RARE EARTHS: Lawmakers press Pentagon on supply report

Annie Snider and Manuel Quinones, Greenwire

A bipartisan group of lawmakers is urging the Pentagon to get its act together to make sure there won’t be a shortage of tools and weapons made with rare earth elements, which are found in numerous systems from lasers to precision-guided bombs.

In a strongly worded letter to Defense Secretary Leon Panetta, Rep. Mike Coffman (R-Colo.) led eight of his colleagues in demanding to know why a review on the issue was more than a month late. The 2011 Defense Authorization Act required DOD to produce a report by July 6 that included a supply chain assessment and plans to prevent shortages.

“While I am concerned that you failed to meet the deadline for this important report,” Coffman wrote, “I am even more disturbed that Department of Defense officials are providing conflicting reasons for this report’s tardiness, offering no insight into the report’s substantive content, and setting no firm alternative date for delivery.”

A spokeswoman for the Pentagon said the report is still in progress and officials will respond to Congress as appropriate.

For more than two years, Coffman and others on Capitol Hill have expressed concerns about how a supply shortage could affect the Defense Department. They also say that the missing report is only the starting point for an important conversation about how to ensure adequate supplies.

In the 2010 defense authorization, lawmakers required a study on the topic. That report was produced by the Government Accountability Office in April 2010 and concluded that DOD was dependent on foreign sources of rare earth materials, but had not taken department-wide action to address the reliance.

Congress waited to act, though, because the Pentagon said it was working on its own internal review of the issue, which it expected to be out in September 2010. However, that study has yet to be released, even after Congress tried to force the department’s hand by legally requiring it in the 2011 defense authorization bill.

The delay may be the result of increasing interest in the issue from across the military. Responsibility for the report was recently transferred between offices at the Pentagon, and DOD insiders say that military brass have also begun taking an interest in the topic because of the impact a supply crunch could have on the military’s ability to do its job.

“People in uniform have started to look at this in an operational manner,” said Jeffrey Green, a lobbyist who represents a group of companies involved with rare earth materials and is closely following the review process. “It’s not just, ‘Are we going to have these weapons today?’ it’s, ‘Would we be able to execute our war plans if our access were cut off for a length of time?'”

Last fall, DOD officials tried to dial down concern on the topic, but Green said it’s possible the report is delayed because DOD is shifting its stance on the issue.

Coffman and his colleagues are tired of waiting, though, and are now demanding that the Pentagon produce an interim report by Aug. 19, estimating the supply and demand for each rare earth element and including draft recommendations.

“Members of Congress need to understand defense demand for, and the supply-chain of, rare earth materials in order to help ensure availability of needed materials,” the lawmakers wrote.

That help could come in giving DOD the go-ahead to use some of its unique abilities to spur an industry deemed critical to national defense. Those abilities include the authority to enter into long-term purchase agreements, the ability to invest directly in a sector, and the right to indemnify a producer against lawsuits related to intellectual property violations if a company’s work is a vital issue of national security.

The rush for rare earth elements has intensified since China, the world’s top producer, announced export restrictions in the name of environmental protection and promotion of its local economy. The recent announcement of new exports did little to calm concerns.

Experts in the field say the United States has not only lost its edge with mining rare earths, but also fallen behind when it comes to downstream production of products, like magnets, that use the group of elements. The military is heavily dependent on such magnets for everything from stealth technology to cruise missiles. Coffman, who sits on both the House Natural Resources and Armed Services committees, successfully attached a provision to next year’s defense bill calling for DOD’s logistics agency to make a plan for building a defense stockpile of rare earth elements — including oxides, metals, alloys and magnets.

In separate action, the House Natural Resources Committee approved legislation to address the domestic supply of rare earths and a host of other so-called critical materials. Bills are also pending in the Senate