What is essential to modern energy production and management including oil-and-gas development, wind and solar, and LED lights, and has rare bipartisan support in both houses of Congress?
The answer is something “rare.” Something that is currently used in almost everything modern, but that is abundant and recoverable in very few places on the planet—hence the “rare” moniker. Something that China has in abundance and that they are using as an economic weapon against the rest of the world—much like OPEC uses oil. And, this something is also found in the U.S., which could give us a competitive advantage in the global economy.
Have you guessed it? “Rare” was a big clue.
I am talking about Rare Earth Elements (REEs), many of which are classified by the Department of Defense as Critical Minerals.
REEs are found in almost all massive rock formations—though their concentrations range from 10 to a few hundred parts per million by weight, which makes them difficult to extract. There are 17 different REEs with names ending in “ium” such as: dysprosium, yttrium, neodymium, terbium, cerium, and europium—just to name a few.
While most people don’t give REEs a thought, we all use them in our modern lives as they are an essential part of what makes cell phones, flat screens, and computer chips work. But REEs are not just about convenience and luxury. They are in every modern vehicle from a Prius to a Ford F-150. They enable miniaturization—making things fast and light.
According to the Wall Street Journal (WSJ), “A Department of Energy report in 2010 noted that several minerals vital to clean-energy applications, including neodymium and dysprosium, face ‘critical’ supply questions over the next 15 years.” A 2011 PricewaterhouseCoopers report revealed that 73 percent of CEOs in the automotive industry have businesses that face minerals and metals scarcity. The same problem applies to 78 percent of high-tech industry CEOs and 50 percent of aviation CEOs.
But, perhaps, most importantly, REEs are playing an ever-increasing role in vital defense technologies. REEs are used in stealth radar-evading technology, in targeting mechanisms for missiles and temperature-resistant magnets, and materials used in jet engines and aerofoil components in manned aircraft and, increasingly, in unmanned drones. The U.S. Department of Defense recently released findings from the “Strategic and Critical Materials 2013 Report on Stockpile Requirements,” which identified 23 critical minerals, of which shortages are likely. They include several vital to defense technologies, such as search and navigation equipment, missiles, and space vehicles. Such shortages will limit our ability to produce the defense systems of the future. It is frightening to realize that the Chinese do not have this worry.
The U.S. is one of only a few countries with known recoverable REE deposits (with approximately 13 percent of the world’s total known reserves), and we have more commodity minerals and metals than any other country. Yet, today, less than half the minerals U.S. manufacturers use comes from domestically mined resources. More specifically, China currently has a near-monopoly on the production of REEs—generally supplying approximately 85 percent of the world’s current REE supply and 100 percent of several REEs. Additionally, in recent years, China has imposed quotas on exports to protect its need for REEs and to compel high-tech companies to establish production in China by giving them the benefit of lower prices and guaranteed supply. In US News, Eric Hannis, senior fellow in defense studies at the American Foreign Policy Council in Washington, DC, addressed companies’ increasing hesitancy to move production to mainland China: “the need to gain a cost-effective, guaranteed supply of rare earths means that many have been forced to make a ‘deal with the devil.’”
Instead of easing the mining regulatory framework to help promote domestic REE production, the Obama administration engaged in the governmental form of a temper tantrum. It joined countries without the quality resources found in the U.S. and lodged a complaint with the World Trade Organization (WTO), claiming that Beijing is unfairly choking off exports of the commodities to benefit its domestic industries. (Imagine that a government would make policy that was designed to benefit its own? Perhaps the White House should try that.) In fact, if the WTO initiative is successful and China is forced to reverse its current policy of keeping the majority of its REEs in-country for its own use, we might end up encouraging them to flood global markets with REEs again, driving the price down—as they did in the 80s and 90s. By joining in the WTO case, the Administration could make it very difficult for U.S. projects to get up and running and stay competitive—and this could be their plan. Gratefully, the very low cost of production expected at Molycorp’s Mountain Pass mine provides some economic cushion.
The WSJ reports that the U.S. was once self-sufficient in REE production but ceded the market to China over the past two decades, “partly because of environmental concerns over energy-intensive mining and partly because of falling global demand and prices,” as a result of China dumping huge quantities of REEs onto the world market.
REEs in China were first discovered in 1927, with the Bayan Obo mine open in 1950. The U.S. dominated global production from the 60s and into the 80s with light and heavy REE production at Mountain Pass, but China then launched a dedicated campaign to dominate the REE supply chain. In 1986, Deng Xiaoping, a Chinese politician and reformist leader of the Communist Party who, after Mao’s death, led his country towards a market economy, established the National High Technology Research and Development Program. His goal was to help China “achieve breakthroughs in key technical fields that concern the national economic lifeline and national security, and to achieve leapfrog development in key high-tech fields in which China enjoys relative advantages.” In 1992, Xiaoping boldly proclaimed: the “Middle East has oil, China has rare earths.”
This brings us to today.
REEs have gone “from being practically unheard of a few years ago to being one of the most-talked-about commodities,” according to the WSJ. There has been growing concern in the U.S. regarding our reliance on China for our REE needs, which has resulted in unusual bipartisan support for increased domestic REE production.
Regarding the U.S. position in the international REE arena, Hannis states: “In much the same way that we should strive for independence from Middle Eastern oil, the United States now needs to make ‘rare earth independence’ from China a key priority of government. After all, the nation that supplies our rare earths shares one key similarity to the region that supplies much of our oil: neither are getting friendlier to America.”
Apparently Congress has gotten the message. Last year, Rep. Doc Hastings, (R-WA), Chairman of the House Natural Resources Committee, said: “Just like the United States’ dependence on foreign oil causes pain at the pump, Americans will soon feel the impact of China’s monopoly on the rare-earth element market.”
In September, the House of Representatives passed, with bipartisan support, HR 761: the National Strategic and Critical Minerals Production Act of 2013, with the goal of allowing for the more efficient development of the U.S.’s $6.2 trillion worth of minerals and metals without minimizing or hindering the environmental review process.
On October 29, 17 Senators (nine Republicans and eight Democrats) introduced similar legislation: The Critical Minerals Policy Act of 2013 to “help reduce the nation’s dependence on foreign suppliers.” According to the Background and Section-by-Section Summary: “The legislation directs the Secretary of Interior to establish a list of minerals critical to the U.S. economy and, pursuant to those designations, outlines a comprehensive set of policies that will bolster critical mineral production, expand manufacturing, and promote recycling and alternatives—all while maintaining strong environmental protections.”
The Critical Minerals Policy Act of 2013 has widespread industry support—even though it calls for yet another stall-tactic study, when 23 studies have already determined that we have a crisis and an emergency.
Hal Quinn, National Mining Association CEO, heralded the bill as “a welcome recognition of the urgent need to facilitate the development of American minerals.” He observed that the measure would analyze the “impediments to domestic minerals mining that hamper the prospects of a sustainable U.S. manufacturing renaissance. It is widely understood that the slow and inefficient permitting system in the U.S. poses the largest impediment to unlocking the full value of American minerals.”
Likewise, the Women’s Mining Coalition statement reads: “this bill will provide high-paying, long-term employment for many Americans, while also providing world-respected environmental management practices and implementation.”
The House bill passed with the support of 100 percent of the Republicans and many Democrats. The same can be assumed for the Senate version. Senate Democrats need to hear from their constituents, they need to know that you support The Critical Minerals Policy Act of 2013. Please call your Senator and ask for his or her support.
Right now, there are only two non-Chinese suppliers for REEs (Molycorp in California and Lynas Corp. in Australia)—but there are several projects, such as Rare Elements Resources’ “Bear Lodge,” in development in the U.S. that could be providing national and economic security within a few years with the passage of The Critical Minerals Policy Act of 2013. America’s REE resources and potential production and refining give us a strong global advantage—but we must accelerate and streamline the permitting process. It is time for our government to make policy that is designed to benefit America.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.
Read more from Marita at these great sites:
