in the domestic mineral supply chain.

Investors will gain further insight into the company's performance when MP Materials reports earnings for the fourth quarter of 2025. The subsequent conference call is set for February 26, 2026, at 5:00 p.m. Eastern Standard Time (23:00 CET).