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Chinese price manipulation has taken its toll on the U.S. economy

Rare earth metals are an increasingly integral part of everything from automobiles to television sets.  But the precious metals are tightly controlled by China, with an excess of 95 percent of current suplly coming from Chinese-owned mines and refineries.  The degree of control has allowed China to manipulate prices, cutting back on demand to sell less material for the same amount of profit, any businessperson's dream.

I. New Private-Public Partnership Sets Aim on Chinese Mineral Hegemony

The problem is that it takes several years or more to bring rare earth metal mines and refineries online; and the capital costs of such facilities are very high.  It took China decades of clever planning to set itself in its current peachy position of rare earth hegemony.  Now the U.S. is racing to try to recover, before Chinese price manipulation deals too much of a blow to the U.S. economy.

The U.S. Department of Energy has committed a relatively large investment of $120M USD to establish an Energy Innovation Hub under the supervision of Ames Labs to research ways to expand domestic rare earth production and otherwise cut reliance on Chinese rare earth supplies.

Rare earth metals
The U.S. is investing deeply to try to cut its reliance on Chinese rare earth metal supplies.
[Image Source: Nelson Ching/Bloomberg]

The new lab, dubbed the Critical Materials Institute (CMI), will be a joint effort between a number of large domestic firms in the private sector, universities, and top government research labs.  

In addition to Ames Lab, other national labs involved include Idaho National Laboratory (INL), Lawrence Livermore National Laboratory (LLNL), and Oak Ridge National Laboratory (ORNL).  On the university side, major contributors will include Brown Univ., the Colorado School of Mines (CSM), Purdue Univ., Rutgers Univ., Univ. of California-Davis (UC Davis), Iowa State Univ. (IA State), and the Florida Industrial and Phosphate Research Institute.

Corporate partners include General Electric Comp. (GE), OLI Systems Inc., Spintek Filtration, Advanced Recovery, Inc., Cytec Industries, Inc. (CYT), Molycorp Inc. (MCP), and Simbol, Inc. (Simbol Minerals).

II. Attacking the Problem From All Angles

Among the research projects will be:
  • Improve rare earth recycling/reuse
  • Improve extraction processes
  • Develop rapid deployment mining techniques
  • Develop rare earth material substitutes
  • Study and optimize supply chains to minimize waste
Top targets for domestic rare earth production include neodymium -- used in neodymium iron boron (NeFeB) hard drive magnets and cell phone components -- and samarium -- used in samarium cobalt (SmCo) drive magnets.  Currently the U.S. has no domestic neodymium producers and only one domestic samarium producer.

Neodymium
The U.S. has no domestic producers of neodymium magnets. [Source: ThinkGeek]

The Government Accountability Office (GAO) in a 2011 research report [PDF] suggests that the U.S. rare earth supply chain, phased out in the 1980s at a time when the 17-element family looked non-critical, will take approximately 15 years to rebuild.  The new lab aims to assist in that slow and arduous recovery.

The U.S. also will continue to purse action against China before the World Trade Organization (WTO) where it has filed complaints about the Chinese price manipulation.

Sources: DOE, Ames Lab



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This article is over a month old, voting and posting comments is disabled

By dgingerich on 1/11/2013 11:28:41 AM , Rating: 3
It's smarter for us to not use up our resources on such thing while other countries supply it, with our oil, rare earths, or anything else.

Here's why: ok, with any depletable resource, if you have the wealth, buy up the resources that other sources offer, wait for them to deplete their supply, then as they supply from around the world runs down, ramp up local sources and sell at much higher rates due to the shortage. In the long run, we're much better off.

Sure, we can buy from China now, and it is smart for them to restrict their supply artificially, but we're smarter to save our supply and get it from whoever else might have it. I've heard there are a couple countries down in South America that have decent supplies.

On top of all that, the government shouldn't be spending money on this sort of thing. It's such a waste.




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