ARU Base Price vs. MP Materials Arbitrage - A NEW WESTERN PRICE FLOOR - $110

ARU Base Price vs. MP Materials Arbitrage

The recent agreement between MP Materials and the U.S. Department of Defence (DoD) includes a price floor of $110 per kilogram for neodymium-praseodymium (NdPr), specifically in the form of NdPr oxide.This pricing arrangement is part of a 10-year offtake agreement, ensuring stable revenue for MP Materials as it expands its operations.

ARU will be selling Rare Earth Oxide.

Although this is not a direct relationship and is more complex in regards to a baseline floor pricing, I would like to be a fly on the wall inside NdPr contract negotiating room going forward - The US government have moved to an Ex-China Pricing strategy.

Given the Trump administration’s announcement and the $110/kg NdPr floor price for U.S. defence procurement: if ARU (Arafura) has a base price below that, and MP Materials can buy at $105/kg (again not that simple - but used to explain my view), they could arbitrage the spread—selling into the DoD floor and pocketing pricing.

Therefore the $110, becomes a genuine and serious floor. With the U.S. DoD now underwriting a $110/kg floor for NdPr, it raises the question—does ARU have a defensible base price that reflects strategic value, or are we at risk of being arbitraged by downstream players like MP Materials who can buy at market and sell into the western market floor?

If ARU’s pricing isn’t calibrated to reflect geopolitical premiums, then it’s not just a missed margin—it’s a missed signal to the market.

Such a timely announcement out of the US overnight.



The broader market somewhat agrees with my view. Watch this space. National security and productivity is being prioritised, that is very evident.