China's export and tariff rule changes for rare earth materials are a wakeup call: The U.S. must fast-track its policy on exploration, development and commercialization.
The House of Representatives has approved H.R. 6160, the Rare Earths and Critical Materials Revitalization Act of 2010, authorizing development of a domestic rare earth materials program to address short-term scarcities and ensure long-term supply for the nation’s security, economic and industrial requirements. The nod comes none too soon.
According to a Bloomberg report, China in July reduced rare earth export quotas for the rest of the year by 72 percent, inflating prices more than sixfold for some rare earth materials vital to the energy, military, electronics and manufacturing sectors.
The U.S. Government Accountability Office, in a briefing to congressional committees, reported on "Rare Earth Materials in the Defense Supply Chain." The GAO warned that while rare earth ore deposits are geographically diverse, current capabilities to process rare earth metals into finished materials are limited mostly to Chinese sources. The United States can no longer claim a role in all stages of the supply chain for materials based on the rare earths. China's dominance not only has implications for global availability and pricing of rare earth-based materials but also could jeopardize U.S. defense readiness.
In a concern closer to the industry, ceding control of both magnetic polarities of the world's magnets to China—magnets being the key electronic components that use rare earth elements—could hold consequences for producers of electronics.
The GAO report states that the fate of materials based on such elements as neodymium, dysprosium and terbium is largely in the hands of Chinese suppliers. China has adopted domestic production quotas on rare earth materials while slashing export quotas. It has increased export taxes on all rare earth materials to a range of 15 to 25 percent.
Still think China's industrial ambitions are purely benevolent?
Rebuilding the U.S. supply chain for rare earth materials to a level that will ensure sustainability could take 15 years. Development is dependent on new technologies that some experts believe will not be available on a production scale for up to four years and will require high startup costs. There is also an intellectual property rights issue: Japanese and other foreign companies own key technology patents for manufacturing neodymium iron boron magnets, some of which do not expire until 2014.
One hopeful sign is a recent contract between Boeing and U.S. Rare Earths Inc. under which Boeing will use a version of its remote sensing technology to identify and confirm rare earth deposits at sites for which USRE owns the mineral rights. USRE will use the Boeing findings to expand its exploration and incorporate large-scale mapping of confirmed and suspected rare earth deposits.
USRE holds the rights to significant deposits of rare earth elements in the United States, according to the U.S. Geological Survey.
China's export and tariff rule changes for the rare earths are a wakeup call for nations that have let their own capabilities lapse. The U.S. government must fast-track its policy on rare earth mineral exploration, development and commercialization.
The rare earths are critical ground.