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Bob Confer Column: A national crisis in rare earth elements

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By Bob Confer

The history of mankind has been filled with numerous wars, of both the military and trade sort, over elements that come from the Earth. Gold and silver have long been at the epicenter of such struggles, many a civilization driven to destruction over their greed – or other peoples’ desires – for the metals.

There are other precious elements now taking their place as resources hungered by all and they are already testing the balance of power in global trade. Rare earth elements (REE) are a collection of 17 members of the periodic table. All of them are not as well-known as metals like copper and zinc yet they are just as important. REE like yttrium (cancer treatments), lanthanum (hybrid car batteries), cerium (catalytic converters), neodymium (magnets) and gadolinium (nuclear reactors) are crucial to modern society.

Like gold in our world’s long history, whoever possesses REE possesses the power. 

We don’t.

Currently, China mines and processes in excess of 85% of the world’s rare earths. In 2018, the United States was considered 100% net-import reliant with the stuff.

Needless to say, having all of our eggs in one basket – especially one held by China – is dangerous for national security. Just ask Japan.

Back in September 2010, Chinese officials temporarily unleashed a trade embargo that prevented shipments of REE to Japan, scaring the dickens out of Japanese manufacturers. It was believed China did this as a bargaining chip to secure the release of a Chinese captain detained by Japanese officials.

In the whole scheme of things, a political impasse like that is nothing in comparison to the potential for conflict that exists between China and the US. While store shelves across our country are filled with products sporting “Made in China” labels, China really isn’t our friend.

China controls $1.05 trillion in US debt and we’ve had strained relations of late for various reasons, be it warranted flexing by Presidents Trump and Biden, China’s continued posturing over Taiwan, global disdain for China’s human rights record, and the too-friendly relationship between China and North Korea (to whom China is the supplier of the physical and intellectual resources needed to make Pyongyang’s ballistics).

It wouldn’t take much for an agitated China to impose REE restrictions, be it higher costs or limited supplies, both of which would weaken the USA’s various manufacturing sectors while strengthening China’s.

China has gotten to this point of dominating the rare earth element marketplace because of their less-stringent environmental standards. Most of the 17 elements are not rare as the name supplies. Some are widely available throughout the world yet are rare in finished, usable form because the excavation and processing of them can be toxic to the environment if not properly controlled.

America has been mostly out of the REE game for years because of those warranted environmental concerns. But, environmentalists in the Department of Energy and the Environmental Protection Agency now see merit in the development of REE projects because they know that, ironically, clean energy technologies (like wind turbines and new-age automobiles) require rare earths. It’s a catch-22: One set of resources (REE) must be capitalized at cost to the environment to prevent other resources (oil, coal) from harming the environment.

In 2008, a company named Molycorp was finally given the okay to tap into a vast REE reserve in the Mojave Desert after an 8-year suspension of operations by the federal government. That mine offers the single largest deposit of REE outside of China. The value of the materials couldn’t overcome the debt accumulated as Molycorp went bankrupt in 2014. MP Materials bought the mine in 2017 and has had a better go of it, except for one caveat – it has partnered with a Chinese firm, Shenghe Resources, to do the processing.   

It is hoped that other projects – mines and processing facilities — are developed and quickly; this is genuinely a matter of national security. But, doing so will require a serious public-private partnership that will need the government, environmentalists, and corporations working hand in hand to develop guidelines and processes necessary for a relatively clean and safe realization of our resources’ potentials.

President Biden is on board with this, as he and his Administration have repeatedly touted the need to improve this critical part of US supply chains. Over the past year he has initiated executive orders and various studies into this while empowering agencies to come up with plans on maximizing what we have and could have.

He’s not alone. Last month, for example, a bipartisan bill that was introduced in the US Senate would force defense contractors to stop buying REE from China by 2026 and have the Pentagon create a stockpile. It’s the latest in a long line of legislative proposals.

Because of that universal interest in this, especially after the pandemic laid bare all supply chains and exposed our reliance on foreign manufacturers, I would expect significant funding to be proposed sometime in 2022 for domestic development of mining and processing operations. It’s one of those very rare times that this libertarian-ish columnist wouldn’t mind seeing some public investment in private endeavors.   

Without the ability to produce REE we are heading into a new national crisis, one where we will suffer in the health, energy, and defense industries. If you want to weaken a nation, that’s where you strike. And, that’s exactly what we’ve allowed China to do.

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