Rare Earth Materials Facing Supply Chain Crisis

U.S. government says that rebuilding of a competitive domestic supply chain could take up to 15 years.

The Government Accountability Office (GAO), on April 14, issued a report that warns of the impending rare earths crisis, especially as it relates to homeland security and the national defense.

The report confirms:

  • That while rare earth deposits are geographically diverse, the United States relies on Chinese sources for finished rare earth materials
  • That while the United States once dominated all stages of the rare earth supply chain, most current processing is performed in China, giving it dominance in worldwide supply and pricing.
  • The rebuilding of a competitive domestic supply chain could take up to 15 years and will require significant capital investment and new technology development.
  • The Department of Defense is currently evaluating the dependence of multiple defense systems and components on rare earth materials provided by lower tier foreign suppliers.
    These defense systems and components will continue to rely on these foreign sources based on their life cycles and lack of effective substitutes.

The United States Magnet Materials Association (USMMA), a coalition of companies representing domestic high performance magnet producers and suppliers, points out that that the United States is today totally dependent on foreign sources for rare earth materials, elements essential to numerous renewable energy and defense systems including wind turbines, hybrid-electric batteries, computer hard drives and precision-guided munitions. China provides over 97% of the world's rare earth raw materials and dominates the world's rare earth refining, alloying and manufacturing.

Currently, there is one United States rare earth mine and processing facility (which is not mining), a major United States Geological Survey-validated deposit of rare earths in Idaho, two small alloying facilities and one significant rare earth magnet producer, making the nations supply-chain for critical renewable energy and defense systems nearly non-existent and leaving the United States dangerously vulnerable to potentially unreliable foreign nations, USMMA says.

The association group believes that urgent and collective action is needed by the federal government in order to head off the impending rare earth crisis. It is estimated that Chinese domestic consumption of rare earth materials will outpace Chinese domestic supply between 2012-2015. With a 3-5 year timeline to reestablish a domestic rare-earth supply-chain, the United States is already in a "silent crisis," the group says.

Colorado Congressman Mike Coffman recently introduced the Rare Earth Supply-Chain Technology and Resource Transformation (RESTART) Act of 2010, H.R. 4866, to reestablish competitive domestic rare earths mineral production, processing, refining, purification, and metals production industries to support the growth of green job technology and manufacturing as well as the nation's defense industry. The legislation, endorsed by USMMA, would create a "whole-of-government" approach involving the U.S. Departments of Commerce, Energy, State, and Defense, Office of the U.S. Trade Representative, and Office of Science and Technology Policy within the Executive Office of the President.

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