Industry calls for US critical minerals strategy

By Mark Watts
Published: Tuesday, 28 February 2012

US risks falling behind rivals in green-tech; Urged to develop domestic resources; Incentives needed to promote investment

Leah Germain

A clear coordinated critical minerals strategy is needed if the US is to compete in global markets for clean energy and technology, warn key industry figures.

In the State of the Union address on 24 January, President Barack Obama emphasised the importance of developing energy sources that prevent the US from being dependent on foreign resources. Alternative energy and transport technology requires a range of industrial minerals, including rare earths, lithium and graphite.

Yet critical minerals experts warn that any potential strategies in this area are bound to fail unless the US government comes up with a proactive plan to drastically expand the country’s rare earth mining and technology sector.

Michael Silver, CEO of global manufacturer and supplier of advanced materials, American Elements, said that the development of a rare earth mining programme in the US was of the utmost importance.

“[In his speech, President Obama] talks about the cost of home-grown manufacturing and home-grown alternative energy industries that will bring us out of this economic situation,” Silver told IM.

“The key thing that is being missed is that America no longer has control of these raw materials necessary to build these inventions.”

In the case of rare earths, the US has access to 13% of known global rare earth reserves, but is dependent on foreign imports, primarily from world-leading producer China.

Government support needed

The CEO of California-based lithium producer Simbol Materials, Luka Erceg, believes the US risks falling behind economies like China, South Korea and Japan, which he says have clear and consistent critical materials policies that drive domestic production.

“In the case that minerals exist here in the US, they should be produced. You should encourage the development of these various steps in the supply chain, but I wouldn’t suggest that it’s only because of a national security issue. It’s more about economic security,” Erceg said.

“If you miss the minerals portion, you miss the opportunity for the material science component, you miss the ability to innovate new production techniques that take out inefficiency in the market,” he added.

Simbol itself benefited from a $3m grant from the Department of Energy’s (DOE) Geothermal Technology Programme in 2009, which triggered around $43m in further commercial capital.

But Erceg warned that the government should not focus its incentives too heavily on individual companies and projects.

“I think that when governments promote activities they need to spread it far and wide. You should not give concentrated large pools of capital to single companies as this puts the government in the position of picking winners and losers,” Erceg said.

“We think that the government should be choosing a policy area. If clean-tech is important, then spread the investments where we can be intellectually honest about opportunities and see which ones play out in the marketplace,” he added.

According to rare earths expert Jim Hedrick, chairman of the US Rare Earths advisory board, one of the greatest hurdles for the American rare earths mining industry is getting the necessary government support in the form of timely permits and loan guarantees.

“The US is way far behind - part of it is that the US government does not have enough people to actually do the job in a timely matter - because they have cut back so much that the US government is pretty ineffective,” said Hedrick.

There are certain lawmakers making an effort to propel American rare earth industry forward. In June 2011, for example, the US Senate introduced two different pieces of legislation meant to address the issue of rare earth shortages in the US.

The first the Critical Minerals Policy Act, introduced by Alaskan Republican Senator Lisa Murkowski - is meant to address the issue of rare earth shortages that could inhibit innovation in the 21st century.

“What sets this bill apart is not only a more comprehensive look at the various minerals we depend on, but also its attention to the broader supply chain, including [issuing permits] for domestic mineral production, where the US is ranked last in the world, ”said Sen. Murkowski in an official communique.

The second piece of legislation – the Critical Minerals and Materials Promotion Act, introduced by Democratic Senator Jeff Bingaman, of New Mexico – seeks to address the issue of creating profitable domestic rare earth mines for the US.

According to Sen. Bingaman’s spokesperson, both legislations are currently being reconsidered, in order to reconcile the differences between the two, in the aim of creating one coherent bill, instead.

New legislation?

Meanwhile, in the House of Representatives, new legislation and amendments are being considered that would change the rare earth clauses of the National Defense Authorization Act.

Colorado Representative Mike Coffman, a Republican, for instance, introduced two amendments in December 2011 aiming to boost domestic stockpiles of rare earth elements.

The first amendment requires the Defense Logistics Agency (DLA) Strategic Materials to establish an inventory of rare earth oxides, metals, alloys and magnets for defence purposes. This would require the DLA to develop steps to maintain a competitive, multi-source supply chain in order to avoid reliance on one country.

The second amendment requires the defence secretary to report back to Congress on the feasibility of recycling, recovering and reprocessing rare earth elements from defence facility fluorescent lighting, weapons systems, neodymium iron boron magnets and commercial off-the-shelf items, such as computer hard drives.

So, there is action in Congress - but none of these legislative measures have yet passed. And even with both arms of the US Congress working to create stability and support for the rare earths mining industry, Hedrick warns that if legislation does not move forward quickly enough, the US will miss out on its opportunity to gain grown in the rare earth sector.

“We are at a critical junction. Two things that will happen: one, we will just have to do without minerals - not just rare earth metals - but a whole bunch of them will be in short supply,” he said. “And [what] will follow [is] that we will have to pay significant additional amounts...”