U.S. Government Government Departments Express Interest in Establishing Inter-Agency Working Group on Rare Earths

Sean Berry, Metal Pages

The U.S. Department of Commerce and the Office of Science and Technology Policy have expressed an interest in setting up an inter-agency working group to tackle the developing rare earth supply crisis, according to Jeff Green, president of Washington D.C.-based lobby group J.A. Green & Co LLC.

The possibility of a common approach by government departments to the rare earths supply issue facing the U.S. follows a proposal submitted by The United States Magnet Materials Association (USMMA) last month.

Under the proposal, the association suggested a six-point plan that would take a “whole-of-government” approach to the issue.“The response has so far been positive. The Department of Commerce has already responded and has been supportive of some elements of the plan,” Green, who is working with the USMMA, told Metal-Pages.

“They have expressed an interest in establishing an inter-agency working group. We now have senior level people recognising that this is an issue and that’s a positive step forward.”

The plan comes in response to concerns that the U.S. is failing to develop a domestic rare earths supply chain in a bid to reduce the country’s reliance on overseas raw materials and finished products. China currently produces about 96.8% of the world’s total estimated output of rare earths and is the world’s largest consumer of rare earths, accounting for about 60% of demand.

The first part of the USMMA plan suggests establishing a baseline of studies on rare earth usage by affected government agencies such as the Department of Defense (DoD) and Department of Energy (DoE). The plan also calls for obtaining the raw material necessary to resume defense critical rare earth manufacturing through a programme where the Defense National Stockpile Center acquires existing rare earth supplies, while rebuilding the domestic supply chain over the next 5 years.

Green said that the important first step is getting support for a common approach across several government agencies, which would also include the State Department and the U.S. Trade Representative.

The USMMA has also suggested a $2 billion DoE led grant and loan guarantee programme to support the reestablishment of mining and refining operations in the US that would support the domestic supply-chain, while also setting up a Numerous Defense Production Act programme ($10-50M each) to support the establishment of domestic manufacturing capability in critical segments of the rare earth market.

Support of innovation, training and workforce development to support the rare earth element supply chain is also required, along with a government-initiated action to investigate potential foreign government market manipulation or dumping in the rare earths market, it added.

Rare earths are essential raw materials used in nearly all sustainable energy technologies and a wide spectrum of defense applications.

For example, tellurium is a metal used in infra-red sensors and increasingly in military applications such as heat seeking missiles.
With no other viable sources of rare earths currently available outside of China, plans by the Chinese government to tighten control of the country’s rare earth production and exports could lead to a supply crimp as demand increases, according to some market participants.

“In terms of neodymium magnets, the U.S. is entirely dependent on oversees suppliers. As the use of these increase as weapons become more electronic and light weight, so does our dependence on these oversees suppliers,” said Ed Richardson, vice president of Indianapolis-based magnet manufacturer Thomas & Skinner, Inc.  “This situation is also not necessarily unique to the magnet industry. Ultimately, we have to develop a complete value-chain from mining and refining right through to the finishing capabilities. It’s an expensive proposition, but we really need to head in that direction.”

USMMA estimates that Chinese domestic consumption of rare earth materials will outpace Chinese domestic supply as early as 2012.

Some rare earth market participants have called on the U.S. government to look at creating an environment in the country where more private capital is invested in rare earth mines and other production facilities.

This could be achieved through government tenders for the supply of certain strategic metals, which would help the development of a supply chain, they believe.