Group urges congressional action to boost domestic supply

Manuel Quinones, Greenwire

The U.S. Magnetic Materials Association, a key advocacy group in the debate over rare earths policy, is urging lawmakers to enact legislation to help restart the domestic supply chain.

In a letter this week, the group and other rare earth industry leaders urged lawmakers not to get complacent in light of President Obama’s request for World Trade Organization talks on Chinese export controls.

“It may take years for the WTO to issue a ruling and yet more time for China to exhaust the appeals process,” the letter said. “In the interim, more American jobs and technology will be shipped overseas.”

Even as companies around the world look to produce rare earths, which are essential in numerous technologies, China remains the dominant source. It is a leader in not only raw materials but also downstream products made from rare earths.

The letter added: “Even a successful WTO ruling will do nothing to aid the near-total reliance of U.S. companies on China for the technology and production facilities needed to utilize rare earth materials in manufacturing.”

China has strongly defended its export controls, saying it needs to protect the environment and secure scarce resources. Experts said the Chinese could become net rare earth importers in the next several years.

But trade attorney Terence Stewart said China follows a familiar pattern with many products and should protect its resources without hurting free trade. He said controls force prices to go up worldwide, allowing China to attract downstream users.

“This is the problem,” he said at a downtown Washington, D.C., briefing on the issue yesterday. “This is the reason that the countries are concerned. It is a broad-based problem.”

Expert Jeff Green, head of J.A. Green and Co., which represents companies in the field, has been critical of the lack of coordination in the government’s response.

“The executive branch has done their part in many respects by filing the WTO case,” he said in an interview. “In order to break the logjam with producers, the Congress is going to have to get involved to take us out of the last place in the world in terms of permitting mines and getting projects online.”

Green echoed mining industry arguments, recently displayed in a Washington Times op-ed by National Mining Association CEO Hal Quinn. The group has chafed at statistics putting the United States behind other mining economies in permitting and investment.

Quinn wrote, “If U.S. companies are to continue innovating and manufacturing the products critical to our nation’s economic future, they need reliable access to mineral raw materials.”

Last year, the House Natural Resources Committee approved legislation from Rep. Doug Lamborn (R-Colo.) and Chairman Doc Hastings (R-Wash.) to review U.S. mineral capabilities and obstacles to domestic production. A panel spokesman could not say when the bill would hit the House floor.

Several bills are pending in the Senate Energy and Natural Resources Committee, including a bipartisan proposal (S. 1113) by Sen. Lisa Murkowski (R-Alaska), the ranking member. Skeptics worry that it could lead to reforms in permitting that may soften environmental safeguards.

Murkowski “barely touches on the subject,” Green retorted at the briefing, praising the proposal’s effort to assess the permitting landscape. “And that bill has not been given an opportunity to get a markup. The politics of this, I think, make it extremely difficult.”