Rare Earth Elements The Global Supply Chain

CRSReportforCongressPreparedforMembersandCommitteesofCongressRareEarthElements:TheGlobalSupplyChainMarcHumphriesSpecialistinEnergyPolicyDecember16,2013CongressionalResearchService7-5700(REEs)outsidetheUnitedStatesraisestheimportantissueofsupplyvulnerability.REEsareusedfornewenergytechnologiesandnationalsecurityapplications.TwokeyquestionsofinteresttoCongressare:(1)IstheUnitedStatesvulnerabletosupplydisruptionsofREEs?(2)AretheseelementsessentialtoU.S.nationalsecurityandeconomicwell-being?Thereare17rareearthelements(REEs),15withinthechemicalgroupcalledlanthanides,plusyttriumandscandium.Thelanthanidesconsistofthefollowing:lanthanum,cerium,praseodymium,neodymium,promethium,samarium,europium,gadolinium,terbium,dysprosium,holmium,erbium,thulium,ytterbium,andlutetium.Rareearthsaremoderatelyabundantintheearth’scrust,someevenmoreabundantthancopper,lead,gold,andplatinum.Whilemoreabundantthanmanyotherminerals,REEsarenotconcentratedenoughtomakethemeasilyexploitableeconomically.TheUnitedStateswasonceself-reliantindomesticallyproducedREEs,butoverthepast15yearshasbecome100%reliantonimports,primarilyfromChina,becauseoflower-costoperations.U.S.-basedMolycorphasbegunproductionatitsMountainPassmineandanticipatesproductionatfullcapacity(19,050metrictons)in2014.MolycorpalsooperatesaseparationplantatMountainPass,CA,andsellsrareearthconcentratesandrefinedproductsfromnewlyminedandpreviouslyminedabove-groundstocks.MolycorpannounceditspurchaseofNeoMaterialsTechnology(renamedMolyCanada),arareearthprocessorandproducerofpermanentmagnetpowderswhichhasfacilitiesinChina.Someofthemajorendusesforrareearthelementsincludeuseinautomotivecatalyticconverters,fluidcrackingcatalystsinpetroleumrefining,phosphorsincolortelevisionandflatpaneldisplays(cellphones,portableDVDs,andlaptops),permanentmagnetsandrechargeablebatteriesforhybridandelectricvehicles,generatorsforwindturbines,andnumerousmedicaldevices.Thereareimportantdefenseapplications,suchasjetfighterengines,missileguidancesystems,antimissiledefense,space-basedsatellitesandcommunicationsystems.Worlddemandforrareearthelementswasestimatedat136,000tonsperyear,withglobalproductionaround133,600tonsin2010.Thedifferencewascoveredbypreviouslyminedabove-groundstocks.Worlddemandisprojectedtorisetoatleast160,000tonsannuallyby2016accordingtotheIndustrialMineralsCompanyofAustralia.SomeminecapacityatMt.WeldAustraliahascomeon-streamin2012,butfarbelowtheprojected11,000metrictonsofcapacity.Othernewminingprojectscouldeasilytakeaslongas5-10yearstoreachproduction.Inthelongrun,however,theU.S.GeologicalSurveyexpectsthatglobalreservesandundiscoveredresourcesarelargeenoughtomeetdemand.InMarch2012,theObamaAdministrationannouncedthefilingofaWorldTradeOrganizationcaseagainstChina,citingunfairtradepracticesinrareearths.Afinaldecisionisexpectedtobeannouncedinearly2014.Severallegislativeproposalshavebeenintroducedinthe113thCongressintheHouseandSenatetoaddressthepotentialofU.S.supplyvulnerabilityandtosupportdomesticproductionofREEsandothercriticalmineralsbecauseoftheirapplicationsfornationalsecurity/defensesystemsandcleanenergytechnologies.OnSeptember18,2013,theHousepassedH.R.716,TheNationalStrategicandCriticalMineralsProductionActof2013.RareEarthElements:TheGlobalSupplyChainCongressionalResearchServiceContentsIntroduction......................................................................................................................................1WhatAreRareEarthElements?......................................................................................................2MajorEndUsesandApplications...................................................................................................2DemandforRareEarthElements..............................................................................................3RareEarthOxidePrices............................................................................................................5TheApplicationofRareEarthMetalsinNationalDefense............................................................7RareEarthResourcesandProductionPotential..............................................................................8SupplyChainIssues................................................................................................................13Molycorp’s“MinetoMagnet”VerticalIntegrationApproachforRebuildingtheU.S.RareEarthSupplyChain........................................................................................14SelectedRecentSupplyChainDevelopments..................................................................16RoleofChina...........................................................................................................................16Japan’sInterests.......................................................................................................................19SelectedPossiblePolicyOptions............