4. Favorable Production Contract Terms
First, only their smallest contract has a floor & ceiling clause, but even it is based mostly on market prices. Their newest larger contracts only have a floor clause.
From the 1/24/11 MCP Form S-1 page 11:
Because of market demand they were able to aggressively negotiate and protect themselves without giving up on the upside. That's a strong market. Also, none of their new doubled production has a contract at this point. When future contracts get announced one can expect the same market based prices, a protective floor clause, and no limiting ceiling. This means that Molycorp will be able to profit from rising spot prices, and still be protected on the downside.