The U.S. Defense Department needs to realize the dangerous consequences a potential lack of domestic rare earths may have on the U.S. weapon industry, suggests a latest study by the Congress released last week.
The document, titled Rare Earth Elements in National Defense: Background, Oversight Issues, and Options for Congress, adds the country’s manufacturing supply chain is even more vulnerable to disruptions caused by from a lack of domestic sources of rare earth metals.
Valerie Bailey Grasso, defense acquisition specialist and author of the report, calls authorities to answer four important questions on rare earth elements:
Last year the U.S. Congress required the Pentagon to examine the use of rare earth materials in defense applications to determine if non-U.S. supplies might be disrupted and identify ways to ensure adequate supplies by 2015. In response, the Pentagon released a seven-page report titled “Rare Earth Materials in Defense Applications,” which concluded that although rare earth materials are “widely used within the defense industrial base…such end uses represent a small fraction of U.S. consumption.”
While China produced about 98% of the world’s yttrium in 2011, U.S. natural reserves of that material are about half as large, said that study.
Brett Lambert, the Pentagon official responsible for industrial policy, said early last week that Defense Department would intervene in case of a shortage of rare earth materials for defense electronics and motors.
Even at the height of export restrictions placed by China in 2010, Lambert told Bloomberg that there was no evidence U.S. defense contractors faced such shortages.
China dominates the world’s rare earths production, accounting for more than 95% of global supply – a situation that has often generated protests from foreign manufacturers who rely on Chinese rare earths.
Last month, the U.S., Japan and the European Union filed an official complaint at the World Trade Organization, urging the body to take actions against China’s restrictions on these metals.
In 2011, Beijing imposed an export quota of 30,184 metric tonnes, marginally reduced from 30,258 metric tonnes in 2010. For 2012, based on analyst calculations, the country’s full-year quota may hit approximately 31,130 metric tonnes.
China underlined that it feels that export restrictions are necessary in order to maintain domestic demand and protect the environment. The WTO responded by stating that it considers the argument illegitimate and that China has been “unable to demonstrate” the benefits of its policies on the environment. At present the ruling does not include rare earth metals, however analysts are hoping to see China alter some of its rare earth policies as a result of the ruling moving forward.
Last year, in the midst of China’s crackdown on illegal rare earths mines, prices for rare earths went up by as much as ten times their value from 2011, before beginning to gradually come down again.
Comments
Brent
China did the same thing a few years back with rare earth Phosphors used in the manufacture of fluorescent light bulbs. To my knowledge no action was taken by the WTO when they increased the price by around 1000%, so I won’t hold my breath on this one. They’ll change their tune when (if) other countries begin production and export of metals on level that can compete.