Since private capital won't fund mines that can be undercut by state-backed competitors like China, a government-guaranteed floor price is necessary. This de-risks investment in strategically vital but commercially unviable resources, effectively subsidizing national security through industrial policy.

Effective US industrial policy should foster competition among states rather than imposing top-down federal plans. By offering federal loans with equity kickers to states that opt-in to host critical industries like mining or chip fabs, the government can incentivize reshoring while allowing for a market-driven, locally-supported approach.

To counter China's dominance in rare earths, subsidies and tax credits are not enough. The US must also use tools like the Defense Production Act to create long-term, guaranteed demand contracts. This provides stability for private companies to withstand the price volatility caused by Chinese market manipulation and dumping.

To combat China's dominance in critical minerals, the Department of Energy is proactively funding dormant US resource companies. It provides a 'startup package' including an equity check, an expedited permit, and a guaranteed offtake agreement with a floor price to de-risk and fast-track projects.

The deal with rare-earths miner MP Materials goes beyond simple subsidies. The government has agreed to purchase 100% of the magnet offtake and has also guaranteed a profit margin for the company. This structure effectively removes all market risk and discipline for private investors.

To combat China's ability to dump products and destabilize markets, the US government should act as a buyer of last resort for critical materials like rare earths. This would create a strategic reserve, similar to the petroleum reserve, ensuring price stability for domestic investment and manufacturing.

China maintains dominance not by restricting supply, but by demonstrating its ability to flood the market at will. This uncertainty makes new Western mining projects financially non-viable without significant government support like price floors or guaranteed offtake agreements, effectively killing competition before it starts.

A large government commitment, like the $80 billion nuclear development plan with Westinghouse, does more than create a single customer. It acts as a powerful catalyst for the entire industry. This de-risks the supply chain, signals market viability, and attracts massive private capital (e.g., Brookfield), creating tailwinds for all players.

The key to breaking China's monopoly on rare earths isn't just sourcing minerals, but creating a commercially viable market. The US government is actively negotiating demand-side pricing deals with allied nations to counteract Chinese subsidies, recognizing that fixing the pricing mechanism is as critical as securing the physical supply.