U.S. Rare Earth Minerals Stockpile?

[buglerbilly]

Bill Calls for Establishment of First U.S. Rare Earth Minerals Stockpile

By JOHN T. BENNETT

Published: 18 Mar 2010 18:04

U.S. Rep. Mike Coffman, R-Colo., has introduced a bill that would require the defense secretary and other federal officials to revive America's rare earth minerals industry and supplies while also calling for creation of the nation's first stockpile of the key materials.

Rare earth minerals "should qualify as materials either strategic or critical to national security," the legislation states.

Officials in Washington "should take measures to reintroduce a globally competitive domestic strategic materials industry that is self-sufficient in the United States domestic market with multiple sources of mining, processing, alloying and manufacturing," the bill states.

China now controls nearly 100 percent of the global supply and production of this family of elements, which is used to make crucial components in a list of American weapon systems, including jet engine turbines, unmanned planes, electric motors, radars, night-vision goggles, missiles, electronics and other items. The United States imports 100 percent of the rare earths it needs, according to the U.S. Geological Survey (USGS).

China's control, experts say, allows Beijing to dictate rare earths prices and global availability.

One industry source said March 17 that Chinese officials have decided to cap rare earth production for two years.

Most notably, the bill would require the defense secretary to begin purchasing rare earth minerals deemed critical to national security, "and place such rare earth materials in the national stockpile" within one year of enactment of the legislation.

The Coffman plan would make the Defense National Stockpile Center the administrator of the envisioned rare earths stockpile.

Chinese Dominance

Acknowledging China's dominance of the global supply and market, the House Armed Services Committee member's bill would allow the stockpile director to purchase minerals directly from the Asian giant "for five years" after its enactment.

Industry officials and analysts say the United States has never included rare earths in its national stockpile.

"There is an urgent need to identify the current global market situation regarding rare earth materials, the strategic value placed on them by foreign nations including China, and the Department of Defense's and domestic manufacturing industry's supply-chain vulnerability related to rare earths and end items containing rare earths," the legislation states.

Further, the legislation seeks no specific federal funding levels. It does include a section that would declare it the "sense of Congress" that to rebuild a domestic rare earths industry, the Defense, Commerce, Energy and Interior departments should apply annual funding toward "academic institutions, government laboratories, corporate research and development, not-for-profit research and development and industry associations" for "innovation, training and workforce development."

An industry source told Defense News that mining officials and advocates opted for "a policy bill" instead of one seeking large amounts of dollars for rare earths projects largely because of a calculation the American citizenry would be outraged by such a move during the ongoing fiscal slowdown.

Dudley Kingsnorth, of the Industrial Minerals Co. of Australia, said March 17 at a conference in Washington that by 2015, the world will need about 210,000 tons of rare earths. He expects China will churn out about 170,000 tons, leaving it up to the rest of the world to supply the remainder. Kingsnorth said he sees the United States, India and other nations taking the requisite steps to ensure that happens.

The one American rare earths firm, Molycorp Minerals, is working to upgrade and get its Mountain Pass, Calif., facility back online. The company's goal is to produce 20,000 tons of rare earths by 2012.

The bill calls for steps to improve market conditions once its goal of a revived U.S. rare earths industry is achieved, proposing to have the U.S. Trade Representative launch a review of international trade practices.

Coffman also wants several federal agencies, including the Defense Department, to issue guidance on how private-sector firms might obtain loan guarantees "to support the re-establishment of mining, refining, alloying and manufacturing operations in the United States that will support the domestic defense supply chain."

The legislation also would require the secretaries of defense, commerce, energy, interior and state to name assistant secretary-level individuals from their agencies. Those five individuals would compose a special interagency working group.

Coffman's bill also calls for those five departments to work on "an assessment of the rare earth supply chain and to determine which rare earth elements are critical to national and economic security."

DoD's Work

DoD already is working on several rare earth minerals studies, including one looking at rare earths in 24 weapons, and another to examine the national security implications of China's dominance of the global supply. The DoD study of rare earths in U.S. weapons should be finished in September, said Rick Lowden, from the Pentagon's industrial policy shop.

Coffman introduced his bill just hours after a U.S. Energy Department official announced that agency will fashion the nation's first rare earths strategic plan.

While many U.S. mining industry officials and advocates, including Coffman, are raising loud alarms about China's rare earths dominance, others say their worries are self-interested, profit-driven and overwrought.

The China situation "is not cause for all this alarm," Noah Lehrman, of the U.K.-based Minor Metals Trade Association, said during the same conference.

Several industry officials who spoke at the conference said they expect "market forces" will drive Washington and several other Western nations to build up an alternative to Beijing's rare earths dominance.

Within the rare earths sector, "the world is not ending," said Constantine Karayannopoulos of Neo Materials Technologies, adding he sees "no looming shortages" ahead.

What's more, Karayannopoulos told the conference, if U.S. private mining firms want to get into the rare earths business, they probably can.

"Just have J.P. Morgan write you a check for $400,000 or $500,000," he said. "It's happened before; it'll happen again."

[buglerbilly]

U.S. Energy Dept. to Craft First Rare Earths Strategic Plan

By JOHN T. BENNETT

Published: 17 Mar 2010 14:44

The U.S. Department of Energy plans to construct its first strategic plan to guide Washington policy on rare earth minerals, a DoE official announced March 17.

"It's time we all pull together a real strategic vision on this," said David Sandalow, assistant energy secretary for policy and international affairs.

Sandalow said the DoE study will build on other rare earth analyses being conducted by the Pentagon and other federal entities.

DoD is working on several rare earth minerals studies, including one looking at rare earths in 24 weapons, and another to examine the national-security implications of China's dominance of the global supply. The DoD study of rare earths in U.S. weapons should be finished in September, said Rick Lowden from the Pentagon's industrial policy shop.

"DoD absolutely will be involved" in the Energy strategic plan, Sandalow said during a conference in Washington.

He said DoE has not yet established a timeline for fashioning the plan, but he vowed the department will move "with a sense of urgency."

Announcement of the strategic plan comes after U.S. mineral industry officials and advocates raised alarms that the Energy Department has done too little on the rare earths issue, and especially the nation's dependence on China for these minerals.

Mark Smith, CEO of Molycorp Minerals, called the announcement "the best news I've heard in a year and a half out of DoE."

The list of U.S. military gear that uses rare earths includes jet engines, unmanned aircraft, electric motors, radars, electronics, communications gear, night-vision goggles, missiles and more, according to DoD and industry officials.

[buglerbilly]

GAO: Reviving U.S. Rare Earths Supply a 15-Year Chore

By JOHN T. BENNETT

Published: 14 Apr 2010 15:22

Rebuilding a viable U.S.-only supply chain of rare earth minerals could take 15 years, according to a U.S. Government Accountability Office (GAO) report that underscores China's global dominance over production and price of the family of elements used in many high-tech military and commercial systems.

Eventually rebuilding America's rare earths supply chain depends on several issues, GAO found, including securing the large amounts of capital to restore production facilities, developing new technologies and obtaining patents now held by foreign firms.

"The United States has the expertise, but lacks the manufacturing assets and facilities to refine oxides to metals," states the study. "Refined metal is almost exclusively available from China."

The study notes several Defense Department entities are in the early stages of assessing the U.S. military's reliance on rare earths and Chinese sources for them. It adds that some U.S. services and military components are taking steps to pare their dependence and to broaden their supplier base of the rare earths.

Colorado-based Molycorp Minerals is working to raise enough capital to bring its Mountain Pass, Calif., rare earths mining and production facility back online. By the middle of this decade, the company hopes to reach that goal. Industry officials and analysts say this will substantially, but not completely, reduce America's reliance on Chinese rare earths supplies, especially for defense systems.

The auditors found, however, that the Mountain Pass site does not contain certain rare earths that can withstand extremely high temperatures. These rare earths are the ones used in the permanent magnets used in many U.S. defense systems.

That California site is not the lone rare earths deposit in the United States. Other deposits are in Idaho, Montana, Colorado, Missouri, Utah and Wyoming. But even if a firm moved to begin mining those sites, the auditors estimate it would take seven to 15 years to reach full-rate production, the time needed to comply with state and federal regulations.

Nearly all the world's rare earths production is done in China. And 97 percent of the world's supply of rare earths oxides are produced in China.

GAO found China has a "dominant position" that gives it "market power" to set and control prices of rare earths.

Many U.S. minerals industry officials and academics told the auditors that most investors are not interested in even considering doling out the kind of capital needed to set up production facilities for a bona fide alternative to Chinese oxides.

What about building key military and commercial systems with alternative components? The auditors determined that could be viable in 10 to 15 years, but the researchers warn such alternatives might not perform as well as the family of rare earths.

The Pentagon's industrial affairs shop is conducting a soup-to-nuts study of DoD's reliance on rare earths and possible supply chain weaknesses, a study that is slated for completion in September.

In a statement on Wednesday, the U.S. Magnetic Materials Association said it "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," according to the organization. "With a 3-5 year timeline to re-establish a domestic rare-earth supply-chain, the United States is already in a 'silent crisis.' It is unclear whether rare earth material will be available outside China in the coming years."

[buglerbilly]

U.S. DOE Takes Next Step on Rare Earths Strategy

By JOHN T. BENNETT

Published: 6 May 2010 11:20

As it builds the first federal strategy on rare earth minerals, the U.S. Department of Energy (DOE) on May 6 put out a call for information on the family of materials, which are used in many high-tech military systems.

The department released a request for information (RfI) on rare earths almost two months after David Sandalow, assistant secretary of energy for policy and international affairs, announced the strategy was being built.

"The responses to the RfI will help inform DOE's understanding of supply and demand for these materials, opportunities for developing substitutes and the potential for using these materials more efficiently," according to a statement released by the department May 6.

In his March speech announcing the federal plan, Sandalow told an industry conference, "It's time we all pull together a real strategic vision on this."

The U.S. Defense Department is working on several rare earth minerals studies, including one looking at 24 weapons, and another to examine the national-security implications of China's dominance of the global supply.

China controls almost 100 percent of the world's rare earth minerals, allowing it to control prices of and access to the minerals.

The list of U.S. military gear that uses rare earths includes jet engines, unmanned aircraft, electric motors, radars, electronics, communications gear, night-vision goggles, missiles and more, according to DoD and industry officials.

Responses to the RfI are due June 7, according to the statement.

[buglerbilly]

China gives U.S. 'assurances' on export of rare-earth minerals

By John Pomfret
Washington Post Staff Writer

Saturday, October 30, 2010; 3:07 AM

HANOI -- China on Saturday assured the United States that it would continue the export of crucial rare-earth minerals that Beijing is believed to have halted as a way to pressure Japan.

In a meeting here at a summit of 18 Asian nations, China's Foreign Minister Yang Jiechi gave Secretary of State Hillary Rodham Clinton "assurances" about its policy on the export of the minerals, according to a statement by the State Department. The assurances marked the first time that a Chinese official has directly addressed the issue in a meeting with an American counterpart.

China controls 97 percent of the world's supply of rare-earth metals, 17 elements vital to the manufacture of high-tech products ranging from cellphones to the U.S. military's precision-guided munitions. China's move to restrict their sales has alarmed advanced economies around the globe.

Yang's assurances notwithstanding, tensions continued between China and Japan. Chinese officials blasted both Japan and the United States over disputed islands in the western Pacific, declining to hold a meeting with Japan's prime minister and lecturing Clinton about the U.S. stance on the islands.

The moves by Beijing surprised diplomats because China and Japan had been expected to use the summit to improve ties. Relations deteriorated last month when Japan's coast guard detained a Chinese fishing boat captain after he plowed his trawler into two coast guard vessels. China cancelled a series of meetings with Japanese officials and stopped exporting rare earths. Japan then released the captain.

On Friday, China accused Japan of ruining the atmosphere for talks between Premier Wen Jiabao and his Japanese counterpart, Naoto Kan, accusing Japan of giving "untrue" media statements. China's Foreign Ministry then turned on Clinton, expressing "deep dissatisfaction" with her views on the islands.

China's comments came in reaction to a joint press conference that Clinton held Wednesday in Hawaii with Seiji Maehara, Japan's foreign minister. Maehara reiterated that the Senkaku Islands, known as the Diaoyu Islands in China, were part of Japanese territory, and Clinton said the disputed island chain falls within the Japan-U.S. security alliance.

"The Senkaku Islands, in terms of history and international law, are inherent territory of Japan," Maehara said.

Japan's actions violated "China's sovereignty and territorial integrity," Chinese Assistant Foreign Minister Hu Zhengyue said, according to the official Chinese news agency, Xinhua.

China's Premier Wen then failed to meet with Kan on Friday evening in Hanoi, even though Japanese officials had said a meeting had been set. Chinese diplomats denied a meeting had been scheduled.

The rift between China and Japan is just one of several China-related disputes bedeviling the region, which is the world's most dynamic economically.

China has also alarmed its neighbors to the south -- in Southeast Asia -- by its claims to have sovereignty over the whole of the South China Sea, a 1 million square mile waterway through which more than 50 percent of the world's trade passes and which is believed to hold vast oil and gas reserves.

After years of playing down the issue, the U.S. government began focusing on China's claims this year in response to concerns from Southeast Asian nations that China had begun aggressively pursuing its claims. In July, Clinton, again in Hanoi, effectively rejected China's claims to the whole sea and pushed China and the other claimants - including Vietnam, the Philippines and Malaysia - to engage in negotiations.

On Saturday, Clinton reiterated the U.S. interests in the waterway, declaring that "the United States has a national interest in the freedom of navigation and unimpeded lawful commerce."

She did, however, praise China, following indications that Beijing has decided to resume multilateral talks with Southeast Asian nations over a code of conduct in the South China Sea.

[tiddles]

A national paint shortage is not exactly the end of the world as far as defence is concerned but an idea of what could happen. There used to be a tioxide plant at Heybridge in Tassie not far from Burnie where I worked for Telecom for 23 years but it closed down about 14 years ago it was the largest in the Southern hemisphere at one time.Plant was relocated to Malasia . Story from the archive of the Central Oregonian
Tiddles
Jason Chaney

October 21, 2010

A nationwide paint shortage has forced the Crook County Road Department to delay road-striping projects leaving them a small window to get enough roads painted.

The shortage began in May and was the result of the current recession and export ban that reduced the supply of two critical paint-production ingredients.

“A couple things happened that came together in May,” said Brian Turmail, senior director of public affairs for the Associated General Contractors of America. “In 2008, with the housing market crashing, a lot of MMA (methylmethacrylate) plants began scaling down.” According to Turmail, MMA is “the glue that binds the paint to the surface.”

While MMA production was ramped down to adjust to the reduced demand caused by the housing market slump, Turmail said an influx of stimulus-funded road projects caused a considerable spike in paint demand. Then in May, Turmail said the shortage was further exacerbated by an export ban on another key paint ingredient, titanium oxide, by the Chinese government. Titanium oxide enables the coloring of the paint.

Turmail went on to state that the supply has since begun to increase, albeit gradually, as MMA plants increased production and other titanium oxide producers try to fill the void left by the loss of the Chinese export.

As supply increases, some agencies have resumed striping projects, while others have had to wait for enough paint.

For the Oregon Department of Transportation (ODOT) the shortage has not had a significant impact.

“We’re painting,” said ODOT Public Affairs Specialist Peter Murphy. “Here in Central Oregon we never stopped. We advance-ordered enough paint last year.”

Murphy went on to explain that ODOT is not responsible for striping all the roads in the Central Oregon region. They maintain the state highways and other roads in their jurisdiction and it is up to local road departments to cover what is left.

So far, for the Crook County Road Department, that has not been easy. According to County Roadmaster Penny Keller, paint has only recently become available for their striping projects. What paint they receive is supplied by the Deschutes County Road Department, who also provides paint for the cities of Bend, Redmond, and Sisters, as well as Jefferson County. As a result, they have only painted a few roads.

“Basically, what we did was a priority list of roads,” Keller explained. Making the list were Paulina-Suplee Road, Juniper Canyon Road, Davis Loop, Powell Butte Hwy, Alfalfa Road, Shumway Road, and Millican Road. Those projects were completed much later than usual.

“Usually our normal schedule of striping starts in May or June,” Keller said. “We finished up striping (the priority roads) last week.”

The Road Department intends to continue striping roads throughout the county, again prioritizing their projects.

“It will be based on traffic volume,” Keller said regarding which roads are painted first. But, whether or not they finish enough roads is still up the in the air. The weather is quickly cooling and the clock is ticking.

“Hopefully we’ll get enough done before our weather changes,” Keller said.

[buglerbilly]

U.S. Defense Department Sees No Rare-Earths Crisis; May Aid U.S. Producers

By Gopal Ratnam - Oct 31, 2010 12:00 PM GMT+0800

The U.S. Defense Department has concluded that China’s monopoly on rare-earth materials, used in military hardware such as missile guidance and radar systems, poses no threat to national security, according to a person familiar with a year-long study by the Pentagon.

The report notes that rising prices and supply uncertainties are spurring private investment in new mining operations outside of China that will help meet American military needs, which require less than 5 percent of U.S. rare- earth consumption.

China now provides 97 percent of the world’s rare earths, a group of 17 metals that includes neodymium, samarium, and dysprosium.

The study, conducted by the Pentagon’s Office of Industrial Policy, raises the possibility that the Defense Department may help prospective U.S. providers such as Molycorp Inc., the person said, speaking on the condition of anonymity because the report has not yet been released publicly.

The findings and recommendations may be presented this week to U.S. lawmakers, who have been alarmed by China’s actions since July to reduce rare-earths exports by about three- quarters. The House on Sept. 29 passed legislation that includes authority for federal loan guarantees for domestic rare-earth producers, and House members such as Representative Bart Gordon, chairman of the Committee on Science and Technology, have urged senators to act on the measure during the post-election session because of concern about China’s market dominance.

Bombs and Lasers

China’s export-quota cuts and delays in Customs’ clearance have led to sharply higher prices and supply concerns among users, including manufacturers of mobile phones, computer hard- disk drives and flat-screen monitors.

Supply constraints haven’t stopped production of equipment such as radar, precision-guided bombs, and night-vision equipment that require powerful magnets and lasers made with rare-earth materials, the Defense Department study found.

The Pentagon expects the supply situation to improve by 2013 once rare-earth mines outside of China, such as one planned by Australia’s Lynas Corp. Ltd., begin operations next year, said the person familiar with the findings.

The study says that demand-supply gaps for neodymium, dysprosium, praseodymium, each used in magnets, as well as for yttrium, used in lasers, are likely persist longer than for the 13 other elements, and that commercial manufacturers such as General Electric Co., maker of wind turbines that use neodymium- iron-boron magnets, are likely to face more shortages than defense contractors, the study found.

Loan Guarantee

The study recommends, among other steps, an examination of how the Defense Department could aid companies such as Molycorp, which has applied to the Energy Department for $280 million in U.S. government loan guarantees to help finance restarting its open-pit, rare-earths mine in Mountain Pass, California, in the Mojave Desert.

The mine once met almost all the world’s demand for rare- earth metals. It shut down in 2002 due to competition from cheaper Chinese supplies. Molycorp plans to resume production by the end of 2012.

Under Title III of the Defense Production Act of 1950, the Pentagon can provide financial incentives to industry to make investments in production capabilities for materials deemed to be in the national interest.

The study recommends more international cooperation among mine operators, magnet-makers and governments that use the components. It also calls for more research by national laboratories into alternatives or substitutes for rare-earth- based components.

Tracking Materials

The Pentagon found that neither defense contractors, like Lockheed Martin Corp., Raytheon Co., and General Dynamics Corp., nor government agencies currently track the use of rare-earth materials in the thousands of weapons bought by the U.S. military. The rare-earth components that go into the systems are treated like commodities, the person said.

Magnets made with samarium-cobalt are widely used in defense applications because the material maintains its magnetic properties even in high-heat conditions found inside missiles and bombs, the Pentagon found in its assessment.

China accounts for about 36 percent of global rare-earth reserves, the largest share, and the U.S. is second, with 13 percent, according to the U.S. Geological Survey. Chinese officials including Premier Wen Jiabao have said the country has not halted shipments of material and will continue to supply the material.

To contact the reporter on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net.

[tiddles]

Here is a link to a site that gives information re rare earth production and global reserves .Both the U.S. & Australia have plenty of reserves if they want to exploit them
http://www.google.com.au/url?sa=t&source=web&cd=5&sqi=2&ved=0CC0QFjAE&url=http%3A%2F%2Fwww.australianrareearths.com%2Fcu rrent-issues.html&ei=DWDPTKTQAsPBcfP0xYQC&usg=AFQjCNF6HFL9oioImKtnfCsWQoJ1Jnbqig&sig2=ya_QzwsbxPTjKjbwxeccKg
Here is another link to a site with production ambitions,there are others.
http://www.google.com.au/url?sa=t&source=web&cd=15&ved=0CCsQFjAEOAo&url=http%3A%2F%2Fwww.arafuraresources.com.au%2Fima ges%2Ffacts%2F06_ARAFURA_Whyalla%2520Rare%2520Eart hs%2520Complex.pdf&ei=QmPPTKvkIoL0vwPHoZQV&usg=AFQjCNFxYUc5xmxgw4yrNGe3oyQDk3vbcg&sig2=yTQBdDd9l7PTsPPzG2LW7g
The chief problem with starting up production is that China may lower prices which takes back to where it all began with countries importing from China rather than keeping their production going,buts thats the way global free trade goes.
Tiddles

[buglerbilly]

Rare earth metals mine is key to US control over hi-tech future

Approval secured to restart operations, which could be crucial in challenging China's stranglehold on the market

Suzanne Goldenberg in Mountain Pass guardian.co.uk, Sunday 26 December 2010 16.54 GMT


The site of the rare earth metals mine in the Mojave desert. Photograph: Barry Sweet/Polaris

It's a deep pit in the Mojave desert. But it could hold the key to America challenging China's technological domination of the 21st century.

At the bottom of the vast site, beneath 6 metres (20ft) of bright emerald-green water, runs a rich seam of ores that are hardly household names but are rapidly emerging as the building blocks of the hi-tech future.

The mine is the largest known deposit of rare earth elements outside China. Eight years ago, it was shut down in a tacit admission that the US was ceding the market to China. Now, the owners have secured final approval to restart operations, and hope to begin production soon.

"We will probably never be the largest [mine] in the world again. It will be hard to overcome China's status in that regard, but we do think we will be a very significant supplier," Mark Smith, chief executive of Molycorp Minerals which owns the mine, told reporters during a tour of the site.

So far as the Obama administration is concerned, the mine can't open soon enough. A US department of energy report warned on 15 December that, in the absence of mines such as this one, America risks losing control over the production of a host of technologies, from smart phones to smart bombs, electric car batteries to wind turbines, because of a virtual Chinese monopoly on the rare earth metals essential to their production.

China controls 97% of global rare earth metals production. Such total domination of a strategic resource became impossible to ignore in October when China cut exports of rare earth elements by more than 70% over the previous year, disrupting manufacturing in Japan, Europe and the US. Prices of even the cheapest of the 17 rare earth elements rose 40%.

Now America, like Japan and Europe, is desperate to find alternatives. "Reopening domestic production is an important part of a globalised supply chain," David Sandalow, the energy department's assistant secretary for international affairs told a seminar in Washington.

For Smith, the official recognition of the strategic importance of the metals was a long time coming. "I've been going out to Washington DC every other week for about two years trying to tell the rare earths story," he said.

They are listening in Washington now. At the 15 December seminar at the Centre for Strategic and International Studies, one PowerPoint presentation lingered on a slide that showed only the Chinese flag. The room filled with nervous laughter.

By 2015, global demand for rare earths is expected to reach 205,000 tonnes. "If we don't get alternative supplies up and running we are going to have this supply gap that is going to cause a lot of issues," Smith said.

Those issues forced their way onto the government's agenda this autumn when China began squeezing raw material exports of rare earth minerals.

Some US media reports have speculated China is trying to use its control over the supply lines for political leverage. But a number of analysts say China is trying to get better control over an expensive, dirty and dangerous mining process, and to get more factories to set up shop inside the country.

Rare earths are extracted through opencast mining and generate radioactive waste.

"I don't believe that China is trying to chop the west off at the knees but it has a growing internal market that is driving the demand," said Gareth Hatch, an analyst at Technology Metal Research. "That reduces the amount they are willing to export." That is where Molycorp – the frontrunner for now in a global race to develop alternative production of rare earth materials – hopes to step in.

Since going public last July, the company has raised more than $500m (£323m) to expand its production facilities at Mountain Pass, a collection of rusting buildings that date from the 1950s. This month, Sumitomo Corp of Japan invested $130m in return for guaranteed supplies of rare earths for the next seven years. The company has also applied for department of energy loans.

By mid-2012, Molycorp aims to produce 20,000 tonnes a year of nine of the 17 rare earths or about 25% of current western imports from China. Smith suggested the company could possibly ramp up production to 40,000 tonnes within the next 18 months. He says Molycorp has exposed just 55 acres of the 2,200 acre site.

But even production on that scale may not be enough to guarantee the supply of metals needed to move to a clean energy economy: lanthanum for batteries for hybrid cars, neodymium for the permanent magnets for wind turbines, especially offshore, europium for energy efficient lighting.

"You would need seven mines the size of Molycorp's just to meet the demand for wind turbines and that would mean no neodymium for motors or any other applications," said Jim Hedrick, who until last year was the rare earth expert at the US Geological Survey.

"Obviously there is a demand for 10 or 20 mines through the world to meet all the different demands for these products."

Some companies, such as General Electric, are already moving to reduce their use of rare earths. "What we are going to absolutely have to do is diversify our sources and optimise the use of these materials in manufacturing," said Steve Duclos, who heads GE's global research division.

In Japan, meanwhile, Hitachi has started a recycling effort to recover rare earths from hard drives and other materials.

Aside from raw materials, it is also unclear whether the US still has the expertise for the complicated process of turning minerals into usable clean tech components.

Such challenges were unthinkable half-a-century ago when prospectors looking for uranium stumbled instead on a rich deposit of rare earths about an hour's drive from Las Vegas.

By the 1960s, the mine was booming, largely through sales of europium, used to produce the bright red tones of colour televisions.

But prices fell as China came on the market, with its low production costs. A pipeline accident in the late 1990s, which leaked radioactive fluid into the desert and a nearby town, led to an expensive clean-up.

The mine closed in 2002. The central pit in the 55-acre site became a pool of bright green water. White bales of minerals – some mined eight years ago – were stockpiled until such time as prices would rise.

This time around, however, Molycorp claims it has a fighting chance against China, especially if it is able to meet its goal of complete mines-to-magnet processing at the Mountain Pass facility.

The company is also confident it can head off competition from a slew of new mines due to begin coming online from Australia, Wyoming, Quebec and South Africa. "The growth in demand for these minerals is just phenomenal," Smith said. "A 6% average growth rate for us would be very, very good but when you start adding things like hybrid vehicles and wind turbines to the rare earth sectors now you are talking about double digit growth, and you still don't know where that will end."

At this point, though, Molycorp is not even at the beginning. "The road to the green world of the future starts from the black earth. But first you have to get the materials out of the ground," said Hatch. "The whole clean-tech energy industry is hinging on it."

The "rare earth elements" are a group of 17 naturally occurring metallic elements used in small amounts in everything from high-powered magnets to batteries and electronic circuits. The materials (including scandium, yttrium and a group of elements called the lanthanides) have chemical and physical properties that make them useful in improving the performance of computer hard drives and catalytic converters, mobile phones, hi-tech televisions, sunglasses and lasers.

With global demand for hi-tech goods increasing the market for rare earth elements has doubled in the past decade.

Despite their name, rare earth elements are not actually all that rare, but China has a near-monopoly on mining the elements. In a report on the elements published this year, the British Geological Survey put their natural abundance on the same level as copper or lead.

According to the BGS China has 37% of the world's estimated reserves, about 36m tonnes, but controls more than 97% of production. The former Soviet bloc has around 19m tonnes and the US 13m, with other large deposits held by Australia, India, Brazil and Malaysia.

Other sources, untapped as yet, include Greenland. Estimates suggest the land mass could meet 25% of global demand for REEs. South Africa also has potential for rich REE deposits, as do Malawi, Madagascar and Kenya

[Unicorn]

It also explains why an Australian mining company was approached several months ago by a consortium of Japanese manufacturers. They wanted to know how long it would take to ramp up a rare earth mineral mine in Australia (the mine had previously operated but got shuttered when China started manipulating prices to drive alternative manufacturers out of the market, leading to their current market distorting dominance).

When the company outlined the amount (well above $100M I am informed), the Japanese asked if the mine could be brought back on stream faster if more money was made available. When asked how much more money, the question in response was how soon can you get it active, and how much would it take?

The Japanese want guaranteed supply of 50% of the mines output for the next 15-20 years, and the right to bid for more of the remaining 50%.

The Japanese now have direct experience of China's heavy-handedness and are looking to make sure they are out from under that particular threat.

Chalk up another 'success' to Chinese 'diplomacy'.

[buglerbilly]

The problem with some of the Aussie Mining companies is that whilst they may be good Miners, they are often lousy Engineers and Developers, the two biggies of Rio Tinto and BHP Billiton most certainly excepted........and they are not totally sublime by a long stretch.......

I'm a bit surprised that neither of the Biggies has taken over one of the known major deposits and/or the company(s) that own it (the mine rights that is).........they'd bring it to market pretty toute de suite.

Its also why Chinese companies have been sniffing around Aussie mine companies for "easy" acquisitions and why the Government is often less-than-amused by, and resistant to, such approaches.

[buglerbilly]

FEBRUARY 7, 2011.

China Moves to Strengthen Grip Over Supply of Rare-Earth Metals .

By JAMES T. AREDDY

SHANGHAI—China is building strategic reserves in rare-earth metals, an effort that could give Beijing increased power to influence global prices and supplies in a sector it already dominates.


Bloomberg News
China is building reserves of such rare-earth metals as neodymium.

Details of the stockpiling plans haven't been made public. But the outlines of the effort have emerged in recent statements from Chinese government agencies, state-controlled companies and reports in government-run media. The reports say storage facilities built in recent months in the Chinese province of Inner Mongolia can hold more than the 39,813 metric tons China exported last year.

China controls more than 90% of current global supply of rare-earth metals—a group usually classified as 17 elements and sometimes are called "21st Century gold" for their importance in such high-tech applications as laser-guided weapons and hybrid-car batteries. Beijing has been tightening its exports with a quota policy.

Many rare-earth minerals aren't actually rare, and China doesn't have a monopoly on deposits of any particular rare-earth elements. The U.S. Geological Survey recently estimated that China has about half the world's 110 million metric tons of rare-earth deposits, however. And mining in the U.S. and elsewhere fell off several years ago, in part because of environmental concerns. Australia's Lynas Corp. U.S.-based Molycorp Inc. and other companies around the world are ramping up mining. But a new mine can take a decade to develop, and processing of rare-earth elements will remain concentrated in China for years.

Industry observers say that if the stockpiling efforts further restrict China's exports, that could raise hackles higher in foreign capitals, where some governments already are threatening to challenge Beijing's quota regime by bringing complaints to the World Trade Organization.

"In my view, [a reserve] makes the Chinese position worse," said Steve Dickinson, an attorney at the Seattle law firm Harris & Moure.

Further limits on Chinese exports of rare-earth elements also threaten to raise costs for companies in an array of industries, including cellphones, oil refining and high-technology batteries.

Chinese government agencies manage other official stockpiles for commodities, such as copper and corn, as well. And many governments world-wide amass similar stockpiles to address temporary emergency shortfalls, such as grain supplies in a drought year. The U.S. manages a Strategic Petroleum Reserve but since 1994 has pared back holdings of a range of commodities that had been held in a World War II era stockpile.

China in recent years has expanded the number of commodities it holds in reserve. It appears to actively manage their use, but does so with little transparency and sometimes in ways that appear designed to influence market prices, analysts say.

When aluminum prices were soaring in early November, for instance, the State Reserve Bureau blunted the rally by unloading more than 200,000 metric tons of aluminum ingots at as much as 7% below Shanghai Futures Exchange prices. China's lack of clarity over how exactly it manages its strategic reserves of petroleum has roiled global oil markets and drawn criticism from the International Energy Agency and others.

China isn't alone in looking to stockpile rare-earth metals. The Japanese and South Korean governments say they have amassed some reserves and U.S. analysts have called for a similar effort. But China appears to be ahead of other countries.

The Chinese stockpiling, under the direction of the Ministry of Land and Resources, began with a pilot project almost a year ago in China's primary mining region of Baotou in Inner Mongolia and is related to the ministry's assertion of authority in recent years over mining regions. At least 10 storage facilities are being built and managed by the world's largest producer of rare-earth metals, government-controlled Baotou Steel Rare-Earth (Group) Hi-Tech Co. Chinese state media reports say stockpiles may eventually top 100,000 metric tons.

The ministry and Baotou Steel Rare-Earth didn't respond to questions for this article.

While China says its deposits of rare-earth minerals account for only about a third of the global total, the country mines most of the world's marketed supply, which has raised concerns that China could deplete the supply too quickly.

In their limited comments about strategic reserves of rare-earth minerals, Chinese officials have cited the need to protect national resources, reduce pollution and save energy, the same factors used to explain China's export quotas.

A 2009 policy paper on minerals by the Resources Ministry cited a need "to regulate the supply-demand relationship in the market and implement government industrial policy."

The move to build reserves comes as China's supply of rare-earth metals to the rest of the world already is shrinking despite growing demand for the elements, which have strategic industrial and military value in such products as night-vision goggles and wind turbines. China's exports of rare-earth metals fell 9.3% last year.

U.S. Rep. Mike Coffman called China "an unreliable trade partner" in rare-earth minerals and said he plans to introduce a bill in coming weeks that may require the U.S. military to hold an unspecified amount of such elements. "The goal of the legislation is to establish a competitive supply chain in the U.S.," and that may include mandating a stockpile or setting conditions on when to form one, the Colorado Republican said in an interview.

The American Security Project think tank in a report released Tuesday recommended stockpiling as "one of the best ways to prepare for a future shortage" of rare-earth metals before U.S. mining and processing capability is expanded. The group, whose board includes retired military officers and former Sen. Gary Hart and Sen. John Kerry, who have specialized in defense policy, cites a Pentagon estimate that while only 5% of demand for rare-earth metals in the U.S. comes from the military, the U.S. is nevertheless "completely reliant on China for the production of some of [the Pentagon's] most powerful weapons."

But some politicians warn that official stockpiling by the U.S. would only make the government a new competitor in an already strained supply chain that, despite its strategic importance, is relatively small. China's exports of rare-earth ore, metals and compounds last year was valued at just $940 million. Sen. Lisa Murkowski, who plans soon to reintroduce a bill to support the U.S. rare-earth industry, favors first studying the merits of a strategic reserve rather than mandating the creation of one, a spokesman for the Alaska Republican said.

The U.S. Department of Energy in 2009 proposed a middle road. It outlined how a Strategic Military Stockpile Program would include "limited physical stockpiles" of metals and other resources but be supplemented by "friendly nation agreements and long-term supply-chain partnerships."

In recent months, the high-tech-focused nations of Japan and South Korea, both of which are dependent on China for rare-earth supplies, have highlighted stockpiling strategies. The European Union is weighing reserves too, Reuters recently reported, and British lawmakers last month discussed their country's strategic-materials strategy.

It is unclear how much day-to-day control Beijing authorities actually have of their rare-earths industry. The Resources Ministry in policies dating to 1999 repeatedly has described rare-earth production as disorderly. Nor has the government spelled out what supplies will get diverted to national stockpiles.

But the ministry increasingly is asserting authority over rare-earth mining as part of a broader program that has seen the government move to manage more than 50 commodity-production zones producing coal, iron ore and the rare-earth element vanadium. Eight rare-earth zones were put under national administration in 2006, while Beijing has specified that more than 1,600 mining blocs are subject to central-government planning policies and hundreds of mines will be closed.

The ministry extended its reach in January to include a region in southeastern Jiangxi Province where a particularly scarce class of rare-earth minerals is prevalent. That move, announced in a one-paragraph notice dated Jan. 4, covers 11 rare-earth mining blocks over a little more than half an acre in the Jiangxi area of Ganzhou. The area is known for deposits of particularly rare, premium-priced "heavy" rare-earth metals, such as terbium, which is used in fuel cells.

"The announcement is to promote an overall planning over the rare-earth mining industry," said Chen Zhenheng, deputy director of the Chinese Society of Rare Earths industry association.

Write to James T. Areddy at james.areddy@wsj.com

[buglerbilly]

Hill Should Not Rush on Rare Earths

By Colin Clark Wednesday, March 23rd, 2011 4:53 pm

Congress should not require the Pentagon to create a stockpile of rare earth minerals because companies will adjust their behavior to the international marketplace, a group of experts said today.

“The sky is not falling. Contrary to what you are reading in some newspapers and articles we are not going to run out of anything any time soon,” said MIT professor Robert Jaffe. And greatly increasing US production of the 17 rare earth minerals is not the answer either, he said. “Mine baby, mine is not the solution.”

Jaffe was speaking primarily from the perspective of an expert in rare earths, their production and uses. A Heritage Foundation economist on the panel, Derek Scissors, said “there is no need for a stockpile. This falls exactly into the terrain that the government should not get into.”

However, Jaffe and Scissors said some basic research aimed at developing alternatives to the rare earths might be useful if the research was truly basic and did not bleed over into applied research.

The experts appeared to discuss whether Congress should act on rare earths. Last September, the House passed the Rare Earths and Critical Materials Revitalization Act of 2010 overwhelmingly, 325 to 98. Their basic conclusion was that the Hill should leave things alone, except for carefully targeted basic research funding to find alternatives to the rare earths.

Scissor agreed that China dominates current production and “can’t be trusted as a supplier. But he said rare earths largely came into use because they were cheap. “They weren’t indispensable 10 years ago. They won’t be in another 10 years.” China, acting as a mercantilist economic power, will continue to raise prices and squeeze supply. And that will drive companies and governments to recycle, find new allows and other ways to avoid using the rare earths that China controls.

“Now they are going to raise the prices and we are going to use less rare earths,” he said.

Following are some of the key defense uses for rare earth minerals, drawn from a paper by James B. Hedrick, titled: Rare Earths in Selected U.S defense Applications:

- Precision Guided Munitions use samarium-cobalt permanent magnet motors to control the fins.

- Tanks and other vehicles use rare-earth lasers for range finding.

- The main US system for detect of underwater mines uses a rare-earth laser system.

- Satellites use wave tubes and klystrons that rely on rare earth metals.

- Military aircraft use samarium-cobalt magnets to help generate electricity for electrical systems. In addition, small high-powered rare-earth magnet actuators are

- The hot sections of aircraft engines rely on super-hard allows that use rare earth elements.

- Radars rely on rare-earth magnets (often samarium-cobalt), to focus microwave energy.

- High-powered sonar uses Terfenol-D rare-earth alloy.

Read more: http://www.dodbuzz.com/2011/03/23/hill-should-not-rush-on-rare-earths/#ixzz1HYow1t00

[buglerbilly]

MAY 20, 2011.

A Rare-Earths Showdown Looms

WTO litigation over China's export limits is inevitable unless Beijing comes to its senses.

By JAMES BACCHUS

A strong legal case can be made that Chinese restrictions on exports of rare-earth elements violate world trade rules. Japan has said publicly that the Chinese are violating World Trade Organization rules. Germany is urging the European Union to act. The United States has refused to rule out doing so. But who ultimately will be willing to bring that case against China in the WTO, and when? And can China itself afford to let things go that far?

The legal issues involved are fairly clear-cut. China has about half of the world's deposits and accounts for about 93% of the world's current production of the 17 rare-earth elements. These elements are essential ingredients in much of modern technology. Magnets, lasers, computer screens, fiber-optic cables, cell phones, ceramics, stainless steel, low-energy light bulbs, wind turbines, hybrid auto batteries—these and much more all depend on rare earth elements.

In the past two years, China has been stockpiling these elements and tightening an array of export restrictions. After cutting export quotas of rare earths last year, China has cut them again by 35% for the first half of this year. Reacting to these restrictions, and also to rising demand, global prices for rare earths multiplied as much as fourfold last year, and doubled again in the first four months of 2011.

This is almost certainly contrary to the agreements China signed on to when it joined the WTO in 2001. Under WTO rules, quotas and other quantitative restrictions on exports are generally prohibited unless they are applied "temporarily" where there are "critical shortages." There is little indication that these Chinese quotas are temporary or that they are a response to a critical shortage in China. WTO rules do permit export taxes as an alternative to export quotas. But under China's accession agreement, Beijing agreed to eliminate taxes and other charges on all exports except those on a list of 84 products. The 17 rare earth elements are not on that list.

Were China to face WTO action on this issue, Beijing would likely argue it is acting within WTO rules that allow export controls that are applied to protect the environment. Rare earths are difficult and dirty to extract. But, significantly, in April, in a ruling that is not yet public or final, a WTO panel reportedly rejected China's assertion of an environmental defense in another trade dispute involving similar facts and essentially the same legal issues. In a case brought by the U.S., the European Union and Mexico, WTO judges disagreed with China's contention that its restrictions on exports of a variety of raw materials—including coke and bauxite—are necessary to protect human health or conserve exhaustible natural resources. Although subject to appeal, this ruling suggests a rare-earths case, too, would not go China's way.

China may be especially vulnerable to WTO action in the case of rare earths because, while applying and increasing restrictions on rare earth exports to the detriment of foreign producers, China has done little to impose rare earth restrictions on its domestic producers. An environmental defense is possible only for measures that are "made effective in conjunction with restrictions on domestic production or consumption."

Likewise, China may well be vulnerable to legal claims that its restrictions on rare earth exports act as implicit subsidies to domestic production because they provide price and other advantages to domestic products that rely on rare earths compared to foreign competitors. Such subsidies are illegal if they can be shown to have "adverse effects" in the marketplace.

A possible deal that would ease Chinese rare earth export restrictions for Taiwan, reported this week, could only worsen China's legal case in the WTO. It might inspire claims that China is discriminating in favor of one trading partner over others.

Why, then, have China's trading partners not yet pursued WTO action on rare earths if the legal case is so compelling? Most likely for strategic reasons. So far, other governments have attempted to resolve the conflict through negotiations such as last week's bilateral Strategic and Economic Dialogue in Washington. No country wants to act alone. And foreign companies, which often prompt their governments to launch WTO litigation, in this case may be reluctant to do so. Many of the largest companies that rely on rare earths from China have other significant business interests there and would be understandably unwilling to antagonize the Chinese government.

But China cannot afford to count on such forbearance forever. As more and more opportunities such as the S&ED pass with no resolution, and as rare earths grow more and more expensive, pressure for a WTO suit inevitably will build. And when such a suit does come, it is likely to involve some of China's most important trading partners—especially the U.S., EU and Japan—acting in concert as co-complainants. In the best case, that would be embarrassing for China. In the worst case—if China lost the case yet refused to revise its offending export regulations—it would face retaliatory trade sanctions on multiple fronts at the same time.

More broadly, China risks much if it undermines WTO rules and embraces the illusion of self-sufficiency in trade. No other country benefits more from WTO tariff concessions or from WTO rules against non-discrimination in international trade. And no other country depends more on the willingness of other countries to export their raw materials and other limited natural resources in an interdependent world of increasingly elaborate and interlinked supply chains.

A WTO case against China can still be avoided. China can, at any time, lift its illegal export controls on rare earths. The sooner it does so, the better. Given the significance of these minerals, the rest of the world can't allow China's restrictions to stay in place forever. And, ultimately, China can't afford to force the rest of the world to sue it, either.

Mr. Bacchus, a former Democratic Representative from Florida, is former chairman of the Appellate Body of the World Trade Organization and chairs the global practice of Greenberg Traurig LLP.