Take closer look at rare earth elements (REE) that are not making their way out of Chinese waters to the rest of the world. Will this create a global squeeze on our world?
Rare earth elements (REE) are getting a lot of attention lately.
Amidst a dispute of territorial waters, China has threatened to block export of the crucial mineral products to Japan, according to the New York Times Sept. 22 issue. Importantly, no official ban has been announced, but Chinese trade ships have been held in port, and the move has stirred unease in the international community over a virtual Chinese monopoly on REE mining and materials.
China meets about 93 percent of global demand in REE materials. The elements are used in a startling array of goods and technologies including wind turbines, solar panels, rechargeable batteries, night vision goggles and a host of other technologies important to national security.
And with the growing demand for renewable energy, demand for REEs is expected to increase 34 percent by 2012.
That could cause a global squeeze in supply, as the world waits for more mines and processing facilities in the development pipeline.
The United States currently has no operable REE mines.
The issue has drawn attention beyond the mining community – in September, both the Senate and the House held hearings on the issue to discuss two bills that would change the REE landscape in the United States.
In the House, a bill has been fast-tracked through the Science and Technology Committee and passed the full House on Sept. 29. That bill establishes a rare earth materials program under the Department of Energy (DOE), and extends a loan guarantee program already administered under DOE to REE activities – but there are concerns about the efficacy of either measure, because the bill authorizes no additional funds for these activities.
Neither does the Senate bill, which also directs the Secretary of Energy to describe and facilitate the extension of loan guarantee programs to industry stakeholders.
“DOE does not have adequate funds to support the existing pipeline of renewable energy-related projects and proposals, much less an expanded pipeline,” said Peter Brehm, vice president of business development for renewable energy company Infinia Corp., in a hearing on that bill.
Both bills are meant to revitalize a long dormant REE industry and supply chain in the United States. The last REE mine in the United States, the Mountain Pass facility in California, closed in 2002.
Jump-Starts
But this isn’t the first time that the federal government has intervened to jump-start a lagging REE industry. For decades, U.S. policy on strategic minerals has been marked by cycles of passionate rhetoric followed by unraveling neglect. The first round of interest was stoked by wartime concerns in the post-World War II era, as disruptions in supply prompted the establishment of the National Security Resources Board and a Strategic Minerals Stockpile.
As soon as immediate concerns subsided, however, Congress abolished the board.
Resource concerns flared up again during Ronald Reagan’s presidential campaign of 1980, centering on speculated Cold War disruptions of materials and the international agreements in the Law of the Sea. Reagan was backed by the domestic mining industry during the election, but after a re-evaluation of the costs of a minerals program, and the severity of the security threat, the newly elected administration balked. No plan was established for the supply chain – and within its first term, the Reagan Administration began to authorize sales of those same minerals from the national security stockpile.
Now concerns are ripe again, and both sides of the political aisle are interested in federal support. But Congress has yet to extend authorizations that will increase and sustain needed R&D for the entire REE supply chain.
Rising prices for REE materials should encourage investments – some have estimated a three-fold increase in the last nine months. Responding to demand, mining corporations in Australia, Canada and the United States will be developing production in the next few years. But should prices drop again, there are concerns that U.S. operations would be out-priced by their ultra-cheap counter parts in China.
Despite the lack of progress on a Senate bill, the Senate hearing this September ended with a stark reminder of the stakes. “This is something that deserves the attention of the U.S. Congress,” stated Subcommittee on Energy Ranking Member Jim Risch (R-Idaho).
The previous day, the House had voted 348-78 to give President Obama the authority to impose import tariffs on Chinese goods subsidized by an undervalued currency. Analysts say the president is unlikely to wield such authority, but the vote raises speculation on the likelihood and impacts of a trade war between the two countries.
“If trade conflicts escalate between the Unites States and China … you could see further [REE] restraints on the part of the Chinese,” Sen. John McCain (R-Ariz.) concluded.
That’s a story line that the United States is not yet ready for.