U.S. at China’s Mercy for Rare Earth Minerals

The United States is entirely dependent on Red China for rare earth minerals, as environmental zealots strangle the American rare earth manufacturing industry, threatening national security and prospective economic growth.
Rare earth minerals (REE) are critical to everything from military weapons, solar power, electric hybrid cars, wind turbines, computer monitors, plasma televisions, smartphones, other high-tech equipment and all renewable “green” energy.  The Department of Defense needs rare earth elements for a variety of applications including communication equipment, smart bombs, global positioning, and guidance and control systems.
Environmentally destructive Communist China has a monopoly on the global supply and production of rare earth and accounts for 97% of the rare earth metals market, though China doesn’t actually contain more than 30% of the world’s rare earths.
The Chinese have a policy of restricting and driving down the currency of exports while driving up the price of those exports.  Since 2005, the Chinese have reduced their allowed exports by 6%, yet in 2010 they reduced their exports quota by 40% and announced they will reduce their exports even further in 2011, according to a 2011 report by the US Geological Survey​ , citing figures from the China Customs Import and Export Tariff Department.  The declines in exports contributed to a surge in prices.
The Chinese have also temporarily shut down production of Batou Steel Rare Earth, their largest rare earth mine, admittedly to drive up prices to levels they believe are appropriate, artificially creating critical shortages of rare earths.  This was a wakeup call to Congress.
“China is spending more on the rare earth industry than the U.S. spent during World War II​,” said Stephen Leeb, chairman and chief investment officer of Leeb Capital Management and author of The Coming Economic Collapse.
“The basic point is that there is a war going on.  China has spent two-and-a-half trillion dollars on new energy.  That amount of money is about how much the U.S. spent during the Second World War​.  In their minds, they are at war,” said Leeb.
There was little incentive for development of deposits outside China because prices having been kept lower for years by a glut of Chinese production, said Jim Sims, spokesman of Molycorp, Inc, the only mine in America dedicated to rare earths located in Mountain Pass, Calif.
The National Center for Policy Analysis on Nov. 2 hosted its first conference in Washington addressing the direct link between the U.S. rare earths supply and the nation’s safety, as well as policy proposals to decrease our dependence on foreign suppliers and improve our domestic energy production.
The primary advantage that the U.S. possesses over our strongest competitors is our domestic resource base, according to the National Research Council.  Yet domestic mineral exploration has detonated during 1990s and 2000s because the Environmental Protection Agency​ is crippling U.S. manufacturing of REE.
The U.S. currently ranks the worst in the world among mining companies because it takes a new mine an average of seven to 10 years for production because of Environmental Protection Agency regulations.
Senator Lisa Murkowski (R.-Alaska), blasted the Environmental Protection Agency during the conference for “cranking out regulation after regulation,” obstructing rare earth mining in the United States, and called its proposed regulations a “train wreck.”
“When you look at the trends in our foreign mineral dependence, and when you look at the crush of new regulations that really threatens to set domestic mining back so very significantly, it’s hard to argue that everything is okay,” she said.
“This is not just a prospective situation, China is now exporting rare earths at such a low level that in 2011 this year, there will be global shortages of rare earth estimated between 25,000 and 30,000 tons, meaning by the end of this year there will be between 25,000 and 30,000 tons of demand for rare earth that are not likely to be met by Chinese exports,” Molycorp’s Sims said.
Congressman Doug Lamborn (R-Colo.), chairman of the House’s energy and mineral resources subcommittee and a member of the Armed Services Committee, is author of the National Strategic and Critical Minerals Policy Act that aims to identify the barriers preventing the U.S. from meeting its mineral needs with the metals and minerals mined on U.S. soil.
The development of our vast mineral supply would stimulate the U.S. economy, have an immediate positive effect on job creation, and is fundamental to a strong manufacturing sector, said Rep. Lamborn.  The U.S. will continue to shift jobs overseas, to China, and forfeit our economic competitiveness unless we take steps to develop our own mineral resources.
“The war for resources is a war for the ability to live a decent life in the 21st century.  Our children and grandchildren are going to suffer accordingly, and the American way of life is going to suffer,” said Leeb of Leeb Capital Management.
Rep. Mike Coffman (R.Colo.) is author of the RESTART (Rare Earths Supply-Chain Technology and Resources Transformation) Act, which would direct the Defense Logistics Agency​ to expedite a permanent permitting process.
The challenge will be in bringing the House and Senate together to agree on legislation addressing domestic minerals that will be signed into law by the President.
As President Obama pushes the green agenda as a way to champion energy independence and create jobs, the U.S. will grow increasingly energy dependent due to the lack of rare earth minerals necessary for all green energy technology.  Furthermore, the shift of scarce rare earths to green energy technologies threatens the available inventory of rare earth needed for critical military and aerospace technologies.

Rare Earths And America’s Green Future

Rare Earths And America’s Green Future

The closure of Bay Area-based solar panel maker Solyndra, a year after the company received federal stimulus funds of $535 million, has highlighted growing concerns about America’s long-term ability to compete with China in the green economy. A key component in the manufacture of green tech products, including solar panels and batteries for hybrid vehicles, are rare earth elements, 97 % of which are currently supplied by China. The significance of Beijing’s near-monopoly over this critical resource and how it affects American competitiveness in the industry is very interesting.

What exactly are rare earths and what is their history with regard to global manufacturing. What are the industries that rely most heavily on these elements?
Rare earths, or rare earth elements (REE) as they are often called, are a group of 17 uncommon minerals including lanthanum, cerium, neodymium, samarium, and europium. Although not exactly “rare,” as their name implies, the rare earth elements are not usually found in concentrated deposits but typically are mixed with other minerals (including radioactive substances), making them hard to find and extract. Each of these elements possesses distinctive characteristics that make them useful for various high-tech industries: lanthanum, for example, is used as a catalyst in petroleum refining, while both neodymium and samarium are used in high-temperature magnets.

What is the relationship between rare earths and the green economy? How are they used in the production of such things as photovoltaic cells and batteries for hybrid vehicles?
The rare earth elements have become especially important in the green energy economy for a number of critical applications. Because certain of the REE retain a magnetic charge even under high temperatures, they are highly prized for use in wind turbines and hybrid-electric and all-electric vehicle motors. Batteries made of lanthanum and nickel also retain their charge longer than conventional batteries, and so are ideal for such vehicles. It is estimated that the Toyota Prius, the world’s most popular hybrid, requires two pounds of neodymium and 20-30 pounds of lanthanum.

Are rare earths found more or less everywhere or, like oil, are they concentrated in certain regions of the world? Aside from China, who are the major players in the mining of rare earths?
The rare earths are dispersed in many locations around the world, including Australia, Brazil, China, India, Mongolia, Vietnam, and the United States. But concentrated deposits of these materials are rare. Extracting REE from composite ores is a hazardous process, involving the use of toxic chemicals and the disposal of toxic and radioactive wastes. China became a major REE producer not because it possesses the largest concentration of these materials but by employing low-cost production methods and overlooking environmental concerns – a move it now appears to regret, as the government is clamping down on small-scale, unregulated producers.
In the United States, a major REE concentration is located at Mountain Pass, Calif., near the Nevada border. A mine at Mountain Pass was once the world’s leading producer of REE, but it was closed in the 1990s due to rising costs and increasingly strict environmental regulation. The mine is now set to be reopened in 2012 following $500 million in new investment.

A recent article in the New York Times noted that China accounts for 97% of rare earths production. What impact does this have on the competitiveness of America’s green industries?
The United States, like Japan, will remain dependent on Chinese rare earths for some time to come. But it is not only rare earths on which the USA has become dependent — many of our solar panels, wind turbines, and other green devices are also supplied by China. President Obama has sought to promote the growth of green technology in the United States and secured billions of dollars in loans and grants for this purpose in the 2009 stimulus package, but most of those funds have now been spent and Congress appears unwilling to vote any additional funds. The USA still holds an advantage in some areas of green technology, but since the Chinese government is willing to pour a lot more money into this field than the American government, China will inevitably make greater strides in the years ahead.

This recent closure of Bay Area-based solar panel manufacturer Solyndra and the loss of some 1,100 jobs, despite a $535 million loan guarantee for the company last year as part of Pres. Obama’s stimulus program. How will China’s near-monopoly on the production of rare earths impinge on Obama’s “green jobs” strategy?
America’s dependence on Chinese rare earths is not, by itself, a cause for alarm, since new mines are being developed at Mountain Pass, Calif. and in Australia, India, Vietnam, and elsewhere. What is far more worrisome is China’s determination to take the lead in ALL facets of green energy technology, including wind, solar, and all-electric vehicles. Unless the United States recognizes the vital importance of retaining leadership in this field and allocates the funds needed to pursue cutting-edge technologies, we are destined to become a second-class industrial power while China will zoom ahead of us.