Rare Earth Metals

[MWM]

The Pentagon Moves to Erase China's Rare Earth Advantage

Comment Posted by Adam English - Wednesday, November 7th, 2012

The Pentagon is finally moving to close a glaring long-term logistical risk for military equipment and technology.
Until around 1990, the U.S.A. was the world leader in producing and refining rare earth elements (REEs). Within a decade it became reliant on China for more than 90% of its use.
Congress required the Pentagon to examine the use of rare earth materials in defense applications, determine if non-U.S. supplies might be disrupted and suggest ways to ensure long-term availability last year. The Pentagon is also required to secure an assured source of supply by 2015.
That has led the Pentagon to team up with the private sector, namely Toyota Motor Corp., to break China's stranglehold on the world's supply of critical REEs.
“This announcement is great news for Alaska and for the United States, where our need for a secure and domestic supply of rare earth elements is an urgent challenge,” said U.S. Sen. Lisa Murkowski.
In particular, the Pentagon is focusing on North American mines with high concentrations of the heavier elements: dysprosium, terbium, and yttrium. The mines, run by Canada's Ucore Rare Metals Inc. and Matamec Explorations Inc. may lead non-Chinese projects in expanding production of heavy REEs by 60% by the end of the decade.
In addition to the work with the rare earth mines, the Department of Defense appears to be working on a non-Chinese supply chain for high-performance magnets used in weapons systems.
In October, the Pentagon also chose Canadian magnet maker Great Western Minerals Group to study the supply of yttrium oxide, which is used in jet engines, last month as well.
U.S. magnet maker Thomas & Skinner Inc will work with the Pentagon in a study of neodymium-iron-boron magnets, which will lose their patent protection under Hitachi Ltd. in 2014.
“The Department of Defense’s investment... represents a significant step toward recapturing the rare earths technological lead surrendered to China decades ago,” said Ucore President and CEO Jim McKenzie.
The development of a supply chain of the critical materials for advanced weaponry couldn't come sooner. China has shown an increasing enthusiasm for manipulating the REE market.
In 2010, China placed export quotas on REEs to bolster prices and protect their national demand for the materials. Due to the flagging global economy, shortages have not been experienced yet. However, with ever-increasing demand and inelastic supply, it is only a matter of time.
China has also been willing to flex its materials advantage in its quarrels with Japan. In retaliation for Japan’s arrest of a Chinese fishing boat captain in contested waters, China unofficially halted shipments of rare earth supplies to Japan for over a month.
It claimed that the 32 companies with REE export licenses, 10 of which are foreign owned, decided on their own to stop shipments due to anti-Japanese sentiment.
With tensions between China and Japan continuing to simmer and long-term strategic positions between the China and the USA at odds in the Pacific, the Pentagon cannot move fast enough.