Much of this month’s issue of Australia’s Paydirt is dedicated to a preview of Paydirt’s Critical Battery Minerals Conference, which will be held on April 21-22 in Perth.
It has been a thrilling ride for both industry and event over the 10 years since it started as the Australian Graphite Conference in 2016. The sector’s only consistency in that period has been its inconsistency, prices and projections fluctuating dramatically from one year to the next.
The essential problem for the Australian critical minerals sector remains the same as it always has, Australian miners are not competing on a level playing field with Chinese peers. Whenever Australian miners have gained or even looked like gaining a foothold in a commodity – whether lithium, rare earths, nickel or graphite – the market has suddenly become flooded with material, driving down prices below the cost of production.
Operations are subsequently placed on care-and-maintenance or, as in the most extreme case of nickel, an entire industry is shut down.
Once the competition is eliminated, production levels return to more restrained levels but as demand picks up, there is insufficient capacity to meet it and the entire cycle fires up again.
The sector is screaming for some predictability but we may finally have it, at least for a few companies.
In February, lithium miner PLS Group Ltd announced a new offtake agreement with long-term customer Canmax. The contract included a floor price of $US1,000/t for PLS’s standard SC5.5 spodumene concentrate. Dale Henderson called it a potential game-changer for the international lithium sector.
“It will be interesting to see what this offtake means for the market, being as it is the first of its kind in the terms set out in it. Maybe there will be more to come,” he said.
It was followed up in March by news from Lynas Rare Earths Ltd that it had struck agreement with Japan Australia Rare Earths for a floor price of $US110/kg for at least 5,000 tpa of neodymium-praseodymium production into Japanese industry. Lynas achieved an average sales price of $68.40/kg across all of its rare earths products in the first half of FY26, up from just $44.60/kg in the prior corresponding period.
They may only represent small portions of the overall market for each commodity, but these two floor price contracts – as well as the one struck by the US Department of War and MP Materials Inc last year – could have wide ramifications for the sectors.
It is the first concrete proof that buyers – and governments – are willing to recognise the importance of the source of supply, not just the cheapest available product. If alternatives are knocked out every time Chinese producers come under pressure, Western companies will never be able to attract the project finance required to build new projects, thus defeating the pursuit of supply chain resilience.
A floor price softens the effects of market dumping.
A new report by the Climate Energy Finance (CEF) thinktank (see page 36 of the April magazine), confirms the effectiveness of floor prices as an instrument for supply chain resilience. In what he describes as “green energy statecraft”, CEF director and report author Tim Buckley is urging Australian Government to consider how it can work with partners to ensure diversity of supply.
“I think the best illustration of green energy statecraft is Lynas’ recent deal with Japan Australia Rare Earths,” Buckley told me. “The Japanese have done a deal with Australia’s world-leading rare earths player which allows Lynas to make money and Japan to secure rare earths.”
Buckley said such instruments would be crucial in ensuring non-Chinese critical minerals capacity could be built out.
“I do see floor prices as necessary,” he said. “You need long-term win-wins and that requires governments to step in to level the playing field because if you are asking mining companies to take on China, their investors will run a mile.
“Our companies are all driven by the sole purpose test, they cannot value investments based on national interest, supply diversity or carbon prices without government mandate. It becomes about government setting effective parameters and rules.”
While it didn’t come with a floor price, Glencore’s offer of offtake terms to nickel developer Centaurus Metals Ltd could be just as significant.
Indonesia’s rapid rise to nickel market domination has already knocked out Australia’s iconic nickel sector and the odds of a non-Chinese backed project getting up appeared to be widening by the week as the LME nickel price drifted in 2025.
However, Glencore’s decision to execute on Centaurus’ Jaguar project in Brazil could be motivated by events in Indonesia, where the Government has placed new restrictions on producers in the archipelago amid noises around the severe community and environmental impact of the sector.
There is little doubt the critical minerals rollercoaster has plenty more twists, turns and dips to go but these floor price guarantees could at least represent the first use of a safety harness we’ve seen.