U.S. security think tank urges Feds to get moving on rare earths strategy

posted on February 2, 2011 at 10:13 am

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Reprinted from Mineweb, 2/2/2011

A prestigious U.S. defense think tank says the country’s current dependence on Chinese rare earth metals will harm future U.S. military and economic needs.

By Dorothy Kosich

RENO, NV -

A report by the think tank the American Security Project has urged U.S. policymakers to develop a coherent, long-term strategy to reduce U.S. dependence on rare earth metals from China.

The report by American Security Project Research Assistant, Emily Coppel, released Tuesday, noted the United States has the “second-biggest deposit of rare earth minerals in the world. North American mines alone could supply U.S. rare earth needs.”

“The U.S. will need to develop new technologies and invest in mining operations to solve the long-term supply problem,” Coppel suggested. “In the short-term, stockpiling rare earths metals is one of the best ways to prepare for a future shortage until these new mines and technologies become available.”

The report also asserts that the first nation or defense company which is able to develop “an effective and reliable substitute for rare earths” or “new and more efficient technologies” will gain a competitive advantage.

“This is one area where the U.S. has a significant advantage, having the most robust defense industry in the world,” the report noted. “The U.S. needs to capitalize on this advantage and regain its position as a producer and supplier of rare earth metals.”

Coppel suggested the U.S. has gone from being the world’s top producer to being completely dependent to China for its REE supply.

“China’s dominance in the rare earths market will have profound implications for U.S. national security in the next couple of years,” she said. “As it is, some analysts already believe it is too late to avoid a global shortage of rare earth metals, placing the U.S. in great risk. The U.S. needs to take steps to remedy this situation.”

Noting the possibility that a shortage of rare earth metals could occur as early as 2012 or by 2014, the American Security Project advises, “This makes U.S. dependence on China for rare earths extremely problematic. U.S. dependence poses both economic and national security risks.”

American Security Project suggests U.S. reliance on technology for military applications is the biggest cause for concern when considering the implications of rare earth metals shortages. “Although the Pentagon claims that the U.S. only uses 5% of the world’s supply of rare earth metals for defense purposes, the fact is that the U.S. is completely reliant on China for the production of some of its most powerful weapons,” Coppel said.

Peter Leiter, a former trade advisor at the Department of Defense, observed, “The Pentagon has been incredibly negligent…there are plenty of early warning signs that China will use its leverage over these materials as a weapon.”

Meanwhile, the American Security Project cautioned that a shortage of rare earths will affect the strength and readiness of the U.S. military until current systems are no longer in operation. “However, it will also affect future production; newer systems rely just as much, if not more, on computers and other electronic equipment. The U.S. is developing itself into greater dependence on rare earth metals.”

In her analysis, Coppel noted the Organization for Economic Cooperation and Development has estimated that non-Chinese producers pay at least 31% more for raw rare earth metals than Chinese producers. As a result a black market in rare earth has developed with an estimated one-third of rare earths leaving China being smuggled out.

“Such market distortions cause the U.S. to pay more for weapons systems and platforms, a big concern during the economic crisis and tightening defense budget,” she observed.

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The American Security Project recommends the U.S. immediately stockpile rare earths, noting that Japan and South Korea already have strategic REE stockpiles. China will also begin stockpiling rare earths this year. “Even in the U.S., such stockpiles are not unprecedented,” Coppel said, adding that the U.S. used to stock rare earth metals in its National Defense Stockpile but sold them by 1998.

The project also recommends that new mines be developed. “There are several places where mining would be a worthwhile venture, including Thor Lake in Canada, which possibly contains one of the world’s largest deposits of rare earth metals.”

“Experts believe that North American mines alone could produce as much as 40,000 metric tons of rare earth metals per year, or double what the U.S. currently uses,” the report observed. “If the U.S. could develop these mines, it would have sufficient rare earths to supply its domestic needs, as well as enough to satisfy future growth in demand.”

The report also advocates international cooperative and dialogue should go a long way towards alleviating the shortage of rare earth metals. American Security Project noted the Pentagon has advocated greater cooperation among the governments, mine operators, and magnet producers who use rare earth metals.

The organization also called on the U.S. government to file a case against China in the World Trade Organization to prevent China from using illegal export quotas and manipulating the rare earths market.

Rare earth metals substitutes should also be developed by the U.S. although current research is being hampered by the lack of resources being invested in R&D. Meanwhile the Chinese government has spent millions on rare earth metal research and development.

“Developing new technologies that increase the efficiency of rare earth metals and that allow for better recycling of rare earths is another way for the U.S. to decrease its dependence on China,” the organization advised. American Security Project noted the U.S. Department of Energy is currently working on new recycling techniques for rare earths, which could “significantly lower world demand for newly extracted materials.”

The American Security Project Board of Directors includes U.S. Senator John Kerry of Massachusetts, several former U.S. senators, retired U.S. generals and admirals, and former U.S. governors. It is chaired by former U.S. presidential candidate and Senator Gary Hart of Colorado.

To read the report, “Rare Earth Metals and U.S. National Security”, go to www.americansecurityproject.org

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