MELBOURNE, Aug 5 (Reuters) - Australia is considering

setting a price floor to support critical minerals projects,

including rare earths, Resources Minister Madeleine King said,

in comments that led to a jump in share prices for

Australian-listed rare earths miners.

Australia has been positioning itself as an alternative

source of critical minerals to dominant producer China for use

in sectors such as the automotive industry and defence.

But prices for some metals like rare earths have been too

low to fund processing capacity in Western nations, meaning that

China has remained the world's dominant supplier.

"Pricing certainty means companies and investors are less

exposed to volatile markets and prices, which are opaque and

prone to manipulation," King said in a statement first reported

by the Australian newspaper on Monday evening.

Australia's policy of building a strategic reserve aims to

provide price certainty for emerging critical minerals projects

such as heavy rare earths, she said.

"Mechanisms for an appropriate price floor are under active

consideration," she added.

Shares in Australian producer Lynas Rare Earths ( LYSCF )

rallied more than 6% while shares in Iluka Resources ( ILKAF )

and Arafura Rare Earths ( ARAFF ) were both up more than 8% on

Tuesday.

U.S. rare earths producer MP Materials ( MP ) last month

unveiled a multibillion-dollar deal with the U.S. government to

boost output of rare earth magnets and help loosen China's grip

on the materials used to build weapons, electric vehicles and

many electronics.

That pricing deal, which offered a minimum price floor that

a buyer would pay, was set to have global implications, analysts

said at the time. The move was positive for producers, but could

increase costs for consumers such as automakers and in turn for

their customers, analysts said.