Energy market shock expected to drive inflation

PLS lands lithium price floor deal  PLS (ASX: PLS) has secured an offtake deal with Canmax through mid-CY28 that includes a price floor of $1400/t (US$1000/t) for spodumene from the Pilgangoora operation. Subject to receipt of a $140m (US$100m) prepayment, the supply of 150ktpa of spodumene concentrate will commence in CY26.The price floor bodes well for lithium, which has seen a sharp rebound to more than $2800/t (US$2000/t) of spodumene after sinking to lows of around $800/t (US$600/t) in mid-2025. A price floor mechanism has been recognised by government and private enterprise alike, especially as more details of Australia’s Critical Minerals Strategic Reserve have come to light. Federal Resources Minister Madeleine King has previously flagged the government’s consideration of a price floor as the reserve has been taking shape. As recently as early February, Minister King confirmed that Australia would build a pricing mechanism within the Critical Minerals Strategic Reserve."We will work to make sure Export Finance Australia has the right financial tools to be able to introduce price floors, and that may be through offtake agreements, for instance,” she said. "The reason for it is we need to be able to set a price that makes projects competitive and, quite frankly, investable. “The government has that financial backing that provides the heft at the start of a project and then as that investment comes in, which we expect it will... the government can then move out of that space.” Price floors have also been used in the US, with rare earths producer MP Materials entering a public-private partnership with the US Government. Notably, the package included a price floor commitment of $154/kg (US$110/kg) for the company’s neodymium-praseodymium products stockpiled or sold with the goal of reducing vulnerability to non-market forces. While details of Australia’s price floor for critical minerals have yet to eventuate, PLS has taken it into its own hands with the Canmax deal. Under the agreement, PLS has the option to extend the agreement for an additional 12 months, beyond the initial two-year term, and supply a further 150kt. PLS can meet the commitment from its Pilgangoora operation, including either the Pilgan plant or Ngungaju plant or a combination of both. The miner says the floor price mechanism provides downside protection against market volatility while preserving full exposure to price upside. “This agreement builds on our established relationship with Canmax and reflects both the quality and consistency of Pilgangoora’s spodumene and PLS’ proven capability as a reliable, large-scale operator,” PLS managing director and chief executive Dale Henderson said. “The US$100m interest-free prepayment and floor price structure demonstrate strong commercial confidence in our product and performance, while preserving full exposure to price upside. “The agreement strengthens our near-term liquidity and preserves operational flexibility through optional volumes, supporting disciplined production and sales decisions as lithium market fundamentals continue to improve.” 

US President Donald Trump and Chinese President Xi Jinping have reached a trade and economic deal to suspend additional export controls on rare-earth metals, according to the White House.

Lynas Rare Earths (ASX: LYC) and Japan Australia Rare Earths (JARE) have extended their rare earths supply deal through 2038, locking in a market-linked floor price of US$110/kg for neodymium and praseodymium. Under the revised agreement, Lynas will continue to provide up to 7200tpa of neodymium and praseodymium to Japanese industry, while JARE has committed to purchase 5000tpa under the new pricing structure.If Lynas’ achieved price is above US$150/kg, 30% of the upside above that level, capped at US$10m each calendar year, will be paid to JARE. Lynas chief executive and managing director Amanda Lacaze comments on the agreement. “Lynas’ partnership with JARE has served both organisations well over the past 15 years. It has created a strong foundation for the development of Lynas’ business, supported investments in new processing capacity and new products, and delivered reliable supply of quality product to support Japanese industry growth,” she said. “This new agreement will ensure continued reliable supply of rare earth products that are strategically important to Japanese industry and its global market, and at the same time, the implementation of fair market pricing will reduce price volatility for Lynas and enable continued growth and investment in our operations.” Additionally, 75% of all HRE oxides produced by Lynas will be made available to Japanese industry, with JARE committed to purchasing the equivalent of 50% of all those HRE oxides. 

Gina Rinehart has become the majority shareholder in the US’s only rare earths producer, MP Materials, while majorly decreasing her US-listed lithium holdings.