China has recently announced cutbacks in rare earth exports to other nations, which has caused quite a stir in the international markets. This is because China produces 90% of rare earths, and its factories process most of the rare earths mined into usable compounds.
The United States requires quite a bit of rare earths for military applications. With 1,000 bases in over 100 countries, the U.S.military is one of the largest users of rare earth materials for precision-guided bombs and other weaponry. The U.S. is, in particular, susceptible to rare earth hoarding by the Chinese, because we have ignored our own rare earth production and allowed the Chinese to gain strong international footholds in both rare earth mining and production.
Japan and China have been sparring over rare earths, mainly because Japan has a strong technology economy which requires many of those elements, while China views domestic production and refining as the property of the Chinese state, not of international markets. The reduction in rare earth exports puts Japan in a precarious position economically, as it relies on technology exports to fuel its economy. As an example, the Toyota Prius uses 25 pounds of rare earths to power its hybrid engine technology. Without rare earths, Toyota and other manufacturers cannot produce the hybrid cars that the world reportedly wants.
The United States does not possess the separation and production facilities needed to complete the rare earth supply chain; thus any current rare earth mining requires shipping those minerals to China for final processing before returning to the U.S. for incorporation into military and technology applications. This is both economically vulnerable and more costly than developing a domestic rare earth supply chain.
As a consequence of the fact that the U.S. has largely ignored developing rare earth markets domestically and has allowed China to monopolize them, the U.S. Congress has intiated several pieces of legislation aimed at closing the gap with the Chinese. One of these is the “RESTART” initiative, which is aimed at building a domestic rare earth supply chain that incorporates not only exploration and mining, but also the various stages of production required to manufacture a finished rare earth element product that industries such as auto, defense, and green can use.
The purpose of the bill is “to reestablish a competitive domestic rare earths minerals production industry; a domestic rare earth processing, refining, purification, and metals production industry; a domestic rare earth metals alloying industry; and a domestic rare earth-based magnet production industry and supply chain in the United States.”
Another piece of legislation passed by the House (H.R. 5136) calls for the Secretary of Defense to “assess the rare earth material supply chain to determine if any of the materials were strategic or critical to national security.” The bill required a report on rare earth sustainability to be completed within 180 days. The report had to state whether rare earths were strategic, and if so, to develop a plan for long term availability of a domestic supply of rare earths by December 2015.
Read the entire article at Seeking Alpha
By – Robert Kientz