Australia says US price floor backdown won't derail its critical minerals strategy

SYDNEY, Jan 30 (Reuters) - Australia on Friday said it would support its critical mineral supply chains after the U.S. stepped back from plans to guarantee a minimum price for such projects.

Shares of Australia's rare earth miners fell sharply on Thursday after Reuters reported on the Trump administration's retreat.

The sector was still in the red on Friday. Lynas, the world's biggest producer of rare earths outside China, was down by more than 4%.

The backdown was communicated to U.S. mining executives by Trump administration officials and indicated a lack of congressional funding for price floors and the complexity of setting market pricing, Reuters reported.

That "won't stop Australia (from) pursuing our critical minerals strategic reserve programme to make sure Australia has access to the resources it needs to build a future made in Australia," Resources Minister Madeleine King told Sky News on Friday.

"We know from what we've seen in reports and we will let that play out ... the U.S. has introduced a price floor for one particular project and that's the only one it has done it for, and that was a game-changer."

Australia has been positioning itself as a critical minerals alternative to China, the world's biggest producer, for use in the automotive and defence sectors.

It has said it would establish a A$1.2 billion ($840 million) strategic reserve of minerals that it believes is vulnerable to supply disruption.

The stockpile, which will prioritise antimony, gallium and rare earth elements, is expected to be ready by the second half of 2026.

The government is also considering setting a price floor to support local critical minerals projects as part of its strategy.

"We'll have a number of mechanisms, a floor price will be one through offtake agreements," King said. "We are determined to make sure there is value for taxpayer money in the reserve and in any floor price."

($1 = 1.4278 Australian dollars)

(Reporting by Christine Chen in Sydney; Editing by Thomas Derpinghaus)