Lynas Rare Earths Ltd (LYC.AU) shares plummeted 5.13% during intraday trading on Friday, reflecting a sharp decline in investor sentiment towards the rare earths sector.

The sell-off follows reports that the U.S. administration is stepping back from plans to guarantee minimum prices for critical minerals projects. This policy shift marks a reversal from previous commitments and suggests reduced government support for non-Chinese rare earth producers, which had viewed price floors as a crucial tool to compete against state-backed Chinese competitors.

Market analysts noted the reaction may have been overdone, emphasizing that the U.S. is still supporting the development of an ex-China critical minerals supply chain through other methods. However, the immediate market response highlighted investor concerns about the financial viability of rare earth projects without such price support mechanisms.