[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
RARE EARTH MINERALS AND
21ST CENTURY INDUSTRY
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HEARING
BEFORE THE
SUBCOMMITTEE ON INVESTIGATIONS AND
OVERSIGHT
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
MARCH 16, 2010
__________
Serial No. 111-86
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.science.house.gov
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COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chair
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
DAVID WU, Oregon LAMAR S. SMITH, Texas
BRIAN BAIRD, Washington DANA ROHRABACHER, California
BRAD MILLER, North Carolina ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois VERNON J. EHLERS, Michigan
GABRIELLE GIFFORDS, Arizona FRANK D. LUCAS, Oklahoma
DONNA F. EDWARDS, Maryland JUDY BIGGERT, Illinois
MARCIA L. FUDGE, Ohio W. TODD AKIN, Missouri
BEN R. LUJAN, New Mexico RANDY NEUGEBAUER, Texas
PAUL D. TONKO, New York BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey MICHAEL T. McCAUL, Texas
JIM MATHESON, Utah MARIO DIAZ-BALART, Florida
LINCOLN DAVIS, Tennessee BRIAN P. BILBRAY, California
BEN CHANDLER, Kentucky ADRIAN SMITH, Nebraska
RUSS CARNAHAN, Missouri PAUL C. BROUN, Georgia
BARON P. HILL, Indiana PETE OLSON, Texas
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
JOHN GARAMENDI, California
VACANCY
------
Subcommittee on Investigations and Oversight
HON. BRAD MILLER, North Carolina, Chair
STEVEN R. ROTHMAN, New Jersey PAUL C. BROUN, Georgia
LINCOLN DAVIS, Tennessee BRIAN P. BILBRAY, California
CHARLES A. WILSON, Ohio VACANCY
KATHY DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
BART GORDON, Tennessee RALPH M. HALL, Texas
DAN PEARSON Subcommittee Staff Director
JAMES PAUL Democratic Professional Staff Member
KEN JACOBSON Democratic Professional Staff Member
TOM HAMMOND Republican Professional Staff Member
C O N T E N T S
March 16, 2010
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Bart Gordon, Chairman, Committee on
Science and Technology, U.S. House of Representatives.......... 11
Written Statement............................................ 12
Statement by Representative Brad Miller, Chairman, Subcommittee
on Investigations and Oversight, Committee on Science and
Technology, U.S. House of Representatives...................... 11
Written Statement............................................ 14
Statement by Representative Paul C. Broun, Ranking Minority
Member, Subcommittee on Investigations and Oversight, Committee
on Science and Technology, U.S. House of Representatives....... 15
Written Statement............................................ 15
Witnesses:
Dr. Stephen Freiman, President, Freiman Consulting, Inc.
Oral Statement............................................... 17
Written Statement............................................ 21
Biography.................................................... 24
Dr. Steven J. Duclos, Chief Scientist and Manager, Material
Sustainability, General Electric Global Research
Oral Statement............................................... 25
Written Statement............................................ 26
Biography.................................................... 30
Dr. Karl A. Gschneidner, Jr., Anson Marston Distinguished
Professor, Department of Materials Science and Engineering,
Iowa State University
Oral Statement............................................... 30
Written Statement............................................ 33
Biography.................................................... 46
Mr. Mark A. Smith, Chief Executive Officer, Molycorp Minerals,
LLC
Oral Statement............................................... 47
Written Statement............................................ 49
Biography.................................................... 61
Mr. Terence Stewart, Esq., Managing Partner, Stewart and Stewart
Oral Statement............................................... 62
Written Statement............................................ 63
Biography.................................................... 68
Discussion
Early Warning for Material Supply Problems..................... 68
How to Compete With China...................................... 70
Prioritizing Responses to Shortage............................. 70
Role of Federal Agencies....................................... 71
Improving Research Infrastructure.............................. 73
Funding for Rare Earth Research................................ 73
Domestic Sources of Rare Earths................................ 74
Expanding U.S. Workforce....................................... 75
Dependence on Foreign Products................................. 75
Maintaining a Complete Supply Chain............................ 76
Keeping Manufacturing in the U.S............................... 77
Balancing Private and Public Needs............................. 78
Chinese Industrial Strategy.................................... 78
Funding Models for Materials Research.......................... 78
Timeframe for Re-Starting Domestic Production.................. 79
Appendix: Answers to Post-Hearing Questions
Dr. Stephen Freiman, President, Freiman Consulting, Inc.......... 82
Dr. Steven J. Duclos, Chief Scientist and Manager, Material
Sustainability, General Electric Global Research............... 83
Dr. Karl A. Gschneidner, Jr., Anson Marston Distinguished
Professor, Department of Materials Science and Engineering,
Iowa State University.......................................... 85
Mr. Mark A. Smith, Chief Executive Officer, Molycorp Minerals,
LLC............................................................ 87
Mr. Terence Stewart, Esq., Managing Partner, Stewart and Stewart. 88
RARE EARTH MINERALS AND 21ST CENTURY INDUSTRY
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TUESDAY, MARCH 16, 2010
House of Representatives,
Subcommittee on Investigations and Oversight,
Committee on Science and Technology,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:01 p.m., in
Room 2318 of the Rayburn House Office Building, Hon. Brad
Miller [Chairman of the Subcommittee] presiding.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
hearing charter
Purpose
The United States, as part of its strategy to reduce emissions from
electricity generation and transportation, is investing significant
funds in renewable energy technologies such as wind power and hybrid
vehicles. The American Recovery and Reinvestment Act provides $2.3
billion for advanced energy manufacturing facilities, including wind
turbine manufacturing plants. The Act further makes available $2
billion ``. . . for Advanced Battery Manufacturing grants to support
the manufacturing of advanced vehicle batteries and components . . .''
Yet these investments may fail to prompt the desired outcome--a buoyant
industry producing renewable energy systems--for lack of rare earth
minerals.\1\
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\1\ These minerals were named ``Rare Earths'' at the time of their
discovery as they were originally found in the form of oxides (bound
together with oxygen; compounds were called ``earths'' by scientists in
the late 18th Century). ``Rare'' reflected the fact that the Swedish
scientists who originally separated the various compounds had not
encountered them before. Today, the name is somewhat misleading in that
``. . . even the two least abundant, thulium and lutetium, are nearly
200 times as abundant as gold . . ..'' Committee on Critical Mineral
Impacts on the U.S. Economy, Minerals, Critical Minerals and the U.S.
Economy (Washington: National Research Council, 2008); p. 133
(hereafter cited as NRC Report).
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The United States finds itself dependent on the People's Republic
of China for a commodity without which it would be hard to compete in
high-technology industries. With a near-monopoly in supplies of rare
earths, the Chinese government threatens to limit exports and tries to
induce manufacturing firms to locate their facilities in Inner
Mongolia. The main American supplier is seeking funding to restart its
mining operation, which closed in 2002, having suffered from low prices
as China expanded into the market and from a late start on renewing its
environmental permits in California. Support for research has
diminished.
This hearing by the Subcommittee on Investigations and Oversight
will examine these intertwined threads to determine ways of redressing
the expected imbalance between available supplies of rare earths and
the Nation's need for them. The hearing will also ask why the policy
structure put in place thirty years ago precisely to identify and
respond to situations like this before they became acute bottlenecks
failed to do its job.
Witnesses
Dr. Stephen W. Freiman
President, Freiman Consulting, Inc.
Member, National Research Council Committee on
Critical Mineral Impacts on the U.S. Economy
Dr. Freiman will present the findings and recommendations of the
most recent National Research Council study evaluating potential
responses to fluctuations in the supply-demand balance for minerals and
materials. The Council included rare earth minerals among the cases
analyzed, concluding that there are sufficient supply risks for rare
earths to be classified as a critical resource. Dr. Freiman, a
materials scientist, served as Chief of the Ceramics Division and
Director of the Materials Science and Engineering Laboratory during a
career at the National Institute of Standards and Technology that
spanned 28 years. A specialist in the fracture of brittle materials, he
has published more than 150 scientific papers.
Dr. Steven Duclos
Chief Scientist and Manager, Material Sustainability
General Electric Global Research
Dr. Duclos will testify on the process underlying General
Electric's Materials Sustainability Initiative, which assesses the
company's businesses for risks posed by lack of raw materials. If a
problem is identified, are there steps to reduce that risk by finding
substitutes, reducing the need for the material or recycling? Terbium,
one of the rare earths, was identified as a high risk for GE by the
Initiative. Dr. Duclos managed the company's Optical Materials
Laboratory, working with GE units to develop advanced materials. He
came to GE from a post-doctorate position at the AT&T Bell Labs
studying superconductivity in buckminsterfullerene, the form of carbon
popularly known as ``buckyballs.''
Dr. Karl A Gschneidner, Jr.
Anson Marston Distinguished Professor
Department of Materials Science and Engineering
Iowa State University
Dr. Gschneidner's testimony will focus on current studies of rare
earths and the processes needed to convert the ores into industrially-
useful materials. He has also been asked for comments to recommend
improvements in the existing U.S. research program. In addition to his
professorship at Iowa State University, Dr. Gschneidner holds the
position of Senior Metallurgist at the Ames National Laboratory of the
Department of Energy. He has researched the properties of rare earth
minerals, has served as the Senior Editor of the Handbook of the
Physics and Chemistry of Rare Earths since 1976 and was for years
Director of the Ames Laboratory Rare Earth Information Center. Dr.
Gschneidner is currently funded by DOE to design a refrigerator using
magnets to control temperatures. He was elected to the National Academy
of Engineering in 2007.
Mr. Mark Smith
Chief Executive Officer
Molycorp Minerals, LLC
Mr. Smith's company is focused on restarting the mine in Mountain
Pass, California, holding the primary source of rare earth minerals in
the United States. The mine was previously owned by the mining
subsidiary of the Chevron Corporation, which acquired it as part of its
purchase of the Union Oil Company of California. Mr. Smith, who served
as head of Chevron's mining subsidiary, left to become President and
CEO of Molycorp in April 2006 and negotiated to buy the Mountain Pass
mine from his old company in 2007. Operations at the mine were halted
after accidental spills and failure to complete environmental permits
required by the State of California. Mr. Smith has been asked to
describe his plan for restoring mining operations and for expanding the
company into the production of magnets for next-generation wind turbine
generators.
Mr. Terence Stewart, Esq.
Managing Partner
Stewart and Stewart
Mr. Stewart has an extensive history in international trade and
customs law. He is a leading expert on the World Trade Organization and
has assisted industry and labor groups with trade issues. Given China's
outsized role in the rare earths market and its efforts to increase its
influence in high-technology industries, Mr. Stewart has been invited
to present his insights into China's policies and actions on resource
issues and into their ramifications for U.S. industry and the economy.
Background
In November 2009, the Australian Broadcasting Corporation
summarized the rare earths issues quite succinctly:
The rare earth metals story is one lens through which we can
view changing world economics, the ways and the pitfalls of how
China integrates with the capitalist world, and global trade.
China provides more than 90% of the world's supply of rare
earths. The business media in particular is full of stories of
how if the Chinese hold back on their supply of rare earths,
your iPhone won't work. And more, much more. Climate change
comes into it, too, because the green technologies are very
dependent on rare earths.\2\
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\2\ Stan Correy. ``Background Briefing: Rare Earths and China.''
Australian Broadcasting Corporation transcript, November 15, 2009.
Accessed at http://www.abc.net.au/rn/backeroundbriefing/stories/2009/
2738774.htm, January 28, 2010.
The current issues relating to rare earths supply and demand
represent the latest instance of a continuing story in which what was
an obscure, commodity mineral or material suddenly assumes outsized
importance. Industry finds new uses that strain supplies, and American
firms find that there are no domestic suppliers. In 1985, the Office of
Technology Assessment (OTA) published Strategic Materials: Technologies
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to Reduce U.S. Import Vulnerability in response to concerns that
Three nations, South Africa, Zaire, and the U.S.S.R., account
for over half of the world's production of chromium, cobalt,
manganese, and platinum group metals. These metals are
essential in the production of high-temperature alloys, steel
and stainless steel, industrial and automotive catalysts,
electronics, and other applications that are critical to the
U.S. economy and the national defense . . ..\3\
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\3\ Strategic Materials: Technologies to Reduce U.S. Import
Vulnerability (Washington, DC: U.S. Congress, Office of Technology
Assessment, OTA-ITE-248, May 1985); p.3.
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At that time, OTA identified the following as options for the
Federal Government to pursue: increase exploration for domestic
sources, find new overseas suppliers, find substitutes or reduce the
need. Many of these same options apply to the case of rare earth
minerals--although the unique properties that make these elements
valuable may not be found in any substitute materials or minerals.\4\
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\4\ NRC Report, p. 131.
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The Global Rare Earths Playing Field
The United States Geological Survey's Minerals Information Team
annually publishes Mineral Commodity Summaries, collecting information
on supply, demand and market activity on some 90 minerals and
materials, among them the rare earths. In January 2010, the most recent
summary for the rare earths was issued, with data current to 2008.\5\
USGS reported there that the United States was completely dependent on
imports: between 2005 and 2008, 91% of its consumption came from China,
3% from France, 3% from Japan, 1% from Russia and 2% from other
sources. The estimated cost of processed ore suitable for extracting
rare earths rose from $6.61 to $8.82 per kilogram between 2007 and
2008, then dropped back to $5.73 during 2009.\6\
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\5\ James B. Hedrick, ``Rare Earths,'' in Mineral Commodity
Summaries 2009 (Reston, VA: United States Geological Survey; January
2010); pp. 128-129.
\6\ Ibid., p. 128.
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USGS issued the following assessment of global rare earths supply:
\7\
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\7\ Ibid., p. 129.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Actions by the Chinese government (see the next section) and
growing world investment in renewable energy equipment have
reinvigorated efforts to identify new sources for rare earths. Molycorp
restarted its separation plant in 2007 and is processing residual
materials from its mine tailings. Australia has begun production at its
Mt. Weld deposit. Evaluation of the economic viability of producing in
Canada and Malawi is underway.\8\ An Australian mining company is also
studying a deposit in Greenland that could satisfy some 25% of world
needs over the next fifty years.\9\ Still, as Mr. Smith of Molycorp
notes, it takes significant funding and time to bring new mines into
production, and volatility in a commodity market can upset even well-
laid plans.
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\8\ Ibid.
\9\ Leo Lewis, ``Greenland Challenge to Chinese Over Rare Earth
Minerals,'' London Times, October 5, 2009; p. 39.
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China and the Global Market
Indications that China intended to reduce exports of the rare earth
materials is a major reason that this issue has recently gained
prominence. Reports last year indicated that the Ministry of Industry
and Information Technology had submitted the draft of a six-year plan
to the State Council of China that contemplated deepening existing cuts
in shipments of minerals like dysprosium.\10\ The ministry stated that
it was concerned that China lacked enough of the minerals to meet its
own needs.\11\ The Japanese Ministry of Economy, Trade and Industry had
earlier developed a ``Strategy for Ensuring Stable Supplies of Rare
Metals'' after the threat that China might limit supplies came to the
attention of the Cabinet in Tokyo.\12\
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\10\ Keith Bradsher, ``China Tightens Grip on Rare Minerals,'' New
York Times, September 1, 2009; p. B1. See also Ambrose Evans-Pritchard,
``World Faces Hi-Tech Crunch as China Eyes Ban on Rare Metal Exports,''
Telegraph.co.uk on August 24, 2009 at 5:58 PM BST. Accessed at http://
www.telegraph.co.uk/finance/commentlambroseevans-pritchard/
6082464/World-faces-hi-tech-crunch-as-China-eves-ban-on-rare-metal-
exports.html, October 15, 2009.
\11\ Feiwen Rong and Xiao Yu, ``Shortage of Rare Earths Used in
Hybrids, TVs May Loom in China,'' Bloomberg News on September 3, 2009
at 4:54 AM EDT. Accessed at http://www.bloomberg.com/apps/
news?pid=20601080&sid=afn.hOk6eEHq, October 17, 2009.
\12\ Ministry of Economy, Trade and Industry, ``Announcement of
'Strategy for Ensuring Stable Supplies of Rare Metals,'' July 28, 2009.
Accessed at http://www.meti.go.jp/english/press/data/
20090728-01.html, October 15, 2009.
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The rare earths issue showcases two major elements of China's
strategy for economic development:
the targeting of critical industries that are to be
kept under government control; and
the use of subsidies and other incentives to attract
foreign investment that will result in moving China's
production up the value chain, bringing advanced technology
into the country, and generating sophisticated exports.
Non-ferrous metals, the category into which rare earths fall,
represent one of six industries that the Chinese government considers
most central to economic performance and growth. The other five of
these ``Heavyweight Industries'' are machinery; automobiles;
information technology; construction; and iron and steel. Plans to keep
the nation's economy under control call for state ownership of the
three largest firms in each industry.\13\
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\13\ A similar plan is in place for the country's seven
``Strategic'' industries: armaments; power generation and distribution;
oil and petrochemicals; telecommunications; coal; civil aviation; and
shipping. The firms in this sector are to be subject to ``absolute
control'' by the government, while, in the ``Heavyweight'' sphere, the
government is looking for no more than a ``dominant presence.'' U.S.-
China Economic and Security Review Commission, Hearing on China's
Industrial Policy and its Impact on U.S. Companies, Workers, and the
American Economy, testimony of George Haley, March 24, 2009.
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China's government has long been aware of its rare earths deposits'
potential value and thought of them in strategic terms. An official
publication quotes a 1992 statement by then-Paramount Leader Deng
Xiaoping that ``there is oil in the Middle East; there is rare earth in
China.'' In conjunction with a 1999 visit to Inner Mongolia, where
China's largest deposit of rare earth minerals is located, then-
President Jiang Zemin wrote: ``Improve the development and applications
of rare earth, and change the resource advantage into economic
superiority.'' \14\
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\14\ ``Rare Earth: An Introduction,'' Baotou National Rare Earth
Hi-Tech Industrial Development Zone, accessed at http://www.rev.cn/en/
int.htm, January 29, 2010.
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Although China has reportedly abandoned a provision in its Rare
Earths Industry Development Plan 2009-15 that would have placed an
absolute ban on the export of five of the 17 rare earths, a ban on
exports of raw ores continues, as does the progressive lowering of
exports quotas on other forms of the materials that began in 2006.
Officials in China make no secret of their desire to bring the
manufacturing of the high-value-added products containing rare earths
into China. ``We want rare-earth industries to locate in Inner
Mongolia,'' Zhao Shuanglin, vice chairman of Inner Mongolia Autonomous
Region, stated in September 2009.\15\ At around the same time, Zhang
Peichen, the deputy director of Baotou Rare Earth Research Institute in
Inner Mongolia, predicted: ``Rare earth usage in China will be
increasingly greater than exports.'' \16\
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\15\ Chuin-Wei Yap, ``Will China Tighten `Rare Earth' Grip?,'' Wall
Street Journal, September 3, 2009; p. C12.
\16\ Bradsher, loc. cit.
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While its current near-monopoly in rare earths gives it a potent
stick, China has had outstanding success in using the carrot to enlist
foreign-based corporations' help in building up its economy. For the
past 15 years or more, multinational companies have shown themselves
eager to establish a presence in China to gain access to the country's
potentially huge market. But that is not the only reason they have
sited production and, more recently, research capacity there. ``China
has attracted the world's largest manufacturers by offering discounted
land, energy, and taxes to relocate in China and to use China as a
global export platform,'' according to the U.S.-China Economic and
Security Review Commission. As a result, ``more than half of China's
exports originate from foreign-invested manufacturing enterprises
located in China.'' \17\
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\17\ U.S.-China Economic and Security Review Commission, 2009
Report to Congress (Washington: U.S. Government Printing Office,
November 2009); p. 43.
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``Preferential Policies'' designed to attract foreign firms to the
Baotou National Rare Earth Hi-Tech Industrial Development Zone, located
less than 100 miles from China's huge rare earths mine at Bayan Obo in
Inner Mongolia, include both funding mechanisms and significant tax
incentives. For example, ``hi-tech enterprises'' and venture capital
companies are exempt from income tax for their first five years
operating in the Zone, then pay at only half of the regular 15 percent
rate during a second five-year period. They receive breaks on VAT and
operations taxes as well.\18\ The Baotou Industrial Development Zone's
Web site lists 25 options on a page titled ``Projects Seeking
Investment,'' many of them focusing on rare earths and several of them
in the area of ``green technologies.'' Among these projects are:
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\18\ ``Preferential Policies,'' Baotou National Rare Earth Hi-Tech
Industrial Development Zone, accessed at http://www.rev.cn/en/pre.htm,
January 29, 2010.
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``Nickel Hydrogen Power Battery Polar Plate'';
``Hydrogen-Store Alloy Powder Cathode Material of Ni-
Hydrogen Power Battery'';
``Industrialization of Rare Earth Ceramic Piston
Ring'';
``Production Line of Rare Earth Giant
Magnetostrictive Alloy'';
``The Technology of Special Rare Earth Ceramic
Thermocouple Tube'';
``Industrialization of Nanometer Crystal Rare Earth
Alloy Magnetic Powder''; and
``Annual Production of 200000 Units of Magnet Motor
for Electric Bicycle.\19\
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\19\ ``Catalog,'' Baotou National Rare Earth Hi-Tech Industrial
Development Zone, accessed at http://www.rev.cn/en/pro.htm, January 29,
2010.
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Reviving Research
Iowa State University (ISU) became a hub of rare earth research as
its contribution to the Manhattan Project.\20\ Dr. Gschneidner carries
on the tradition in rare earth research, focusing today on the behavior
of rare earths at low temperatures or in high magnetic fields. He is
currently receiving funds from the Department of Energy to build a
refrigerator that achieves cooling by magnetism, employing magnets
containing rare earths. Dr. William McCallum has recently begun seeking
a cheaper or more readily available substitute for the rare earths
incorporated into the permanent magnet used in a hybrid vehicle's
generator. If his project is successful, a potential bottleneck for
hybrid vehicle manufacturers will be eliminated. These are elements of
the broader effort on magnet development at the Lab.\21\ Both Drs.
Gschneidner and McCallum served as director for the Rare Earth
Information Center at Ames. Established as an information clearinghouse
on the minerals by the Atomic Energy Commission in 1966, it was closed
in 2002.
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\20\ The first chain reaction, initiated December 2, 1942, used
natural uranium, which is very low in the fissionable isotope U-235.
When a U-235 atom splits, rare earths may be among the resulting
fragments. Because these might soak up the excess neutrons in the
reactor that would sustain the chain reaction, research was needed on
how to separate rare earths from uranium and plutonium. Iowa State
succeeded in developing separation methods that could produce rare
earths that were sufficiently purified to permit the needed research
program. Harry J. Svec, ``Prologue,'' in Gschneidner and Eyring, eds.,
Handbook on the Physics and Chemistry of the Rare Earths, Vol. 11
(Amsterdam: Elsevier Science Publishers, BV, 1988); p. 15. In 1947, the
newly-formed Atomic Energy Commission chose the school as the home for
the Ames National Laboratory and appointed Dr. Frank Spedding as its
first director. Spedding, a leader in rare earth chemistry, improved
his original processing methods to the point where Ames became the
major supplier to the scientific community and the AEC laboratories.
Spedding oversaw an extensive basic research effort characterizing the
properties of rare earths in solutions and continued to develop
industrial-scale processing for these materials. Ibid., p. 16.
\21\ Communication from Iver Anderson, Senior Metallurgist, Ames
National Laboratory, January 7, 2010.
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In discussing the needs for research in minerals and materials, the
NRC Committee on Critical Mineral Impacts on the U.S. Economy drew
heavily on a 2006 industry study by the Industrial College of the Armed
Forces.\22\ That analysis placed rare earths in a category recommended
for government support to develop materials offering superior
properties for defense and commercial applications. Designers and
engineers prefer materials with well-understood properties, but this
conservative tendency can stymie innovation by limiting the opportunity
to improve performance or efficiency. Agencies like NASA and the
Department of Defense invest in studies of materials to put real-world
data into the handbooks that program managers consult when writing
system specifications. The decision to employ a new material often
requires reworking existing production methods or introducing entirely
new processes. Perfecting these can consume years, and the government
may be alone in its willingness to support a project lasting that
long.\23\
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\22\ Lt. Col Carl Buhler, USAF et al. Strategic Materials: AY 2005-
2006 Industry Study Final Report. Industrial College of the Armed
Forces, National Defense University, Ft. McNair, Washington, D.C.,
2006. (hereafter cited as ICAF Report)
\23\ Ibid., pp. 6-9.
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The NRC report notes: ``Many government efforts specifically focus
on innovative research in materials specialties. These efforts support
a variety of worthwhile research in materials science. However,
individual agencies award many of these grants on an individual or
somewhat ad hoc basis that is not the product of a coordinated research
strategy. In particular, they rarely address mineral information needs
or consider mineral supply and demand data or criticality, either short
or long term.'' \24\ The panel therefore calls for:
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\24\ NRC Report, p. 195.
Theoretical geochemical research to better identify
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and quantify virgin stocks that are potentially minable;
Research on extraction and processing technology to
improve energy efficiency, decrease water use, and enhance
material separation;
Research on remanufacturing and recycling technology,
key components in increasing the rate and efficiency of
material reuse; and
The characterization of stocks and flows of
materials, especially imports and exports, as components of
products, and of losses upon product discard. This lack of
information impedes planning on many levels.\25\
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\25\ Ibid., p. 192.
This proposed program is consistent with the research effort
required by the National Materials and Minerals Policy, Research and
Development Act of 1980.\26\
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\26\ 30 U.S.C. 1602(2).
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The Policy Framework
Thirty years ago, the National Materials and Minerals Policy,
Research and Development Act was enacted because
. . . [T]he United States lacks a coherent national materials
policy and a coordinated program to assure the availability of
materials critical for national economic well-being, national
defense, and industrial production, including interstate
commerce and foreign trade . . ..\27\
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\27\ 30 U.S.C. 1601(a)(6).
The Congress declared it the President's responsibility to
coordinate a plan of research and other actions that would ``. . .
promote an adequate and stable supply of materials necessary to
maintain national security, economic well-being and industrial
production with appropriate attention to a long-term balance between
resource production, energy use, a healthy environment, natural
resources conservation, and social needs.\28\ Our current situation
with rare earth minerals indicates that successive Administrations
failed to carry out this policy.
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\28\ 30 U.S.C. 1602.
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The 1980 Act directed development of a plan that would, among other
outcomes, produce continuing assessments of demand for minerals and
materials in the economy; conduct a ``vigorous'' research and
development effort; collect, analyze and disseminate information; and
cooperate with the private sector and other nations.\29\ In April 1982,
President Reagan delivered a response to that directive.\30\
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\29\ 30 U.S.C. 1603.
\30\ ``National Materials and Minerals Program Plan and Report to
Congress,'' April 1982.
---------------------------------------------------------------------------
Dissatisfied with the plan and its implementation, Congress decided
in the National Critical Materials Act of 1984 to establish a National
Critical Materials Council in the Executive Office of the President to
serve as the focal point for critical materials policy. The Council was
tasked to assist the President in carrying out the requirements of the
1980 Act.\31\ Yet by 1989, as the first Bush Administration took
office, reports indicated that the Council was effectively moribund and
that President Reagan's final budget request recommended that it be
eliminated.\32\ Senator Harry Reid took strong exception to the view of
Acting Council Chairman Thomas Moore ``. . . that there is no need for
a centralized agency like the council because other agencies already
are authorized to address critical material issues.'' \33\ The Council
survived that brush with extinction, but ultimately succumbed to a
recommendation by President Clinton's science advisor, Director of the
Office of Science and Technology Policy (OSTP) Dr. John Gibbons, to
terminate the Council and transfer its responsibilities to the National
Science and Technology Council (NSTC) established within OSTP by
Executive Order 12881.\34\ Funding for the Critical Materials Council
was dropped in the Fiscal Year 1994 General Government Appropriation
Act.\35\
---------------------------------------------------------------------------
\31\ 30 U.S.C. Chapter 30.
\32\ ``New budget to cut NCMC, R&D at Mint and land purchases,''
Metals Week, January 16, 1989; p. 3.
\33\ Marilyn Werber, ``Senator Blasts Plan to Abolish NCMC,''
American Metal Market, April 6, 1989; p. 2.
\34\ Ex. Ord. 12881, ``Establishment of the National Science and
Technology Council,'' November 23, 1993; 58 Fed. Reg. 62491. Dr.
Gibbons tied the reorganization both to President Clinton's decision to
reduce staff within the White House and to the National Performance
Review conducted by Vice President Gore. Bill Loveless, ``Gibbons to
Propose Formation of Science and Tech Council,'' Federal Technology
Report, September 2, 1993; p. 1.
\35\ Public Law 103-123, October 28, 1993.
---------------------------------------------------------------------------
In 1995 and 1996, the NSTC published reports on The Federal
Research and Development Program in Materials Science and Technology.
No equivalent report has been produced since, however, and inquiries
made of OSTP failed to locate the ``long-range assessments of materials
needs related to scientific and technological concerns'' or
``scientific and technical changes over the next five years'' whose
annual preparation the statute requires.\36\ It empirically
demonstrates the failure to implement the responsibilities assigned by
Congress in the 1980 Act through multiple administrations. The
Committee has learned that the situation with rare earth supplies has
galvanized OSTP to convene a group of senior officials and subject-
matter experts from a number of Federal agencies to discuss the
potential utility of White House coordination in the matter. The
Committee has decided to revisit policy issues it thought it had
settled decades ago to determine how to avoid finding ourselves in
similar straits in the future.
---------------------------------------------------------------------------
\36\ 30 U.S.C. 1604(b)(2) and (3).
---------------------------------------------------------------------------
Appendix: The Value of Rare Earth Minerals
The subject of today's hearing is the 15 elements found in the so-
called lanthanide series of the Periodic Table.\37\ The U.S. Geological
Survey describes them as ``iron gray to silvery lustrous metals that
are typically soft, malleable, ductile, and usually reactive,
especially at elevated temperatures or when finely divided.'' \38\
---------------------------------------------------------------------------
\37\ As scandium and yttrium fail within the same period (column)
on the Periodic Table, they are often counted as rare earths. The
actinide series (the elements between actinium and lawrencium) can also
be included, but they are noted mostly for their radioactive properties
and are not the subject of the hearing.
\38\ James D. Hedrick, 2007 Minerals Yearbook. Rare Earths (Reston:
U.S. Geological Survey, 2009); p. 60.1.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
These elements are normally obtained as byproducts from mining for
other materials. The chemical properties of these elements are quite
similar, which complicates separating them; the production process must
be tailored to the composition of the ore extracted from a given
deposit.
Industry tends to divide these into ``light'' and ``heavy''
elements, moving from lanthanum to the right along the row. The
``heavy'' elements tend to have greater economic value. One aspect of
the supply problem for the United States is that the Mountain Pass
deposit lacks many of the heavier elements, whereas the major Chinese
producer, the Bayan Obo mine, can provide the more valuable dysprosium
and terbium.
Rare earths contribute to a number of industries, usually
incorporated into metal alloys to enhance electrical or magnetic
capabilities. The hearing today will consider their major contributions
to renewable energy applications. Electrical generators need magnets; a
smaller magnet producing a stronger field can reduce the final size of
a wind turbine even as its power output increases. Combining neodymium
with iron and boron, or samarium with cobalt, can produce these more
efficient components. Hybrid automobiles, such as Toyota's Prius or the
new Chevrolet Volt, depend on rechargeable batteries. Incorporating
lanthanum into the nickel-metal-hydride battery electrolyte enhances
the power output, resulting in increased vehicle range even as the
battery itself gets smaller and lighter.
The following chart gives some sense of the breadth of other uses:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Having applied the criticality matrix developed as part of their
study, the NRC committee concluded:
The relatively high composite weighted score for REs [rare
earths] of 3.15 . . . [on a scale of 1-4] reflects the
diversity of applications for the RE family, the importance of
those applications, and the steady growth in consumption and
has led our committee to suggest that disruptions in the
availability of REs would have a major negative impact on our
quality of life . . .. In our view, most of the applications
are somewhat to very important since substitutes are generally
less effective.\39\
---------------------------------------------------------------------------
\39\ NRC Report, p. 133.
---------------------------------------------------------------------------
Chairman Miller. This hearing will now come to order. Good
afternoon. Welcome to today's hearing entitled Rare Earth
Minerals and 21st Century Industry.
Before we begin, we have a request from the gentleman from
Colorado, Mr. Coffman, to join the Subcommittee for this
hearing, and unless there is an objection--hearing none, I
would like to invite him to join us on the dais, which he is
already there. You may remain where you are, and I will remind
folks that non-committee members are only recognized for
questions after all committee members have been recognized--
which will not be that much of a problem today, it does not
look like.
We will now recognize Mr. Gordon is here, and I understand
that he has votes in another committee shortly, so we will
recognize him first so he may go to vote.
Chairman Gordon. Thank you, Chairman Miller, and Ranking
Member Broun for having this hearing, and I want to thank the
staff for doing a good job in gathering this material. I do
want to attend as much as I can. I will be back after these
votes.
Last September, I saw an article on this issue \1\ that
raised a number of questions in my mind about whether the
committee--this committee and Congress were doing enough to
support American business and American jobs.
---------------------------------------------------------------------------
\1\ Keith Bradsher. ``China Tightens Grip on Rare Minerals.'' New
York Times, September 1, 2009; pp. B1, B4.
---------------------------------------------------------------------------
Rare earth minerals are an essential component of a wide
array of emerging industries: clean energy, telecommunications,
and our defense industry. And I noticed that one country, and
we are not here to beat up on that one country, but nature made
one country seem to have about 90 percent of these rare earth
materials, and they seem to be trying to capture the rest of--
or a large part of that other ten percent, which gives me
pause.
This is not the first time the committee has been concerned
with the competitive implications of materials such as rare
earths. In 1980, 30 years ago, this committee established a
national minerals and materials policy.\2\ One core element in
that legislation was the call to support for a vigorous,
comprehensive and coordinated program for the materials
research and development.
---------------------------------------------------------------------------
\2\ Public Law 96-499, the National Materials and Minerals Policy,
Research and Development Act of 1980; enacted October 21, 1980.
---------------------------------------------------------------------------
Unfortunately, over successive administrations, the effort
to keep the program going fell apart. Now, it is time to ask
whether we need to revive and coordinate an effort to level the
playing field on rare earths.
In particular, I want to learn if there is a need for
increased research and development to help address this
Nation's rare earth shortage or if we need to re-orient the
research we already have underway.
Based on my review of the written submissions, it appears
that we could benefit from more research both in basic and
applied materials.
The rare earths are not the only materials in which the
United States is largely or exclusively dependent on foreign
sources. According to the U.S. Geological Survey, there are 18
other minerals \3\ and materials where the United States is
completely dependent on foreign sources.
---------------------------------------------------------------------------
\3\ U.S. Geological Survey. Mineral Commodity Summaries 2009
(Washington: Government Printing Office, 2009; p. 6.
---------------------------------------------------------------------------
And a bit of a collateral subject that I would like for you
to address is, there are those minerals and elements that
aren't rare or close to being rare, but go through periods of
time where they are being very vogue in using manufacturers. So
they can become--or our resources can become strained during
those periods of time. And then a new manufacturing process
comes in and they may go down. Do we need to have some kind of
inventory? Do we need to be watching out for those other?
So Mr. Chairman and Mr. Broun, thank you for having this
hearing. I think this is going to be very informative and
hopefully can lead us to some potential legislation that would
be good for our national defense and our national
competitiveness.
[The prepared statement of Chairman Gordon follows:]
Prepared Statement of Chairman Bart Gordon
I'd like to thank Chairman Miller for calling this hearing. Last
September, I saw an article on this issue that raised a number of
questions in my mind about whether the Committee and the Congress were
doing enough to support American business and American jobs.
Rare earths are an essential component in a wide array of emerging
industries.
This is not the first time the Committee has been concerned with
the competitive implications of materials such as rare earths. In 1980_
30 years ago_this Committee established a national minerals and
materials policy. One core element in that legislation was the call to
support for ``a vigorous, comprehensive and coordinated program of
materials research and development.''
Unfortunately, over successive administrations, the effort to keep
that program going fell apart. Now, it is time to ask whether we need
to revive a coordinated effort to level the playing field in rare
earths.
In particular, I want to learn if there is a need for increased
research and development to help address this Nation's rare earth
shortage, or if we need to re-orient the research we already have
underway.
Based on my review of the written submissions, it appears that we
could benefit from more research both in basic and applied materials
sciences.
Rare earths are not the only materials in which the U.S. is largely
or exclusively dependent on foreign sources. According to the U.S.
Geological Survey, there are eighteen other minerals and materials
where the United States is completely dependent on foreign sources.
Someone needs to be telling us what's going on with those before we
read about it in the New York Times. Legislation may be the best way to
institutionalize a renewed focus and expanded commitment to identifying
shortages and needs before they become a crisis.
Again, Mr. Chairman, I appreciate you holding this hearing and
expect a stimulating discussion. I yield back my time.
Chairman Miller. Thank you, Mr. Gordon. I neglected to
mention in my quick introduction that this is an issue in which
Mr. Gordon has shown a great interest and that this hearing is
at Mr. Gordon's urging. It is one of the habits of highly
effective subcommittee chairs to pay attention to what the Full
Committee Chair urges, and I have done so in this case.
The usual order would be Democrat, Republican, Democrat, so
you want me to go? All right.
Well, I also want to welcome everyone to this hearing on
something that most of us have either never heard of or
promptly forgot after our test on the periodic table in high
school chemistry. Dr. Broun may have taken it up in medical
school, but for me, if I was exposed to it at all, it was some
considerable time ago.
Today we will be discussing rare earth elements, which
really aren't all that rare, but rare earth elements are
crucial to making the magnets and batteries needed for the
energy industry of the 21st century. With a little of one of
those elements you can get a smaller, more powerful magnet, or
an aircraft engine that operates at higher temperatures or a
fiber-optic cable that can carry your phone call much greater
distances.
The United States, not so long ago, was the world leader in
producing and exporting rare earths. Today, Mr. Gordon
delicately said another nation--or one nation--controlled much
of the world's market. I will be less delicate and name the
nation. China is the world's leader. We are having this hearing
in part to recognize that the Chinese have some different ideas
about how to get the greatest benefit from this suddenly
valuable commodity beyond simply digging it up and selling it
to those who want to use it in their high-tech manufacturing.
China appears to view rare earths as one of the incentives they
can offer a technology firm scouting for a new plant location.
How do we compete in attracting and retaining manufacturing
high-tech firms that need access to rare earth elements in
light of China's current near monopoly and their willingness to
use their monopoly power to our disadvantage?
The most immediate step would be to get some competition
back into the supply of rare earths. One of our witnesses, Mr.
Mark Smith, is proposing to do just that. His company owns a
mine that could produce, has in the past, many rare earth
elements if it were to reopen. He will describe today not only
what it would take to restart the mine but also his intent to
augment America's capability to produce the magnets needed for
electrical generators in wind turbines.
From what he has told us in preparation for the hearing, he
has found it hard to get help in making his vision a reality.
If we intend to rebuild America's capability to supply our own
needs in rare earth materials, if we intend to foster a home-
grown capability to make the devices that provide wind energy,
we can't succeed unless Mr. Smith and others like him succeed.
Further, are we investing enough in research, as Mr. Gordon
said, looking into ways to recover and recycle those materials
and looking for alternatives or synthetic options? Are there
efficiencies that could be gained in the use of rare earth
minerals? For example, if you work with rare earths at the
nanoscale level, could you get the same improvements in
material performance using micrograms where today you need
kilograms? There aren't a lot of places where people are
currently working to answer those questions even as the answers
could go far in helping the United States compete in the
alternative energy technology industries springing up around
the world.
This is not the first time this committee has wrestled with
rare earth and critical materials issues. It is the first time
in my service here but not the first time the committee has
struggled with the issue.
Our committee established a national policy in minerals and
materials three decades ago. That 1980 law requires a
continuing assessment of mineral and materials markets to alert
us to looming problems such as supply disruptions, price spikes
and the like.
Four years later we followed up by establishing the
Critical Materials Council \4\ to assure that someone was
minding the store. However, you won't find the Critical
Materials Council in the White House organization chart today.
It disappeared into the National Science and Technology Council
in 1993,\5\ and the high level attention to rare earths, and
other materials, dropped off as a priority.
---------------------------------------------------------------------------
\4\ See Title II of Public Law 98-373, the National Critical
Materials Act of 1984; enacted July 31, 1984.
\5\ See Executive Order 12881; November 23, 1993 (58 Fed. Reg. 226,
pp. 62491-62492).
---------------------------------------------------------------------------
While preparing for this hearing, we have learned that the
Office of Science and Technology has recently organized a new
interagency committee to respond to our rare earth problems. An
obvious question arises. If the Critical Materials Council had
been maintained, might we be in a better position now to
protect our Nation's interests in a strong rare earths
industry? How can we reverse the result of that history of
neglect?
The Subcommittee thanks the witnesses for helping us
address these issues, and I anticipate an interesting
discussion when the questions begin.
[The prepared statement of Chairman Miller follows:]
Prepared Statement of Chairman Brad Miller
Welcome to our hearing this afternoon on something most of us have
never heard of at all, or promptly forgot after our test on the
Periodic Table in high school chemistry. Today we will be discussing
rare earth elements, which aren't really all that rare. Rare earth
elements are crucial to making the magnets and batteries needed for the
energy industry of the 21st Century. With a little of one of these
elements you can get a smaller, more powerful magnet, or an aircraft
engine that operates at higher temperatures or a fiber-optic cable that
can carry your phone call much greater distances.
The United States, not so long ago, was the world leader in
producing and exporting rare earths. Today, China is the world's
leader. We're having this hearing in part to recognize that the Chinese
have some different ideas about how to get the greatest benefit from
this suddenly-valuable commodity beyond simply digging it up and
selling it to those who want to use it in their high-tech
manufacturing. China appears to view rare earths as one of the
incentives they can offer a technology firm scouting for a new plant
location. How do we compete in attracting and retaining manufacturing
firms that need access to rare earth elements in light of China's
current near monopoly, and their willingness to use their monopoly
power to our disadvantage?
The most immediate step would be to get some competition back into
the supply of rare earths. One of our witnesses, Mr. Mark Smith, is
proposing to do just that. His company owns a mine that could produce
many rare earth elements if it were to reopen. He will describe today
not only what it will take to restart the mine, but also his intent to
augment America's capability to produce the magnets needed for
electrical generators in wind turbines. From what he has told us in
preparation for the hearing, he's found it hard to get help at making
his vision a reality. If we intend to rebuild America's capability to
supply its own needs in rare earth materials, if we intend to foster a
home-grown capability to make the devices that provide wind energy, we
can't succeed unless he and others like him succeed.
Further, are we investing enough in research looking into ways to
recover and recycle these materials and looking for alternatives or
synthetic options? Are there efficiencies that could be gained in the
use of rare earth materials? For example, if you work with rare earths
on the nanoscale level, could you get the same improvements in material
performance using micrograms where today you need kilograms? There
aren't a lot of places where people are currently working to answer
these questions even as the answers could go far in helping America
compete in the alternative energy technology industries springing up
around the globe.
This is not the first time the Committee has wrestled with rare
earth and critical materials issues.
Our Committee established a national policy in minerals and
materials three decades ago. That 1980 law required a continuing
assessment of mineral and materials markets to alert us to looming
problems such as supply disruptions, price spikes and the like.
Four years later we followed up by establishing the Critical
Materials Council to assure that someone was minding the store.
However, you won't find the Critical Materials Council in the White
House organization chart today; it disappeared into the National
Science and Technology Council in 1993 and high level attention to rare
earths, and other materials, fell away as a priority.
While preparing for this hearing, we have learned that the Office
of Science and Technology Policy has recently organized a new
interagency committee to respond to our rare earth problems. An obvious
question arises: if the Critical Materials Council had been maintained
might we be in a better position to protect our nation's interests in a
robust rare earths industry? How can we reverse the result of that
history of neglect?
The Subcommittee thanks the witnesses for helping us address these
issues and I anticipate an interesting discussion later. I now
recognize Dr. Broun, our Ranking Member, for his opening remarks.
Chairman Miller. I should let everyone be on notice that
the rule in this Subcommittee is that current Members of the
Committee can take credit for all the work of our predecessors,
but we get none of the blame for any mistakes that they have
made.
I now recognize Dr. Broun, our Ranking Member, for his
opening statement.
Mr. Broun. Thank you, Mr. Chairman. Let me welcome our
witnesses here today, and I thank you all for participating.
The topic of today's hearing, Rare Earth Minerals, is
timely and important. Rare earths are slated to play an
increasingly important role as we seek to meet our future
energy needs, to remain competitive in the international
marketplace and to continue to defend our Nation. Rare earths
are essential elements in renewable technologies, such as wind
turbine magnets, compact fluorescent light bulbs and hybrid
vehicle batteries. They are also used in technologies critical
to national security like lasers, aircraft engines, and fiber
optics. After the closure of the Mountain Pass Mine in the
1990s, the United States became dependent upon foreign sources
for rare earths with China currently producing roughly 95
percent of the world's supply. They have created a near
monopoly and are actively exploiting that advantage.
While China recently eased its export quotas for rare
earths, over the past three years, they have steadily cut
export quotas saying they need additional supplies to develop
their own domestic clean energy in high-tech sectors.
I hope today's hearing will call attention to the current
state of dependence that our Nation finds itself in. We have
assembled an experienced panel to provide insight into how we
can ensure that we have access to rare earths in the future.
What industrial information is needed to guarantee continued
availability of critical minerals, what role the Federal
Government should play, and what further research and
development needs to be done in that area.
With that, Mr. Chairman, I yield back my time so that we
can hear from this esteemed panel.
[The prepared statement of Mr. Broun follows:]
Prepared Statement of Representative Paul C. Broun
Thank you Mr. Chairman.
Let me welcome our witnesses here today and thank them for
appearing.
The topic of today's hearing_Rare Earth Minerals_is timely and
important. Rare Earths are slated to play an increasingly important
role as we seek to meet our future energy needs, remain competitive in
the international marketplace, and continue to defend our Nation.
Rare Earth Minerals are essential elements in renewable
technologies such as wind turbine magnets, compact fluorescent light
bulbs, and hybrid vehicle batteries. They are also used in technologies
critical to national security like lasers, aircraft engines, and fiber-
optics.
After the closure of the Mountain Pass mine in the 90s, the United
States became dependent upon foreign sources for rare earths. With
China currently producing roughly 95% of the world's supply, they've
created a near monopoly and are actively exploiting that advantage.
While China recently eased its export quotas for Rare Earths, over the
past three years they have steadily cut export quotas, saying they need
additional supplies to develop their own domestic clean energy and
high-tech sectors. I hope today's hearing will call attention to the
current state of dependence our nation finds itself in.
We have assembled a superb panel to provide insight into how we can
ensure that we have access to Rare Earths in the future, what
industrial information is needed to guarantee continued availability of
critical minerals, what role the Federal Government should play, and
what further research and development needs to be done in the area.
With that Mr. Chairman, I yield back my time so that we can hear
from this esteemed panel.
Chairman Miller. Thank you, Dr. Broun. At the time of Mr.
Gordon's opening statement and mine, China controlled 90
percent of rare earths, and by the time of Dr. Broun's, it had
grown to 95 percent. That should give us a sense of the urgency
with which we need to address this issue.
I now ask unanimous consent for any additional opening
statements submitted by members to be included in the record.
Without objection, that is so ordered.
It is now my pleasure to introduce our witnesses. First,
Dr. Stephen Freiman is currently a member of the National
Research Council Committee on Critical Mineral Impacts on the
U.S. Economy. Dr. Steve Duclos is Chief Scientist and Manager
of Material Sustainability at General Electric Global Research.
Dr. Duclos managed GE's optical materials laboratory where he
worked to develop advanced materials. Dr. Karl Gschneidner is
Anson Marston Distinguished Professor at the Department of
Materials Science and Engineering at Iowa State University and
a Senior Metallurgist at the Ames National Laboratory. And Mr.
Terence Stewart is a managing partner at the law firm of
Stewart and Stewart, specializing in international trade and
customs issues.
I would now like to recognize the gentleman from Colorado,
Mr. Coffman, to introduce our final witness today. Mr. Coffman?
Mr. Coffman. Thank you, Mr. Chairman. Chairman Miller and
Ranking Member Broun, thank you for allowing me to introduce
Mark Smith today. I first became aware of the looming crisis of
the rare earth mineral supply and manufacturing capability last
year. In my subsequent study on the problem, I quickly learned
that the greatest concentration of rare earth minerals, now
known as the Mountain Pass Mine in California, and the company
working that mine is headquartered in my district, in Greenwood
Village, Colorado. That company is Molycorp Minerals, Limited
Liability Corporation, and I spoke about the rare earth supply
chain problem with Chief Executive Officer Mark Smith.
Prior to Molycorp, Mr. Smith was the President and Chief
Executive Officer of Chevron Mining, Incorporated. Mr. Smith
was appointed President and Chief Executive Officer in April
2006. Prior to this appointment, Mr. Smith was the Vice
President for Unocal Corporation where he was responsible for
managing the real estate remediation and mining divisions. Mr.
Smith worked for Unocal for over 22 years.
Mr. Smith received his Bachelor of Science degree in
agricultural engineering from Colorado State University in 1981
and his Juris Doctorate from Western State University College
of Law in 1990. He is a registered professional engineer and an
active member of the State Bar of California and Colorado. Mr.
Smith and his wife live in Denver, Colorado.
As he will testify, the U.S. has significant rare earth
resources at Molycorp's rare earth mine at Mountain Pass,
California. However, the U.S. no longer possesses the
manufacturing capability to convert its raw rare earth minerals
into the critical metals and magnets that power so many key
technologies. I hope we can work with industry through
knowledgeable leaders such as Mr. Smith to address the crucial
need for rare earth mineral supply and industrial capability.
Mr. Chairman, I yield back.
Chairman Miller. Thank you, Mr. Coffman. As our witnesses
should know, you will each have five minutes for your spoken
testimony, your oral testimony. Your written testimony will be
included in the record for the hearing. When all have completed
your spoken testimony, we will begin with questions, and each
member will have five minutes to question the panel.
This committee is a Committee on Investigations and
Oversight, although this hearing is more really like a
legislative than investigative hearing, but it is our practice
to receive testimony under oath. Do any of you have any
objection to taking an oath? The record should reflect that all
nodded in the negative, they had no objection.
You also have the right to be represented by counsel. Do
any of you have counsel here? And the record should reflect
that all nodded in the negative with the exception of Mr. Smith
who said no. And we ask you these questions to put you at ease.
If you would now please stand and raise your right hand. Do
you swear to tell the truth and nothing but the truth? The
record should reflect that all the witnesses said yes and have
taken the oath. Let us now begin with Dr. Stephen Freiman. Dr.
Freiman, you are recognized for five minutes.
STATEMENT OF DR. STEPHEN FREIMAN, PRESIDENT, FREIMAN
CONSULTING, INC.
Dr. Freiman. Thank you, Mr. Chairman. I retired as Deputy
Director of the Materials Science Engineering Laboratory at the
National Institutes of Standards and Technology to start a
small consulting business. I served on the Committee on
Critical Mineral Impacts on the U.S. Economy of the National
Research Council and am testifying in place of the Committee
Chairman, Dr. Roderick Eggert, who could not be present today.
As you observed, mineral-based materials are ubiquitous--
aluminum in jet aircraft, steel in bridges and buildings, and
lead in batteries to name but a few examples.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The slide that you see illustrates the expanded use of new
minerals over the years in important technologies such as
computer chips.
The emergence of new technologies and engineered materials
creates the prospect of rapid increases in demand for some
minerals previously used in relatively small quantities in a
small number of applications such as lithium in automotive
batteries, rare earth elements in permanent magnets and compact
fluorescent light bulbs and indium and tellurium in
photovoltaic solar cells.
At the same time the supplies of some minerals seemingly
are becoming increasingly fragile due to more fragmented supply
chains, increased U.S. import dependence, export restrictions
by some nations on primary raw materials, and increased
industry concentration.
It was in this light that the Standing Committee on Earth
Resources of the National Research Council initiated a study
and established an ad hoc committee to examine the range of
issues important in understanding the evolving role of non-fuel
minerals in the U.S. economy and the potential impediments to
the supplies of these minerals to domestic users. The U.S.
Geological Survey and the National Mining Association sponsored
the study, the findings of which appear in the volume Minerals,
Critical Minerals, and the U.S. Economy.\6\
---------------------------------------------------------------------------
\6\ National Research Council. Committee on Critical Mineral
Impacts on the U.S. Economy. Minerals, Critical Minerals, and the U.S.
Economy (Washington: National Academy Press, 2008).
---------------------------------------------------------------------------
In my testimony today, I highlight two parts of the report,
its analytical framework and empirical findings and its
recommendations.
The analytical framework begins by defining critical
minerals as those that are both essential in use--that is,
difficult to substitute away from, and subject to supply risk.
The idea is illustrated in the slide that you see, a
criticality matrix. The horizontal axis represents the degree
of supply risk associated with a particular mineral, which
increases from left to right. Supply risk is higher, the
greater the concentration of production in a small number of
companies, mines, et cetera. The smaller the existing market,
the greater the reliance on byproduct production of a mineral
and the smaller the reliance on post-consumer scrap as the
source of supply.
Import dependence by itself is a poor indicator of supply
risk. Rather it is import dependence combined with concentrated
production and perhaps geopolitical risk, the first of the four
factors above, that lead to supply risk.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
In the next slide, the hypothetical mineral A is subject to
greater supply than mineral B. So the overall risk of
criticality increases as one moves from the lower-left to the
upper-right corner of the diagram.
Implementing the framework requires specifying a
prospective timeframe. From the perspective of a mineral-using
company, for example, will likely be different than that of a
national government. The degree of criticality in the short to
medium term, one to a few years, up to a decade, depends on
existing technologies and production facilities. Substituting
one material for another in a product typically is difficult in
the short term, due to constraints imposed by existing product
designs and production equipment. In contrast, over the longer
term, the degree of criticality depends much more importantly
on technological innovation and investments in new technology
and equipment on both the demand side and the supply side.
Taking the perspective of the U.S. economy overall and in
the short to medium term, the Committee evaluated 11 minerals
or mineral families. It did not assess the criticality of all
important non-fuel minerals due to limits on time and
resources.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Slide three summarizes the Committee's evaluations, and I
am sure you have trouble seeing it, but of the 11 minerals
those deemed most critical, those that plot in the upper-right
portion of the diagram, are indium, magnesium--manganese,
rather--niobium, platinum group metals and rare earth elements.
A final point: criticality is dynamic. A critical mineral
today may become less critical either because substitutes of
new sources of supply are developed. Conversely, a less
critical mineral today may become more critical in the future
because of a new use or change in supply risk. Such could be
the case with lithium which the committee did not evaluate as
one of the more non-critical minerals.
It should be recognized, however, that this analysis tool
can be no better than the quality and timeliness of the date
used to create it. And in the interest of time, the committee
had several recommendations which you have in your written
document, and I don't think I need to read them to you. I would
just say, however, that my personal opinion that research and
development in topics, such as recycling of specialty materials
used in small quantities in emerging uses as well as enhanced
coordination of research efforts between departments and
agencies as suggested in the National Materials and Minerals
Policy Research and Development Act of 1980 would also be very
beneficial.
Thank you for allowing me to testify today, and I will be
happy to answer any questions the Subcommittee may have.
[The prepared statement of Dr. Freiman follows:]
Prepared Statement of Stephen Freiman
Good afternoon, Mr. Chairman and members of the Committee. My name
is Dr. Stephen Freiman. A few years ago I retired as Deputy Director of
the Materials Science and Engineering Laboratory at the National
Institute of Standards and Technology to start a small consulting
business. I served on the Committee on Critical Mineral Impacts on the
U.S. Economy of the National Research Council (NRC). The Research
Council is the operating arm of the National Academy of Sciences,
National Academy of Engineering, and the Institute of Medicine of the
National Academies, chartered by Congress in 1 863 to advise the
government on matters of science and technology.
Mineral-based materials are ubiquitous--aluminum in jet aircraft;
steel in bridges and buildings, and lead in batteries, to name but a
few examples. The emergence of new technologies and engineered
materials creates the prospect of rapid increases in demand for some
minerals previously used in relatively small quantities in a small
number of applications--such as lithium in automotive batteries, rare-
earth elements in permanent magnets and compact-fluorescent light
bulbs, and indium and tellurium in photovoltaic solar cells. At the
same time, the supplies of some minerals seemingly are becoming
increasingly fragile due to more fragmented supply chains, increased-
U.S. import dependence, export restrictions by some nations on primary
raw materials, and increased industry concentration.
It was in this light that the U.S. Geological Survey (USGS) and the
National Mining Association sponsored a National Research Council study
to examine the range of issues important in understanding the evolving
role of nonfuel minerals in the U.S. economy and the potential
impediments to the supplies of these minerals to domestic users. The
study was conducted under the purview of the NRC's standing Committee
on Earth Resources. The findings of the study are contained in the
volume Minerals, Critical Minerals, and the U.S. Economy (National
Academies Press, 2008).
In my testimony today, I highlight two parts of the report: its
analytical framework and empirical findings, and its recommendations.
In addition, I provide answers to the questions you posed in your
letter of invitation to me.
Analytical Framework
The analytical framework begins by defining critical minerals as
those that are both essential in use (difficult to substitute away
from) and subject to supply risk. The idea is illustrated in Figure 1,
a `criticality matrix.' The horizontal axis represents the degree of
supply risk associated with a particular mineral, which increases from
left to right. Supply risk is higher (1) the greater the concentration
of production in a small number of mines, companies, or countries, (2)
the smaller the existing market (the more vulnerable a market is to
being overwhelmed by a rapid increase in demand due to a large new
application), (3) the greater the reliance on byproduct production of a
mineral (because the supply of a byproduct is determined largely by the
economic attractiveness of the associated main product), and (4) the
smaller the reliance on post-consumer scrap as a source of supply.
Import dependence, by itself, is a poor indicator of supply risk;
rather it is import dependence combined with concentrated production
and perhaps geopolitical risk (the first of the four factors above)
that lead to supply risk. In Figure I, the hypothetical mineral A is
subject to greater supply risk than mineral B.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Figure I. The Criticality Matrix. Source: Minerals, Critical
Minerals, and the U.S. Economy (National Academies Press, 2008).
The vertical axis represents the impact of a supply restriction,
which increases from bottom to top. Broadly speaking, the impact of a
restriction relates directly to the ease or difficulty of substituting
away from the mineral in question. The more difficult substitution is,
the greater the impact of a restriction (and vice versa). The impact of
a supply restriction can take two possible forms: higher costs for
users (and potentially lower profitability), or physical unavailability
(and a ``no-build'' situation for users).\1\
---------------------------------------------------------------------------
\1\ When considering security of petroleum supplies, rather than
minerals, the primary concern is costs and resulting impacts on the
macroeconomy (the level of economic output). The mineral and mineral-
using sectors, in contrast, are much smaller, and thus we are not
concerned about macroeconomic effects of restricted mineral supplies.
Rather the concern is both about higher input costs for mineral users
and, in some cases, physical unavailability of an important input.
---------------------------------------------------------------------------
The overall degree of criticality increases as one moves from the
lower-left to the upper-right corner of the diagram. The hypothetical
mineral A would be relatively more critical than mineral B.
Implementing the framework requires specifying a perspective and
time frame. The perspective of a mineral-using company, for example,
will likely be different than that of a national government. The degree
of criticality in the short to medium term (one or a few years, up to a
decade) depends on existing technologies and production facilities.
Substituting one material for another in a product typically is
difficult in the short term due to constraints imposed by existing
product designs and production equipment. Short-term supply risks are a
function of the nature and location of existing production. In
contrast, over the longer term (a decade or more), the degree of
criticality depends much more importantly on technological innovation
and investments in new technology and equipment on both the demand side
(material substitution) and the supply side (mineral exploration,
mining and mineral processing, and associated technologies).
Taking the perspective of the U.S. economy overall and in the short
to medium term, the committee evaluated eleven minerals or mineral
families. It did not assess the criticality of all important nonfuel
minerals due to limits on time and resources. Figure 2 summarizes the
committee's evaluations. Of the eleven minerals, those deemed most
critical--that is, they plot in the upper-right portion of the
diagram--are indium, manganese, niobium, platinum-group metals, and
rare-earth elements.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Figure 2. Criticality Evaluations for Selected Minerals or Mineral
Families. Source: Minerals, Critical Minerals, and the U.S. Economy
(National Academies Press, 2008).
A final point: criticality is dynamic. A critical mineral today may
become less critical either because substitutes or new sources of
supply are developed. Conversely, a less-critical mineral today may
become more critical in the future because of a new use or a change in
supply risk. Such could be the case with lithium, which the committee
did not evaluate as one of the more-critical minerals in its analysis
two years ago (Figure 2); if demand for lithium in batteries increases
significantly and new sources of supply are in politically risky
locations, then lithium could plot in the more-critical region of the
figure in the future.
Recommendations
The committee made three recommendations, which I quote below:
1. The Federal Government should enhance the types of data and
information it collects, disseminates, and analyzes on minerals
and mineral products, especially as these data and information
relate to minerals and mineral products that are or may become
critical.
2. The Federal Government should continue to carry out the
necessary function of collecting, disseminating, and analyzing
mineral data and information. The USGS Minerals Information
Team, or whatever Federal unit might later be assigned these
responsibilities, should have greater authority and autonomy
than at present. It also should have sufficient resources to
carry out its mandate, which would be broader than the Minerals
Information Team's current mandate if the committee's
recommendations are adopted. It should establish formal
mechanisms for communicating with users, government and
nongovernmental organizations or institutes, and the private
sector on the types and quality of data and information it
collects, disseminates, and analyzes. It should be organized to
have the flexibility to collect, disseminate, and analyze
additional, nonbasic data. and information, in consultation
with users, as specific minerals and mineral products become
relatively more critical over time (and vice versa).
3. Federal agencies, including the National Science
Foundation, Department of the Interior (including the USGS),
Department of Defense, Department of Energy, and Department of
Commerce, should develop and fund activities, including basic
science and policy research, to encourage U.S. innovation in
the area of critical minerals and materials and to enhance
understanding of global mineral availability and use.
Questions from the Subcommittee on Investigations and Oversight
What are the major gaps in current Federal policy for minerals and
materials?
The committee report does not address this broad question. It does
identify gaps in minerals information and recommends enhanced
collection, dissemination and analysis of those parts of the mineral
life cycle that are under-represented at present including: reserves
and subeconomic resources, byproduct and coproduct primary production,
stocks and flows of materials available for recycling, in-use stocks,
material flows, and materials embodied in internationally traded goods.
The committee report recommends periodic analysis of mineral
criticality over a range of minerals.
Which aspects of research and development in minerals and materials
require enhanced Federal support, and what form should this
support take?
See Recommendation 3 above. As part of its detailed discussion of
this recommendation, the committee report also recommends funding
scientific, technical, and social-scientific research on the entire
mineral life cycle. It recommends cooperative programs involving
academic organizations, industry, and government to enhance education
and applied research.
How should the Federal Government improve the collection of information
on minerals and materials markets?
See Recommendation 2 above. As part of its more detailed discussion
of this recommendation, the committee report suggests that the Federal
Government consider the Energy Information Administration, which has
status as a principal statistical agency, as a potential model for
minerals information, dissemination, and analysis. Whatever agency or
unit is responsible for minerals information, it needs greater autonomy
and authority than at present.
Facing dynamic changes in supply and demand for particular minerals and
materials in a global economy, what are the most useful
contributions the Federal Government can employ to assist
industry?
My personal opinion is that Federal. minerals and materials policy
should focus on: (1) encouraging undistorted international trade, (2)
ensuring that policies and procedures for domestic mineral development
appropriately integrate commercial, environmental, and social
considerations, (3) facilitating provision of information on which
private and public decisions are made, and (4) facilitating research
and development, including on recycling of specialty materials used in
small quantities in emerging uses.
Thank you for the opportunity to testify today. I would be happy to
address any questions the subcommittee may have.
Biography for Stephen Freiman
Dr. Freiman graduated from the Georgia Institute of Technology with
a B. ChE. and a M. S. in Metallurgy. After receiving a Ph.D. in
Materials Science and Engineering from the University of Florida in
1968, Dr. Freiman worked at the IIT Research Institute and the Naval
Research Laboratory. He joined NIST (then NBS) in 1978. From 1992 to
2002 Dr. Freiman served as Chief of the Ceramics Division at NIST.
Prior to his leaving NIST in 2006 to start a consulting business
(Freiman Consulting Inc.), Dr. Stephen Freiman served for four years as
Deputy Director of the Materials Science and Engineering.
Dr. Freiman has published over 200 scientific papers focusing
primarily on the mechanical properties of brittle materials. He was the
first Chairman of the ASTM Subcommittee addressing brittle fracture and
a past Chair of the Steering Committee of the Versailles Project for
Advanced Materials and Standards. Dr. Freiman served as Treasurer, and
President of the American Ceramic Society, and is a Fellow and
Distinguished Life Member of the Society.
Chairman Miller. Thank you, Dr. Freiman. Dr. Steven Duclos.
STATEMENT OF DR. STEVEN J. DUCLOS, CHIEF SCIENTIST AND MANAGER,
MATERIAL SUSTAINABILITY, GENERAL ELECTRIC GLOBAL RESEARCH
Dr. Duclos. Chairman Miller, Ranking Member Broun, and
Members of the Committee, it is my privilege to share with you
GE's thoughts on how we manage shortages of materials critical
to our manufacturing and what steps the government can take to
help industry minimize the risk associated with these
shortages.
This hearing addresses an issue that is critical to the
future wellbeing of U.S. manufacturing. Without development of
new supplies and focused research in materials and
manufacturing, such supply challenges could undermine efforts
to meet the Nation's future needs in defense, energy, health
care and transportation.
I would like to share with you GE's strategy to address its
material needs as well as outline a series of recommendations
for how the government can strengthen its support of industry
in this area.
GE uses 70 of the first 83 elements on the periodic table.
As Chief Scientist and Manager of Material Sustainability at GE
Global Research, is it my job to understand the latest trends
in materials and to work with our businesses to manage our
materials needs in a sustainable way.
To evaluate risks associated with material shortages, GE
uses a modification of the assessment tool developed by the
National Research Council in 2008. Risks are quantified by
element in two categories, price and supply risk and impact of
a restricted supply to GE. Those elements deemed to have high
risk in both categories are identified as materials needing
further study and a detailed plan to mitigate supply risks. For
this assessment, we extensively used data from the U.S.
Geological Survey's mineral information team as well as in-
house knowledge of supply dynamics.
There is a broad spectrum of strategies that can be
implemented to minimize the risk of those elements identified
as being at high risk. These include, number one, improvements
in the global supply chain, including the development of
alternate sources, long-term supply agreements and development
of inventory of materials. Number two, improvements of material
utilization in manufacturing and reduction of manufacturing
waste. Number three, development of recycling technologies that
extract at-risk elements from both end-of-life products and
manufacturing yield loss. This includes the design of products
that are more easily recycled and service which improves
materials service life. Number four, development of materials
and systems technologies that either greatly reduce or even
eliminate the need for the element altogether. Several examples
of these are discussed in my written testimony where GE has
successfully taken this approach. This includes the replacement
of helium with boron in neutron detectors and the reduction by
a factor of two in the use of rhenium content in superalloys
for our jet engines, a development that leveraged past research
programs supported by DARPA, the Air Force, the Navy and NASA.
And finally, number five, reassessment of the entire
system. Often more than one technology can address a customer's
need, and each will use a different subset of the periodic
table. The solution to the materials constraint can involve
using a new or alternate technology. An example is the
development of energy-efficient LED lighting technologies as
supported by the Department of Energy that offer a 70-times
reduction in the use of rare earth elements for lighting.
Attention needs to be paid to all five of these solutions
outlined above. The shorter term sourcing and manufacturing
solutions are critical to buy time for the more optimal
recycling and material substitution solutions. They tend to be
longer term, higher risk and require risk mitigation strategies
involving parallel paths. The government can help by enabling
public/private collaborations that provide both materials
understanding and resources that enable these material
substitution approaches. Anticipated growth in the use of rare
earths for efficient energy and transportation technologies
mandates that we develop the full range of five solutions
outlined above.
We make the following recommendations for the government to
strengthen its support of efforts to minimize the increasing
risk associated with material shortages.
Number one, appoint a lead agency with ownership of early
risk assessment and authority to fund the five solutions. The
government needs to enhance its ability to monitor, assess and
coordinate a response to identified issue.
Number two, sustained funding for research focusing on
material substitutions to lay the foundation upon which
solutions are developed. Collaborative efforts between
academia, government laboratories and industry will help ensure
that manufacturing compatible solutions are available to
industry in time to avert disruptions in U.S. manufacturing.
Number three, with global economic growth resulting in
increased pressure on material stocks, it is imperative that
there be a sustained support of the government to develop the
full set of solutions outlined in this testimony, new material
sources, recycling technologies, manufacturing efficiency,
alternate materials and new system solutions.
In closing, we believe a more coordinated approach and
sustained investment from the government in materials and
manufacturing technologies is needed to provide industry with
the flexibility that makes U.S. manufacturing less vulnerable
to material shortages. Thank you for your time, and I look
forward to answering your questions.
[The prepared statement of Dr. Duclos follows:]
Prepared Statement of Steven J. Duclos
Introduction
Chairman Miller and members of the Committee, it is a privilege to
share with you GE's thoughts on how we manage shortages of precious
materials and commodities critical to our manufacturing operations and
what steps the Federal Government can take to help industry minimize
the risks and issues associated with these shortages.
Background
GE is a diversified global infrastructure, finance, and media
company that provides a wide array of products to meet the world's
essential needs. From energy and water to transportation and
healthcare, we are driving advanced technology and product solutions in
key industries central to providing a cleaner, more sustainable future
for our nation and the world.
At the core of every GE product are the materials that make up that
product. To put GE's material usage in perspective, we use at least 70
of the first 83 elements listed in the Periodic Table of Elements. In
actual dollars, we spend $40 billion annually on materials. 10% of this
is for the direct purchase of metals and alloys. In the specific case
of the rare earth elements, we use these elements in our Healthcare,
Lighting, Energy, Motors, and Transportation products.
Nowhere in the company is our understanding of materials more
evident than at GE Global Research, the hub of technology development
for all of GE's businesses. Located just outside of Albany NY, GE
scientists and engineers have been responsible for major material
breakthroughs throughout our 110-year history. One of GE's earliest
research pioneers, William Coolidge, discovered a new filament
material, based on ductile tungsten, in 1909, which enabled us to bring
the light bulb to every home. Just four years later, he developed a
safe x-ray tube design for medical imaging. In 1953, GE scientist
Daniel Fox developed LEXAN plastic, which is used in today's CDs and
DVDs. It was even used in the helmets that U.S. astronauts Neil
Armstrong and Buzz Aldrin wore when they walked on the moon. More
recently, GE scientists created a unique scintillator material, called
Gemstone, which is the key component in GE Healthcare's newest High-
Definition Computed Tomography (CT) medical imaging scanner that
enables faster and higher resolution imaging.
Because materials are so fundamental to everything we do as a
company, we are constantly watching, evaluating, and anticipating
supply changes with respect to materials that are vital to GE's
business interests. On the proactive side, we invest a great deal of
time and resources to develop new materials and processes that help
reduce our dependence on any given material and increase our
flexibility in product design choices.
We have more than 35,000 scientists and engineers working for GE in
the U.S. and around the globe, with extensive expertise in materials
development, system design, and manufacturing. As Chief Scientist and
Manager of Material Sustainability at GE Global Research, it's my job
to understand the latest trends in materials and to help identify and
support new R&D projects with our businesses to manage our needs in a
sustainable way.
Chairman Miller, I commend you for convening this hearing to
discuss an issue that is vital to the future well being of U.S.
manufacturing. Without development of new supplies and more focused
research in materials and manufacturing, such supply challenges could
seriously undermine efforts to meet the nation's future needs in
energy, healthcare, and transportation. What I would like to do now is
share with you GE's strategy to address its materials needs, as well as
outline a series of recommendations and indeed, a framework, for how
the Federal Government can strengthen its support of academia,
government, and industry in this area.
Comments and Recommendations
The process that GE uses to evaluate the risks associated with
material shortages is a modification of an assessment tool developed by
the National Research Council in 2008. Risks are quantified element by
element in two categories: ``Price and Supply Risk'', and ``Impact of a
Restricted Supply on GE''. Those elements deemed to have high risk in
both categories are identified as materials needing further study and a
detailed plan to mitigate supply risks. The ``Price and Supply Risk''
category includes an assessment of demand and supply dynamics, price
volatility, geopolitics, and co-production. Here we extensively use
data from the U.S. Geological Survey's Minerals Information Team, as
well as in-house knowledge of supply dynamics and current and future
uses of the element. The ``Impact to GE'' category includes an
assessment of our volume of usage compared to the world supply,
criticality to products, and impact on revenue of products containing
the element. While we find this approach adequate at present, we are
working with researchers at Yale University who are in the process of
developing a more rigorous methodology for assessing the criticality of
metals. Through these collaborations, we anticipate being able to
predict with much greater confidence the level of criticality of
particular elements for GE's uses.
Once an element is identified as high risk, a comprehensive
strategy is developed to reduce this risk. Such a strategy can include
improvements in the supply chain, improvements in manufacturing
efficiency, as well as research and development into new materials and
recycling opportunities. Often, a combination of several of these may
need to be implemented.
Improvements in the global supply chain can involve the development
of alternate sources, as well as the development of long-term supply
agreements that allow suppliers a better understanding of our future
needs. In addition, for elements that are environmentally stable, we
can inventory materials in order to mitigate short-term supply issues.
Improvements in manufacturing technologies can also be developed.
In many cases where a manufacturing process was designed during a time
when the availability of a raw material was not a concern, alternate
processes can be developed and implemented that greatly improve its
material utilization. Development of near-net-shape manufacturing
technologies and implementation of recycling programs to recover waste
materials from a manufacturing line are two examples of improvements
than can be made in material utilization.
An optimal solution is to develop technology that either greatly
reduces the use of the at-risk element or eliminates the need for the
element altogether. While there are cases where the properties imparted
by the element are uniquely suitable to a particular application, I can
cite many examples where GE has been able to invent alternate
materials, or use already existing alternate materials to greatly
minimize our risk. At times this may require a redesign of the system
utilizing the material to compensate for the modified properties of the
substitute material. Let's look at a few illustrative recent examples.
The first involves Helium-3, a gaseous isotope of Helium used by GE
Energy's Reuter Stokes business in building neutron sensors for
detecting special nuclear materials at the nation's ports and borders.
The supply of Helium-3 has been diminishing since 2001 due to a
simultaneous increase in need for neutron detection for security, and
reduced availability as Helium-3 production has dwindled. GE has
addressed this problem in two ways. The first was to develop the
capability to recover, purify and reuse the Helium-3 from detectors
removed from decommissioned equipment. The second was the accelerated
development of Boron-10 based detectors that eliminate the need for
Helium-3 in Radiation Portal Monitors. DNDO and the Pacific Northwest
National Lab are currently evaluating these new detectors.
A second example involves Rhenium, an element used at several
percent in super alloys for high efficiency aircraft engines and
electricity generating turbines. Faced with a six-fold price increase
during a three-year stretch from 2005 to 2008 and concerns that its
supply would limit our ability to produce our engines, GE embarked on
multi-year research programs to develop the capability of recycling
manufacturing scrap and end-of-life components. A significant materials
development effort was also undertaken to develop and certify new
alloys that require only one-half the amount of Rhenium, as well as no
Rhenium at all. This development leveraged past research and
development programs supported by DARPA, the Air Force, the Navy, and
NASA. The Department of Defense supported qualification of our reduced
Rhenium engine components for their applications.
By developing alternate materials, we created greater design
flexibility that can be critical to overcoming material availability
constraints. But pursuing this path is not easy and presents
significant challenges that need to be addressed. Because the materials
development and certification process takes several years, executing
these solutions requires advanced warning of impending problems. For
this reason, having shorter term sourcing and manufacturing solutions
is critical in order to ``buy time'' for the longer term solutions to
come to fruition. In addition, such material development projects tend
to be higher risk and require risk mitigation strategies and parallel
paths. The Federal Government can help by enabling public-private
collaborations that provide both the materials understanding and the
resources to attempt higher risk approaches. Both are required to
increase our chances of success in minimizing the use of a given
element.
Another approach to minimizing the use of an element over the long
term is to assure that as much life as possible is obtained from the
parts and systems that contain these materials. Designing in
serviceability of such parts reduces the need for additional material
for replacement parts. The basic understanding of life-limiting
materials degradation mechanisms can be critical to extending the
useful life of parts, particularly those exposed to extreme conditions.
It is these parts that tend to be made of the most sophisticated
materials, often times containing scarce raw materials.
A complete solution often requires a reassessment of the entire
system that uses a raw material that is at risk. Often, more than one
technology can address a customer's need. Each of these technologies
will use a certain subset of the periodic table--and the solution to
the raw material constraint may involve using a new or alternate
technology. Efficient lighting systems provide an excellent example of
this type of approach. Linear fluorescent lamps use several rare earth
elements. In fact, they are one of the largest consumers of Terbium, a
rare earth element that along with Dysprosium is also used to improve
the performance of high-strength permanent magnets. Light emitting
diodes (LEDs), a new lighting technology whose development is being
supported by the Department of Energy, uses roughly one-hundredth the
amount of rare earth material per unit of luminosity, and no Terbium.
Organic light emitting diodes (OLEDs), an even more advanced lighting
technology, promises to use no rare earth elements at all. In order to
``buy time'' for the LED and OLED technologies to mature, optimization
of rare earth usage in current fluorescent lamps can also be
considered. This example shows how a systems approach can minimize the
risk of raw materials constraints.
In addition to high efficiency lighting, GE uses rare earth
elements in our medical imaging systems and in wind turbine generators.
Rare earth permanent magnets are a key technology in high power density
motors. These motors are vital to the nation's vision for the
electrification of transportation, including automobiles, aircraft,
locomotives, and large off-road vehicles. The anticipated growth in the
use of permanent magnets and other rare earth based materials for
efficient energy technologies mandates that we develop a broad base
solution to possible raw material shortages. These solutions require
the development of the sourcing, manufacturing efficiency, recycling,
and material substitution approaches outlined above.
Based on our past experience I would like to emphasize the
following aspects that are important to consider when addressing
material constraints:
1) Early identification of the issue--technical development of
a complete solution can be hampered by not having the time
required to develop some of the longer term solutions.
2) Material understanding is critical--with a focus on those
elements identified as being at risk, the understanding of
materials and chemical sciences enable acceleration of the most
complete solutions around substitution. Focused research on
viable approaches to substitution and usage minimization
greatly increases the suite of options from which solutions can
be selected.
3) Each element is different and some problems are easier to
solve than others--typically a unique solution will be needed
for each element and each use of that element. While basic
understanding provides a foundation from which solutions can be
developed, it is important that each solution be compatible
with real life manufacturing and system design. A specific
elemental restriction can be easier to solve if it involves few
applications and has a greater flexibility of supply. Future
raw materials issues will likely have increased complexity as
they become based on global shortages of minerals that are more
broadly used throughout society.
Given increasing challenges around the sustainability of materials,
it will be critical for the Federal Government to strengthen its
support of efforts to minimize the risks and issues associated with
material shortages. Based on the discussion above, we make the
following recommendations for the Federal Government:
1) Appoint a lead agency with ownership of early assessment
and authority to fund solutions--given the need for early
identification of future issues, we recommend that the
government enhance its ability to monitor and assess industrial
materials supply, both short term and long term, as well as
coordinate a response to identified issues. Collaborative
efforts between academia, government laboratories, and industry
will help ensure that manufacturing compatible solutions are
available to industry in time to avert disruptions in U.S.
manufacturing.
2) Sustained funding for research focusing on material
substitutions--Federal Government support of materials research
will be critical to laying the foundation upon which solutions
are developed when materials supplies become strained. These
complex problems will require collaborative involvement of
academic and government laboratories with direct involvement of
industry to ensure solutions are manufacturable.
3) With global economic growth resulting in increased pressure
on material stocks, along with increased complexity of the
needed resolutions, it is imperative that the solutions
discussed in this testimony: recycling technologies,
development of alternate materials, new systems solutions, and
manufacturing efficiency have sustained support. This will
require investment in long-term and high-risk research and
development--and the Federal Government's support of these will
be of increasing criticality as material usage grows globally.
Conclusion
In closing, we believe that a more coordinated approach and
sustained level of investment from the Federal Government in materials
science and manufacturing technologies is required to accelerate new
material breakthroughs that provide businesses with more flexibility
and make us less vulnerable to material shortages. Chairman Miller and
Members of the Committee, thank you for your time and the opportunity
to provide our comments and recommendations.
Biography for Steven J. Duclos
Steven Duclos is a Chief Scientist at the General Electric Global
Research Center in Niskayuna, New York, and manages GE's Material
Sustainability Initiative. The Material Sustainability initiative
addresses GE's risks in the availability and sustainability of the
company's raw material supply, by developing technologies that reduce
the use, support the recycling, and enable substitution of lower-risk
materials.
From 2000 to 2008 Dr. Duclos managed the Optical Materials
Laboratory, also at GE GRC. The laboratory is responsible for
development of advanced materials for a broad spectrum of GE
businesses, including its Lighting and Healthcare businesses. From 1994
to 2004 Dr. Duclos served on the Executive Committee of the New York
State Section of the American Physical Society. Prior to joining the GE
Global Research Center in 1991 he was a post-doc at AT&T Bell
Laboratories in Murray Hill, New Jersey.
Dr. Duclos received his B.S. degree in Physics in 1984 from
Washington University in St. Louis, M.S. degree in Physics from Cornell
University in Ithaca, New York in 1987, and Ph.D. in Physics from
Cornell in 1990. He is the recipient of an AT&T Bell Laboratories Pre-
doctoral Fellowship and the 1997 Albert W. Hull Award, GE Global
Research's highest award for early career achievement.
Chairman Miller. Thank you, Dr. Duclos. Dr. Gschneidner.
STATEMENT OF DR. KARL A. GSCHNEIDNER, JR., ANSON MARSTON
DISTINGUISHED PROFESSOR, DEPARTMENT OF MATERIALS SCIENCE AND
ENGINEERING, IOWA STATE UNIVERSITY
Dr. Gschneidner. Good afternoon, Mr. Chairman, members of
the Subcommittee, ladies and gentlemen. I am pleased to have
this opportunity to present my views on the rare earth crisis
and what can be done to alleviate this situation.
My brief responses to your questions are as follows. More
detailed information will be found in my written statement.
The first question was, how has rare earth research at the
Ames Laboratory changed over time? Rare earth science and
technology at Ames Laboratory, the U.S. Department of Energy,
had its beginning in World War II when Iowa State College
assisted the war effort by supplying 1/3 of the uranium metal,
two tons, necessary to make the first nuclear reactor go
critical at the University of Chicago in 1942. By the end of
the war, two million pounds of uranium and 600,000 pounds of
thorium were produced for the Manhattan Project.
Work on rare earths was a natural outgrowth of the war
effort. Initially there was a wide spectrum of research being
carried out. This includes separation, analytical, solid state
chemistry; process, physical and mechanical metallurgy;
ceramics; and condensed matter physics. Many successes were
achieved and technology was turned over to industry, but as
science matured, programmatic changes occurred and a number of
research areas were phased out. This included separation and--
chemistry, process and mechanical metallurgy, and ceramics. The
remaining areas are still strong, but the power person levels
have diminished.
However, the establishment of the Materials Preparation
Center, a DOE Basic Energy Scientist Specialized Research
Center, has alleviated some of this degradation in process
metallurgy.
I would like to mention a new and exciting development, the
revolutionary method of preparing neodymium master alloy to
make a neodymium-iron-boron permanent magnet. The cost of this
master alloy is about half of that of neodymium. Furthermore,
it is a very green technology with no byproducts compared to
conventional processes which have byproducts which need to be
disposed of in an environmentally safe manner.
I have in my hand the second neodymium-iron-boron magnet
made which was just produced within the last month, and so they
are working with that technology.
The second question, what would be required to conduct a
robust program of basic research on rare earths? We are well-
aware of the impact of Chinese activities in the rare earth
market as noted by other invited speakers at this House
hearing. In addition to forcing the United States and rare
earth permanent magnet manufacturers out of business, the
country now faces a shortage of trained scientists, engineers,
technicians and a lack of innovations in a high-tech area which
are critical to our country's future needs.
A research center which alleviates both of these problems
is the best way to solve this rare earth crisis, an educational
institute which has a long and strong tradition of carrying out
research on all aspects of rare earth materials with a strong
educational component would be an ideal situation. A National
Research Center on Rare Earths and Energy should be established
with Federal and state support, supplemented by U.S. industry
as the rare earth industry revitalizes. The center would employ
about 30 full-time employees. This research center would be a
national resource for rare earth science technology and
applications and would provide support of research activities
at other institutions via subcontracts complementing the
activities of the center.
The major emphasis of the center would be directed basic
research; proprietary research paid by the organizations that
request it, would also be a part of the center's mandate. The
center would have an advisory board made up of representatives
from the university, government, industry and the general
public to oversee, guide and refocus as needed the research
being conducted.
I would like to suggest to this House committee they
consider a second national center on research on magnetic
cooling. Cooling below room temperature accounts for 15 percent
of the total energy consumed in the United States. Magnetic
refrigeration is new, advanced, highly technical, energy
efficient, green technology for cooling and climate control,
for refrigerating and freezing. See Section 6.5 of my written
response. It is about 20 percent more efficient as a green
technology because it eliminates harmful gases and reduces
energy consumption. If we were able to switch all cooling
process to magnetic refrigeration at once, we would reduce the
energy consumption by five percent. There are a lot of hurdles
that need to be overcome, and the United States needs to put
together a strong, cohesive effort to retain our disappearing
leadership in this technology by assembling a National Center
for Magnetic Cooling.
Europe and China are moving rapidly in this area. Denmark
has assembled a Magnetic Refrigeration National Research Center
at Riso, so far the only one in the world. This center should
be structured similar to what has been posed for the National
Research Center on Rare Earths and Energy. The question is, are
we going to give up our lead position and be a second-rate
country or will we lead the rest of the world? I hope and pray
that our answer is that we are going to show the world that we
are number one.
Question three, how can knowledge on rare earth be
transferred to domestic companies? Knowledge is exported from
research institutes, universities to industry through transfer
of intellectual property and know-how. Research findings are
disseminated as published articles in journals, presentations
at conferences and electronic media and, if exciting enough,
via news conferences, press releases, assuming the new results
are not patentable. If research has some potential commercial
value, this new information should be made available as soon as
possible after filing a patent disclosure. However, before a
patent disclosure is filed, one could disseminate the results
to companies that might be interested by contacting them to
say, one, if they are interested, two, if they would sign a
nondisclosure agreement, and if they answer yes to both one and
two, then the information could be disclosed to them.
The second highly effective route is the transfer of the
skills and knowledge gained by university students to their
industrial employers after graduation.
The fourth and last question is, how actively are U.S.
scientists researching extraction, processing, substitution,
recycling, and how is this compared to other countries? Rare
earth research in the USA--and mineral extraction, rare earth
separation, processing of oxides into metal, metallic alloys,
and other useful forms, substitution, recycling is virtually
zero. Today, some work is carried out at various DOE
laboratories on rare earth and actinide separation chemistry
directed toward treating waste nuclear products and
environmental clean-up of radioactive minerals in the soils.
This research may be beneficial to improving the rare earth
separation processes on a commercial scale.
Some research at various universities might be considered
to be useful in finding substitutes for a given rare earth
metal in a high-tech application, but generally the particular
rare earth properties are so unique it is difficult to find
another substitute. And finally, the Chinese have two large
research laboratories which have significant research and
development activities that are devoted to the above topics.
They are the General Research Institute for Nonferrous Metals
in Beijing, and the Baotou Research Institute of Rare Earth in
Baotou, Inner Mongolia. The former is a much larger
organization than the Baotou group, but the rare earth activity
is smaller. The Baotou Research Institute is the largest rare
earth research group in the world. Baotou is located about 120
miles from the large rare earth deposit in Inner Mongolia.
Thank you for allowing me to participate in this House
committee hearing this afternoon. Thank you.
[The prepared statement of Dr. Gschneidner follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Prepared Statement of Karl A. Gschneidner, Jr.
1. Introduction
The Ames Laboratory (AL) is the smallest of DOE's (Department of
Energy) seventeen national laboratories. It is a single-program
laboratory with about 78% of DOE's funding from the Office of Basic
Energy Sciences (BES). Additional non-DOE income of about $7M is
derived from contracts, grants, Cooperative Research and Development
Agreements (CRADAs) and Work for Others (WFO) arrangements.
The AL is fully integrated with Iowa State University (ISU) and its
buildings are right on the campus and several are directly connected
with ISU buildings. All AL personnel are ISU employees, and many of the
lead scientists (23) have joint appointments with various academic
departments. There are about 140 scientists and engineers, 260 graduate
and undergraduate students, another 240 visiting scientists, facility
users, and associates, and 180 support personnel, for a total of about
440 employees (or about 300 full-time equivalent employees) and 410
associates (non-payroll). Of the scientific staff about 20% are
directly involved in rare earth research and development activities,
including materials science, condensed matter physics, and materials
chemistry.
2. A Brief History--How Did Rare Earths get to Ames?
Many persons may wonder how the Mecca of rare earths a
ever ended up on the picturesque ISU campus--an oasis amongst the corn
and soy bean fields of central Iowa. The story begins in late 1930s
when Frank H. Spedding was searching for a permanent academic position
after receiving his Ph.D. from the University of California in 1929
under G.N. Lewis. His Ph.D. thesis dealt with the physical properties
of rare earth materials at low temperature. He spent a number of years
in temporary jobs, including two years in Europe, where he worked with
several Nobel prize winners, including Niel Bohr. In 1937, while he was
occupied at Cornell University working with a future Nobel prize
winner, Hans Bethe, he was offered a permanent position at ISU b
as an associate professor, and he remained at ISU until he retired in
1972. Frank Spedding was primarily a spectroscopist, but he had to
separate and purify his rare earth samples from the other rare earth
elements in order to carry out his optical measurements, which are very
sensitive to the presence of other rare earth impurities. Based on his
experience with rare earth (or 4f) chemistry he was asked by A.H.
Compton of the University of Chicago to work with actinide (or 5f)
materials to assist the team of physicists to build the first nuclear
reactor under the stands of Stagg Field at the University of Chicago.
Spedding was appointed the Director of Chemistry in the Chicago
Project. One of the main goals of the Project was to purify uranium
from its ores and then to convert the oxide to the metal--six tons were
needed, which seemed like mission impossible since only a few grams of
uranium metal had been produced before World War II. By late summer in
1942 the delivery of the uranium was behind schedule and Frank Spedding
offered to use a different approach to make the metal via a
metallothermic reduction of uranium tetrafluoride, UF4. It
was successful, and as an added bonus it was purer than the metal
produced by other organizations. By November, the ISU team sent two
tons of uranium cylinders (2" diameter 2" long) to Chicago. The
addition of these two tons to the four tons delivered previously
allowed the reactor to go critical on December 2, 1942. This stellar
contribution to the Manhattan Project was recognized when ISU and
Spedding's team were awarded the ``Army and Navy E for Effort with four
stars'' pennant on October 12, 1945; the only university (college) in
the country to receive this prestigious honor. Since the Ames ingots
were purer and less expensive to produce, the Manhattan District asked
three companies to take over the Ames fluoride process and make large
amounts of uranium for the Oak Ridge and Hanford reactors. But since it
took time to get the facilities up and running the ISU group was asked
to continue to produce uranium metal. More than two million pounds were
produced by the end of World War H, and by December 1945 industry took
over. The Ames process, albeit somewhat modified, is still in use today
[1].
---------------------------------------------------------------------------
a Coined by Chemical and Engineering News in the 1970s.
b At that time ISU was known as Iowa State College, but
I will use ISU in this presentation. The name change officially
occurred in 1959.
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Soon thereafter, a new requirement arose in the war effort. Thorium
metal was needed for another type of reactor, and Spedding and his co-
workers were asked to develop a process for making thorium metal. Again
they were successful and the Ames thorium process was turned over to
industry. In the meanwhile, 600,000 pounds of thorium were produced
[1].
During the late war years, research on developing methods of
separating the rare earth elements was begun at several Manhattan
District laboratories because some of the rare earth elements were
among fission products which would absorb neutrons because of their
high neutron capture cross-section and eventually would cause the
reactor to shut down. Also the pure rare earth elements were needed to
study their chemical and metallurgical behaviors to help actinide
chemists and physicists understand the trans-uranium elements because
of the expected similarities in the properties of the two series of
elements. It was during these years that Spedding and co-workers
developed the ion exchange method for separating rare earths, which was
in commercial use for many years after World War H, until displaced by
liquid-liquid extraction procedures. The ion exchange process is still
in use today to obtain the very highest purity rare earth elements
(99.9999% pure), which are primarily used in optical applications such
as lasers and optical signal multipliers [1].
On May, 17, 1947 the Ames Laboratory became one of the Atomic
Energy Commission (AEC) laboratories to promote the peaceful uses of
atomic energy and to do research to increase our understanding and
knowledge of the chemistry, physics, and nuclear behavior of the lesser
known and uncommon elements, including the rare earths [1].
Additional information about the Ames Laboratory and Frank H.
Spedding during World War II and the early post-World War II years can
be found in several articles authored by I.E. Goldman [2,3,4] and
papers by J.D. Corbett [5] and by S.R. Karsjen [6].
3. The Golden Age of Rare Earth Research
The time span of the 1950s through the 1970s was the golden age of
rare earth research at the Ames Laboratory. At that time there was a
very wide spectrum of research being carried out ranging from
separation chemistry to analytical chemistry to process and physical
metallurgy to solid state experimental physics to theoretical first
principle calculations.
3.1 Separation Chemistry
The discovery of using ion exchange chromatography to separate and
purify the rare earths was further refined and improved in the 1950s
through the 1960s. A large pilot plant was set up to supply researchers
at the Ames Laboratory and other organizations, including many of the
AECs national laboratories, with high purity individual rare earths, to
carry out fundamental and applied research on various chemical
compounds and the pure metals (see Sec. Sec. 3.3-3.6). In addition
these ion exchange columns were used to separate the other rare earths
from yttrium (also a rare earth element) which was to be used in the
nuclear aircraft (see Sec. 3.3).
3.2 Analytical Chemistry
In order to verify the chemical purity of the separated products
new and more sensitive chemical and physico-chemical analytical methods
were developed to detect impurities of both rare earth and other non-
rare earth elements at the part per million level. This included wet
chemistry, atomic emission and atomic absorption spectroscopy, laser
ion mass spectrometry, vacuum and inert gas fusion, and combustion
analysis. This research also led to the development of inductively
coupled plasma (ICP)-atomic emission (AE) in the late 1970s, and ICP-
mass spectrometry (MS), which occurred in the early 1980s. The ICP-MS
technology was turned over to industry and today is still one of the
most versatile and utilized analytical techniques, see Sec. 5.
3.3 Process Metallurgy
This was one of the strengths of the Ames Laboratory in this time
period. The pure rare earth elements, after separating them on the ion
exchange columns, were converted to their respective rare earth oxides.
The oxide was converted to the fluoride which was then reduced to the
pure metal by calcium metal. These two processes were the critical
steps for preparing high purity metals with low concentration of
interstitial impurities, especially oxygen, carbon, nitrogen, and
hydrogen. The reduced metals were further purified by a vacuum casting
step and for the more volatile rare earth metals further purification
was carried out by distillation or sublimation. Generally, kilogram
(2.2 pounds) quantities were prepared at the Ames Laboratory. Industry
adopted the Ames process with some minor modifications to prepare
commercial grade rare earth metals, and it is still in use today. This
method is still being carried out at the AL under the auspices of the
Materials Preparation Center (MPC), see Sec. 6.1.
In the late 1950s the AEC asked the Ames Laboratory to prepare pure
yttrium metal for the proposed nuclear aircraft. A nuclear reactor
would be used to heat gases to propel an airplane much like a jet
engine. This aircraft would carry atomic weapons for months at a time
without landing. The yttrium was to be hydride to form YH2
which is used to absorb the neutrons produced by the fission of uranium
protecting the crew from radiation. As part of this project the AL
produced 65,000 pounds of YF3 and 30,000 pounds of yttrium
metal. The yttrium metal was cast into 85 pound, 6 inch diameter ingots
to ship to the General Electric Co. facilities in Cincinnati, Ohio.
In the mid-1950s, Spalding and A.H. Daane and their colleagues
developed a new technique for preparing high purity metals of the four
highly volatility rare earths--samarium, europium, thulium, and
ytterbium--by heating the respective oxides with lanthanum metal and
collecting the metal vapors on a condenser. This process has also been
turned over to industry and is used by AL's Materials Preparation
Center today (Sec. 6.1).
3.4 Physical Metallurgy
Research in the physical metallurgy area encompassed: determining
melting points, crystal structures, vapor pressures, low temperature
heat capacities, elastic constants, and magnetic properties of the pure
metals and various intermetallic compounds; and phase diagram and
thermodynamic properties studies; crystal chemistry analyses; and
alloying theory of rare earth-based materials. This was another strong
focus area in the AL in the 1950s-70s era which is still active today
but at reduced level.
Closely related, but not strictly physical metallurgy, was research
on the mechanical behavior (tensile and yield strengths, ductility, and
hardness) of the metals and some of their alloys, and also oxidation
and corrosion studies, especially yttrium in conjunction with the
nuclear aircraft project. From the information gained from the
mechanical property measurements, processes were developed to fabricate
the rare earth metals and their alloys at room and elevated temperature
into a variety of shapes and forms, e.g. rolled sheets.
3.5 Materials and Solid State Chemistry, and Ceramics
The chemical activity, in addition to separation and analytical
chemistry Sec. 3.1 and Sec. 3.2) was another area in which the AL was
considered to be world class, even though the manpower levels were
smaller than above noted areas of analytical chemistry, process and
physical metallurgy. Research was focused on the sub-stoichiometric
rare earth halides, and interstitial impurity stabilized compounds
including the halides. X-ray crystallography was an important tool in
this focus area to characterize these compounds. John D. Corbett was
the lead scientist and is still active today.
Investigations of ceramic materials were important in many of the
studies and advances in process and physical metallurgy, not only for
their refractory properties, but also because of the need to contain
the molten metals without contamination. Rare earth oxides and
sulfides, because of their intrinsic stability, were candidate
materials to contain the molten rare earths, uranium, thorium and other
non-rare earth metals.
3.6 Condensed Matter Physics
The AL was very strong in this area from the very beginning and
still is today. Research under the leadership of Sam Legvold was
concentrated on the magnetic behavior of the metals and the intra-rare-
earth alloys. This work was strongly coupled with neutron scattering
studies at both the Ames Laboratory and Oak Ridge National Laboratory,
and also with the theorists. The theoretical efforts included first
principle calculations (Bruce Harmon) and phenomenological approaches
(Sam Liu). Superconductivity was also another active topic of research,
but most of the effort was concentrated on non-rare-earth compounds.
3.7 Interdisciplinary Research
Two of the main strengths of the Ames Laboratory are magnetism and
X-ray crystallography of rare earth and related materials. In part this
is due to cooperative research efforts that cut across the disciplines
of physics, materials science, and chemistry. Frank Spedding was one of
the leaders in this approach to scientific research, which was rare in
the 1950s.
4. Interactions with Industry
As mentioned above in Sec. 3 much of the research and development
efforts were turned over to industry--the uranium and thorium metal
production, the ion exchange separation processes, and the analytical
techniques (especially ICP-MS). In addition, K.A. Gschneidner, Jr.
established the Rare-earth Information Center (RIC) in 1966 with the
initial support of the forerunner of BES, and later by industry
(starting in 1968), which totaled about 100 companies world-wide in
1996. RIC's mission was to collect, store, evaluate and disseminate
information about new scientific discoveries, industrial developments,
new commercial products, conferences, books and other literature,
honors received by rare earthers, and to answer information inquiries.
RIC published two newsletters--a quarterly (available free) and a
monthly (available to supporters of RIC), and occasional reports. In
1996 the directorship was turned over to R.W. (Bill) McCallum. But RIC
ceased operation in August 2002--when industry support dwindled
significantly as China forced many companies out of the rare earth
markets with extreme price reductions and, simultaneously, a down-turn
in the economy dried up state and Federal support.
Because of the expertise of individual AL scientists and/or some
unique AL analytical or processing capability, many organizations,
including industrial companies, asked the AL to perform applied
research as Work for Others projects or CRADAs. Many of these non-DOE
projects include the rare earths. One of these cases is discussed in
more detail in Sec. 6.5. In addition to these individual interactions,
the AL established the Materials Preparation Center (MPC) in 1981 to
provide unique metals, alloys and compounds to worldwide scientific and
industrial communities; and to perform unusual processes for
fabricating materials which could not be done elsewhere, see Sec. 6.1.
The functions carried out by the MPC over the nearly 30 years of its
existence are an outstanding example of AL-industry interactions.
Over the years various industrial organizations have sent their
staff scientists and engineers to work at Ames Laboratory getting
firsthand experience on a particular technology. These arrangements may
be part of CRADAs or Work for Others projects.
In 2009 ISU became a research member of the Rare Earth Industry and
Technology Association (REITA) to implement rare earth technology and
promote commercialization of the rare earths for military and civilian
applications.
5. Technology Transfer and Patents
The Ames Laboratory (AL) has been awarded 300 patents, of which
about 45 are concerned with rare earth materials. Ten patents deal with
the rare earth-base permanent magnets and four with magnetic
refrigeration materials. Before the passage of the Stevenson-Wydler
Technology Innovation Act of 1980 (P.L. 96-480) and the Dayh-Dole Act
of 1980 (P.L. 96-517) all patent rights were turned over to the U.S.
Government. After the Acts became law, the AL (a GOCO--government
owned, contractor operated laboratory) began to license the various
technologies developed at the AL via the Iowa State University Research
Foundation (ISURF).
The combination of inductive coupled plasma with atomic emission
spectroscopy in 1975 and later with mass spectrometry in 1984 was a
quantum jump in increasing the sensitivity for detecting and
determining trace elements in various materials. The two analytical
methods were developed at the AL to improve the speed and lower the
limits of detecting various rare earth impurity elements in a given
rare earth matrix. This technique was soon applied to other impurities
in a variety of non-rare-earth materials, e.g. detection of poisons
such as mercury and arsenic in drinking water. The ICP-MS and ICP-AE
technologies were turned over to industry and are now a standard
analytical tool in over 17,000 analytical laboratories worldwide. It is
a rapid and accurate method for 80 elements, and in some cases allows
the detection of an impurity down to the parts per trillion level.
Today there are at least six companies that manufacture ICP-MS
instruments.
In addition to the various technology transfers noted in the
previous paragraph and in sections 2, 3.1-3.3, one of the more recent
success stories is concerned with Terfenol. Terfenol is a magnetic
iron-rare-earth (containing dysprosium-terbium) intermetallic compound
which has excellent magnetostrictive properties. When a magnetic field
is turned on Terfenol will expand and when the magnetic field is
removed it relaxes to its original shape and size. There are many
applications for this material including sonar devices for detecting
submarines, oil well logging, vibration dampers, audio speakers, etc.
The magnetostrictive properties were discovered in the early 1970s at
the Naval Ordinance Laboratory in Maryland. Shortly thereafter the Navy
contracted the AL to grow single crystals and Terfenol samples with
preferred orientations. The AL was successful and designed a procedure
for making the orientated material to maximize the amplitude of the
magnetostrictive effect. Patents were issued and in the late 1980s
ISURF licensed the processing technology to Etrema, a subsidiary of
Edge Technologies, Inc. in Ames, Iowa. Today Etrema is a multimillion
dollar business.
6. Where We are Today 1980-2010
With the Ames Laboratory's successes, some of the golden-age
research was no longer deemed to be basic research and funding dried
up. In addition key personnel started to retire. As a result of these
two events a number of AL capabilities were phased out completely.
These include: analytical chemistry, separation chemistry, process
metallurgy, and ceramics. The excellent analytical capabilities were
slowly reduced and completely lost by the 2000s, except for inert gas
fusion and combustion analysis. The rare earth research activities in
physical metallurgy and condensed matter physics areas have also
suffered some downsizing to about half the level of what it was in the
pre-1980 era, but what is left is still first class state-of-the-art
basic research.
In the following sections important activities that are still
ongoing are described. Other research that had been completed in the
1980s and may play in important role in the future activities of a new
national rare earth research center, is also noted.
6.1 Materials Preparation Center
As an outgrowth of the Ames Laboratory's interactions with
industry, other DOE laboratories, universities, other research
organizations, the Materials Preparation Center (MPC) was established
in 1981 to provide high purity metals (including the rare earths,
uranium, thorium, vanadium, chromium); and intermetallics, refractory,
and inorganic compounds, and specialty alloys; none of which are
available commercially in the required purity or form/shape needed by
the request or on a cost recovery basis. The MPC is a BES specialized
research center with unique capabilities in the preparation,
purification, processing, and fabrication of well-characterized
materials for research and development. The Center is focused on
establishing and maintaining materials synthesis and processing
capabilities crucial for the discovery and development of a wide
variety of use-inspired, energy-relevant materials in both single
crystalline and polycrystalline forms, spanning a range of sizes with
well-controlled microstructures. There are four functional sections
within the MPC: (1) high purity rare earth metals and alloys; (2)
general alloy preparation; (3) single crystal synthesis; and (4)
metallic powder atomization. Each area is provided scientific and
technical guidance by a Principal Investigator (PI) whose individual
expertise is aligned with the function of each section. The original
director was F. (Rick) A. Schmidt who retired in 1993 and turned over
the directorship to Larry L. Jones.
In 2008 the MPC filled 183 external materials requests from 111
different scientists at 88 academic, national and industrial
laboratories worldwide. Internally the Center provided materials, and
services for 53 different research projects that totaled 1092
individual requests.
6.2 Nd2Fe14B Permanent Magnets
The announcement of the simultaneous discovery of the high strength
permanent magnet materials based on Nd2Fe14B by
scientists at General Motors in the USA and at Sumitomo Special Metals.
Co., Ltd. in Japan in November of 1983 set off a flurry of activities
everywhere. The lead scientist at General Motors was John Croat (an ISU
graduate), who was Frank Spedding's last graduate student. DOE/BES
funding for research on these materials at the AL started in 1986 and
lasted through 1998. U.S. Department of Commerce (DOC) funding for gas
atomization processing work on Nd2Fe14B alloys,
through the ISU Center for Applied Research and Technology, was
received from 1988 through 1993. Funding was renewed at the AL in 2001
under the auspices of DOE/EERE's Vehicle Technology (formerly
FreedomCar) program.
Notable achievements in the BES funded project included: (1)
demonstrating that the Nd2Fe14B compound can be
prepared by a thermite reduction process that is competitive with other
methods of the permanent magnet material; (2) developing methods for
controlling the solidification microstructure of melt spun
Nd2Fe14B which leads to large energy products
(the larger the energy product the better the permanent magnet
properties); (3) proposing a model for the rapid solidification of a
peritectic compound to explain the solidification microstructure of
melt spun Nd2Fe14B; and (4) developing a model
for hysteresis in exchange coupled nanostructure magnets. In 1996 the
AL team headed by R.W. (Bill) McCallum c received the DOE
Materials Science Award for ``Significant Implications for DOE Related
Technologies, Metallurgy and Ceramics'' (items 2 and 3 above). A year
later this same team won an R&D-100 Award for Nanocrystalline Composite
Coercive Magnet Powder (see Sec. 7.1). In the DOC funded project, an
alternative rapid solidification process, gas atomization, was
developed for making fine spherical Nd2Fe14B
powders, for which the AL (Iver Anderson and Barbara Lograsso) received
an R&D-100 award in 1991 (see Sec. 7.1). They also received the Federal
Laboratory Consortium Award for Excellence in Technology Transfer for
gas atomization processing of Nd2Fe14B to enable
improved molding of bonded magnets. The AL thermite reduction process
(item 1), which was developed by F. (Rick) A. Schmidt, J.T. Wheelock
and Dave T. Peterson under MPC research, was selected for one of the
1990 IR-100 (changed to ``R&D 100'' in 1991) Awards for new innovative
research for potential commercialization.
---------------------------------------------------------------------------
c Other team members were K. Dennis, M. Kramer and Dan
Branagan, who moved to DOE's INEEL laboratory.
---------------------------------------------------------------------------
The Vehicle Technology research funded by SERE is on-going and
includes design of improved Nd2Fe14B permanent
magnets which can operate at high temperature, enabling more powerful
and more efficient motors. This project also is developing further the
high temperature RE magnet alloys for powder processing, intended for
injection molded bonded magnets for mass production of hybrid and
electrical vehicles. Based on initial success with both aspects of the
RE magnet project, in 2009 SERE expanded their support into the high
risk task of identifying non-rare-earth magnet alloys with sufficient
strength for vehicle traction motors.
6.3 Nd2Fe14B Scrap Recovery
As manufacturers began to make the Nd2Fe14B
material, it soon became apparent there was a great deal of waste
magnet material being generated because grinding, melting and polishing
the magnets into a final form/shape. Much of the magnet material is
mixed with oils and other liquids used in these operations--this
material is known as ``swarf''. The team of scientists at AL headed by
F. (Rick) A. Schmidt developed two different processes to recover the
neodymium metal: a liquid metal extraction process to treat the solid
materials; and an aqueous method for treating the swarf. Both processes
were patented, but the patents have since expired.
6.4 High Temperature Ceramic Oxide Superconductors
In the mid-1980s another major discovery occurred and had an
enormous impact on the rare earths as well as science and technology in
general--the discovery of the oxide superconductor with transition
temperatures greater than that of liquid nitrogen 77 K (195 C). One
of the key superconductors was
YBa2Cu3O7, also known as ``1:2:3''. It
is utilized today in electrical transmission lines, electrical leads in
low temperature high magnetic field apparati and other superconducting
applications. The AL had a strong tradition in superconducting research
well before this discovery, and when they learned of it the condensed
matter physicists and materials scientists immediately began research
on these ceramic oxide superconductors. A National Superconducting
Basic Information Center was established at AL in 1987 with financial
support from DOE's BES. It was headed by John R. Clem, a theorist who
continues to consult with American Superconductor. The experimentalists
worked diligently on various aspects of the 1:2:3 and other oxide
superconductors to understand the processes by which they are formed
and to prepare high purity well characterized materials for physical
property studies, which would assist the theorists to understand the
fundamental nature of these superconductors. This work laid the ground
work for the development of a method of fabricating the rare earth
1:2:3 materials into filaments and flexible wires. Most of the research
on these oxide superconductors at AL has stopped and most of the know-
how has been turned over to industry. However, AL scientists are still
at the forefront of the field studying the new high temperature
superconductors: the rare-earth-arsenic-iron-oxide-fluoride and the
MgB2 materials.
6.5 Magnetic Cooling
Magnetic cooling is new, advanced, highly technical, energy
efficient, green technology for cooling and climate control of
buildings (large and homes), refrigerating and freezing food
(supermarket chillers, food processing plants, home refrigerator/
freezers). The AL team headed by K.A. Gschneidner, Jr. and V.K.
Pecharsky has been involved with magnetic cooling since 1990, when
Astronautics Corporation of America (ACA) asked Gschneidner to develop
a new magnetic refrigerant material to replace the expensive GdPd
refrigerant they were using for hydrogen gas liquefaction (a DOE
sponsored research effort). The AL team was successful and showed that
a (Dy0.5Er0.5)Al2 alloy was about 1000
times cheaper and 20% more efficient than GdPd. A patent was issued for
this new magnetic refrigerant material. This work was recognized as the
best research paper presented at the 1993 Cyrogenic Engineering
Conference. A few years later AL teamed up with ACA and designed,
constructed and tested a near room temperature magnetic refrigerator.
In 1997 they demonstrated that near room temperature magnetic
refrigeration is competitive with conventional gas compression cooling
technology and is about 10% more efficient, and is a much greener
technology because it does not employ ozone depleting, or greenhouse,
or hazardous gases [7]. This work was funded by BES's Advanced Energy
Project program. Additional research on magnetocaloric materials was
supported by BES after the Advanced Energy Project ended in 1998. But
in 2005 BES funding for this research was terminated because they
thought it was no longer basic research, i.e. it was too applied. Since
then some work has continued on magnetocaloric materials under a work
for others subcontract with ACA who has a Navy contract to build
shipboard cooling machines, and a few SBIRs which are being funded by
EERE.
This research on magnetic cooling is a good example of AL's
response to a problem encountered by industry which was successfully
solved, and then later, this work led to a whole new cooperative AL-
industry project on near room temperature magnetic refrigeration.
6.6 Neutron Scattering
Neutron scattering is a powerful tool in determining magnetic
structures of magnetic materials and it compliments magnetic property
measurements made by standard magnetometers. The rare earth research at
AL has benefited from interactions with the neutron scatterers. In the
early 1950s Frank Spedding and Sam Legvold of the AL had a close
relationship with the neutron scattering group headed by Wally Koeller
at Oak Ridge National Laboratory neutron scattering facility and
furnished single crystals of the rare earth metals. Recognition and
demand for neutron scattering resulted in a 5MW reactor being
constructed locally for Ames Laboratory. Scientists used this reactor
for extensive measurements of the electronic interactions in rare earth
and other magnetic materials. Because of a large jump in the cost of
operating and fueling this reactor, it was shut down in 1978. The
relationship with the neutron scattering effort at Oak Ridge was
enhanced and continued for many years up to about 1980, shortly before
the death of the three scientists in 1983-84. To this day a dedicated
neutron scattering facility, run by AL scientists, operates at the Oak
Ridge High Flux Isotope Reactor (HFIR). It is still of great benefit to
AL scientists studying rare earth materials.
6.7 X-ray Magnetic Scattering
X-ray magnetic scattering is a fairly new tool, which was developed
in the early 1990s, to study magnetic structures. It is fortunate that
this new tool became available because a few of the rare earth
elements, especially gadolinium, readily absorb neutrons and neutron
scattering measurements are very difficult if impossible to make. Thus,
X-ray magnetic scattering has been especially useful in determining the
magnetic structures of gadolinium compounds.
In more recent years scientists have improved the X-ray magnetic
scattering technique, which is called X-ray magnetic circular
dischroism (XMCD). The AL scientists have been on the forefront by
applying the latest experiments and theoretical tools to help elucidate
complex electronic interactions underlying bulk magnetic properties.
The AL team, led by Alan Goldman (experiment) and Bruce Hannon
(theory), has been pioneers in the development and application of XMCD
on rare earth materials. This tool gives valuable and direct
information about the itinerant electrons responsible for coupling the
individual localized magnetic moments of each rare earth atom in a
solid. The stronger the microscopic coupling the stronger the bulk
magnet, and the more useful it can be in applications. Such experiments
and powerful computers are essential for helping AL scientists in their
latest ``materials discovery'' initiative to accelerate the discovery
of new magnetic materials for industry.
6.8 Emerging Technologies
One of the new and exciting, ongoing developments at Ames
Laboratory is a revolutionary method of preparing rare earth-based
master alloys for energy and other applications. In addition to
lowering costs of the starting material, the processing technique also
reduces energy consumption by 40 to 50% and is a very green technology.
The work on preparing Nd2Fe14B magnet material
began about a year ago with financial support from AL patent royalties,
and it has been reduced to practice--we have prepared a state-of-the-
art permanent magnet on February 5, 2010, see attached figure. It is a
one step process going from the neodymium oxide to the neodymium master
alloy, and since the end-products are completely utilized, there are no
waste materials to dispose of. The conventional process also starts
with the neodymium oxide but takes two steps to obtain the neodymium
metal, and there are waste products associated with both steps which
need to be disposed of in an environmentally friendly manner. The step
to prepare the Nd2Fe14B magnet material is
essentially the same in either case. This processing technique was
invented by F. (Rick) A. Schmidt and K.A. Gschneidner, Jr. A
provisional patent has been filed.
A modification of this process should enable us to prepare a
lanthanum master alloy to prepare lanthanum nickel metal hydride
batteries, which are used in hybrid and electrical vehicles. Likewise,
we believe this process can be used to make magnetic rare earth
refrigerant alloys (see Sec. 6.5).
7. Kudos
The Ames Laboratory scientific achievements and their science/
engineering leaders have been recognized by several organizations
including DOE.
7.1 R&D-100 Awards (former IR-100 Awards)
Industrial Research magazine annually identifies the nation's top
100 technological innovations, called the ER-100 Awards before 1991 and
now are called the R&D-100 Awards. These awards are also known as the
``Oscars of Science''. Over the past 25 years AL has received 17 R&D-
100 Awards. Of these three are involved with rare earths, in particular
the Nd2Fe14B permanent magnet materials. These
are listed below.
1990: ``Thermite Reduction Process to Make Rare-earth Iron
Alloys'' F. (Rick) A. Schmidt, John T. Wheelock and Dave T.
Peterson
1991: ``HPGA (High Pressure Gas Atomization)'' Iver Anderson
and Barbara Lograsso
1997: ``Nanocrystalline Composite Coercive Magnet Powder''
R.W. (Bill) McCallum, Kevin Dennis, Matt Kramer, and Dan
Branagan
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Left: Our KAA-1-34 composition. 60/40 by vol.
Nd2Fe14B/PPS (poly(phenylene sulfide). Hot
pressed at 300 C and magnetized with a 2T electromagnet. The second
bonded permanent magnet prepared.
Center: Practice magnet of similar composition. The surface is
boron nitride coating from the die used to compact the
Nd2Fe14B particles in the polymer.
Right: First Bond permanent magnet. 30/70 by vol.
Nd2Fe14B/diallyl phthalate sample mounting
material. Hot pressed and sealed with thin layer of epoxy.
7.2 National Academies Members
Six Ames Laboratory scientists have been named to the National
Academy of Sciences and the National Academy of Engineering. Frank H.
Spedding was elected in 1952 and John D. Corbett in 1992 to the
National Academy of Sciences. The four National Academy of Engineering
members are: Donald O. Thompson--1991, Dan Schechtman--2000, R. Bruce
Thompson--2003, and Karl A. Gschneidner, Jr.--2007. Of the six three
(Spedding, Corbett and Gschneidner) were heavily involved in the rare
earth science and technology of rare earths during their careers.
Corbett and Gschneidner are still actively engaged in research and
development activities. Spedding died in 1984 but was still active
until shortly before his passing.
7.3 Department of Energy Awards
Scientists at AL have won several DOE, (mostly from BES) awards for
their scientific achievements. These are listed below.
1982 K.A. Gschneidner, Jr. and K. Ikeda for quenching of spin
fluctuations
1991 I.E. Anderson and B.K. Lograsso received the Federal
Laboratory Consortium Award for Excellence in Technology
Transfer for high pressure gas atomization of rare earth
permanent magnet alloys
1994 B.J. Beaudry for thermoelectric materials
characterization from DOE's Radioisotope Power Systems Division
1995 J.D. Corbett for sustained outstanding research in
materials chemistry
1995 A.I. Goldman, M.J. Kramer, T.A. Lograsso, and R.W.
McCallum for sustained outstanding research in solid state
physics
1996 D. Branagan, K.W. Dennis, M.J. Kramer, R.W. McCallum for
studies on the solidification of rare earth permanent magnets
1997 K.A. Gschneidner, Jr. and V.K. Pecharsky for
contributions to the advancement of magnetic refrigeration
2001 K.A. Gschneidner, Jr. and V.K. Pecharsky received the
``Energy 100 Award'' for research on magnetic refrigeration as
one of the 100 discoveries between 1997 and 2000 that resulted
in improvements for American consumers.
Acknowledgements
The author wishes to thank his colleagues and associates for
assisting him in putting this report together. They are: A.H. King,
Director, Ames Laboratory; and K.A. Ament, I.E. Anderson, J.D. Corbett,
D.L. Covey, K.B. Gibson, B.N. Harmon, S.L. Joiner, S.R. Karsjen, L.L.
Jones, T.A. Lograsso, R.W. McCallum, V.K. Pecharsky, F.A. Schmidt, and
C.J. Smith.
References
1. H.J. Svec, pp. 1-31 ``Prologue'' in Handbook on the Physics and
Chemistry of Rare Earths, vol. 11, K.A. Gschneidner, Jr. and L.
Eyring Eds., Elsevier Science Publishers (1988).
2. J.A. Goldman, ``National Science in the Nation's Heartland. The Ames
Laboratory and Iowa State University, 1942-1965'', Technology
and Culture 41, 435-459 (2000).
3. J.A. Goldman, ``Mobilizing Science in the Heartland: Iowa State
College, the State University of Iowa and National Science
during World War II'', The Annals of Iowa 59, 374-397 (Fall
2000).
4. J.A. Goldman, ``Frank Spedding and the Ames Laboratory: The
Development of a Science Manager'', The Annals of Iowa 67, 51-
81 (Winter 2008).
5. J.D. Corbett, ``Frank Harold Spedding 1902-1984'', Biographical
Memories 80, 1-28 (2001); The National Academy Press,
Washington, DC.
6. S.R. Karsjen, ``The Ames Project: History of the Ames Laboratory's
Contributions to the Historic Manhattan Project, 1942-1946'',
published by Ames Laboratory Public Affairs, Iowa State
University, Ames, Iowa (2003).
7. K.A. Gschneidner, Jr. and V.K. Pecharsky, ``Thirty Years of Near
Room Temperature Magnetic Cooling: Where we are Today and
Future Prospects'', Intern. J. Refrig. 31, 945-961 (2008).
QUESTION 2: BASIC RESEARCH PROGRAM
In the 1990s the Chinese flooded the marketplace with low priced
raw rare earth products (mixed and separated rare earth oxides) and as
a result, not only did the primary rare earth producers in the United
States and the rest of the world shut down, but technical personnel
with expertise in rare earth mining, refining, extraction, etc. found
employment in other industries. Soon thereafter the Chinese began
manufacturing higher value rare earth products, including rare earth
permanent magnet materials, and in time, all of the
Nd2Fe14B magnet manufacturers in the United
States also went out of business. This also resulted in a brain drain
of scientists and engineers in this field, and also in all high-tech
areas involving other rare earth products, such as high energy product
permanent magnet materials, metallic hydrogen storage and rechargeable
battery materials. Some of these experts have moved on to other
industries, others have retired, and others have died, basically
leaving behind an intellectual vacuum.
In the late 2000s the Chinese game plan changed, and they have
started to exercise export controls on a variety of rare earth
products, and signaled that they intend to consume all the rare earths
mined in China internally in the next three to five years. This change
will allow the rare earth producers and manufacturers to supply the
needed products, but this presents several problems which have been
cited by others at this House Committee hearing. One of these is the
shortage of trained scientists, engineers, and technicians. Another
need is innovations in the high tech areas which are critical to our
country's future energy needs. A research center which alleviates both
of these problems is the best way to work our way through the rare
earth crisis facing the USA. An educational institution which has a
long and strong tradition in carrying out research on all aspects of
rare earth materials--from mining and purification to basic discovery
and applications over a number of disciplines (i.e. chemistry,
materials, physics, and engineering) with a strong educational
component (undergraduate, graduate and post doctoral students) would be
the ideal solution. A National Research Center on Rare Earths and
Energy should be established at such an institution initially with
Federal and, possibly, state support, and as the U.S. rare earth
industry matures in five to ten years, supplemented by industrial
financial support. The center would employ about 30 full time
employees--group leaders; associate and assistant scientists and
engineers; post docs, graduate and undergraduate students; and
technicians plus support staff. This research center will be a national
resource for the rare earth science, technology and applications, and
therefore, it would also provide broad support of research activities
at other institutions (universities, national laboratories, non-profit
research centers, and industry) who would supply intellectual expertise
via subcontracts to complement the activities at the center.
The major emphasis of the center would be goal oriented basic
research, but proprietary research directly paid by the organizations
that request it would also be part of the center's mandate. The center
would have an advisory board to oversee, guide and refocus as needed
the research being conducted. The advisory board would be made up of
representatives from the university, government, industry and the
general public.
I would like to suggest to this House subcommittee that they
consider .a second national center, the National Research Center for
Magnetic Cooling. Cooling below room temperature accounts for 15% of
the total energy consumed in the USA. As noted in my response to the
first question, magnetic refrigeration is a new advanced, highly
technical, energy efficient green technology for cooling and climate
control of buildings,-ships, aircraft, and refrigerating and freezing
(Sec. 6.5). We have shown that magnetic cooling is a refrigeration
technology competitive with conventional gas compression cooling.
Magnetic cooling is 10 to 20% more efficient, and it is a very green
technology because it eliminates hazardous and greenhouse gases, and
reduces energy consumption. If we were able to switch all of the
cooling processes to magnetic refrigeration at once we would reduce the
nation's energy consumption by 5%. But there are a lot of hurdles that
need to be overcome and the USA needs to put together a strong,
cohesive effort to retain our disappearing leadership in this
technology, by assembling a National Research Center for Magnetic
Cooling. Europe and China are moving rapidly in this area, and Denmark
has assembled a magnetic refrigeration national research center at
Riso--so far the only one in the world. The U.S. Center should be
structured similar to what has been proposed in the above paragraphs
for the National Research Center on Rare Earth and Energy. The question
is, are we going to give up our lead position and be a second rate
country, or will we be leading the rest of the world? I hope and pray
that the answer is, we are going to show the world that we are number
one.
QUESTION 3: KNOWLEDGE TRANSFER
Knowledge is transferred from a research organization to industry
through two primary routes. The first is the transfer of intellectual
property. Research findings carried out at universities, colleges, non-
profit organizations, and DOE and other Federal laboratories are
disseminated as published articles in peer-reviewed journals and in
trade journals, presentations at national and international
conferences, electronic media, or their organization's web site, and if
exciting enough, via news conferences and press releases assuming the
new results are not patentable. If, however, the research has some
potential commercial value, this new information/data should be made
available as soon as feasibly possible after filing a patent
disclosure. However, before the patent is filed one could disseminate
the results to companies that might be interested by contacting them
directly to see: (1) if they are interested, (2) if they would sign a
non-disclosure agreement, and (3) if they answer yes to both (1) and
(2) then the information could be disclosed to them. However, all the
companies must be treated equally and fairly.
The second route is highly effective when the research organization
is connected with a university. This is exemplified by Ames Laboratory
and Iowa State University. AL employs a significant number of ISU
students in part time positions either as graduate research assistants
or undergraduate research helpers. These science and engineering
students, particularly at the bachelors and masters levels, transfer
the skills and process the knowledge gained in working in the
laboratory to their employers after they graduate.
QUESTION 4: U.S. RESEARCH ON RARE EARTH MINERALS
Rare earth research in the USA on mineral extraction, rare earth
separation, processing of the oxides into metallic alloys and other
useful forms (i.e. chlorides, carbonates, ferrites), substitution, and
recycling is virtually zero. As is well-known, research primarily
follows money; but prestige and accolades are other drivers; or when
someone serendipitously comes up with an exciting idea for a research
project. The lack of money and excitement accounts for the low level of
research on the above topics.
Today some work on rare earth and actinide separation chemistry is
directed toward treating waste nuclear products and environmental
clean-up of radioactive materials in soils is being carried out at
various DOE laboratories. This research may be beneficial to improving
rare earth separation processes on a commercial scale.
Some research at various universities might be considered to be
useful in finding substitutes for a given rare earth element in a high
tech application. But generally the particular rare earth's. properties
are so unique it is difficult to find another element (rare earth or
non-rare earth) as a substitute.
The Chinese have two large research laboratories which have
significant research and development activities devoted to the above
topics. They are the General Research Institute for Nonferrous Metals
(GRINM) in Beijing, and the Baotou Research Institute of Rare Earths
(BRIRE) in Baotou, Inner Mongolia. GRINM is a much larger organization
than the Baotou group, but the rare earths activity is smaller than
what is carried out at BRIRE. The Baotou Research Institute of Rare
Earths is the largest rare earth research group in the world. Baotou is
located about 120 miles from the large rare earth deposit in Inner
Mongolia and is the closest large city to the mine. This is the reason
why BRIRE is located in Baotou.
Biography for Karl A. Gschneidner, Jr.
Karl A. Gschneidner, Jr. was born on November 16, 1930 in Detroit,
Michigan, and received his early education at St. Margaret Mary grade
school and St. Bernard high school. He attended the University of
Detroit, 1948-1952 and graduated with B.S. in Chemistry. He went to
graduate school at Iowa State College (became Iowa State University in
1959) and in 1957 obtained a Ph.D. degree in Physical Chemistry
studying under Distinguished Professor Frank H. Spedding and Professor
Adrian H. Daane. He then worked in the plutonium research group at the
Los Alamos Scientific Laboratory from 1957 through 1963. In 1963 he
joined the Department of Metallurgy as an Associate Professor, and
jointly as a group leader at the Ames Laboratory of Iowa State
University. He was promoted to a full professor in 1967, and named a
Distinguished Professor in 1979. In 1966 he founded the Rare-earth
Information Center and served as its Director for 30 years. He was also
the Program Director for Metallurgy and Ceramics at the Ames Laboratory
from 1974 to 1979. He taught mostly graduate level courses, including
x-ray crystallography, the physical metallurgy of rare earths, and
alloying theory.
Gschneidner, sometimes known as ``Mr. Rare Earths'', is one of the
world's foremost authorities in the physical metallurgy, and the
thermal, magnetic and electrical behaviors of rare earth materials, a
group of chemically similar metals naturally occurring in the earth's
crust. His work lately has taken him into the field of magnetic
refrigeration, a developing technology that has the potential for
significant energy savings with fewer environmental problems than
existing refrigeration systems.
Gschneidner has over 450 refereed journal publications and nearly
300 presentations to leading scientific gatherings worldwide to his
credit. Holder of more than a dozen patents, he has been honored with
numerous awards by governmental, professional, and industrial bodies,
including recognition for his Ames Lab team's research in magnetic
refrigeration by the U.S. Department of Energy in 1997 and with an
Innovative Housing Technology Award in 2003.
In addition to the National Academy of Engineering, Gschneidner is
also a Fellow of the American Society for Materials-International, The
Minerals, Metals and Materials Society, and the American Physical
Society. In 2005, he was honored for 53 years of outstanding
contributions to his field with a symposium at Iowa State that was
attended by some of the world's leading experts in rare earth
materials, many of them his former students or collaborators. He
maintains an active research program with Ames Laboratory.
Chairman Miller. Thank you, Dr. Gschneidner. Mr. Smith for
five minutes.
STATEMENT OF MR. MARK A. SMITH, CHIEF EXECUTIVE OFFICER,
MOLYCORP MINERALS, LLC
Mr. Smith. Thank you. Chairman Miller, Ranking Member
Broun, other distinguished Members of the Subcommittee. I would
like to thank you for the opportunity to be here today.
This is the first committee to hold a hearing specifically
on this issue, and I want to commend you for your leadership in
this regard.
It has been remarkable, in my 25 years in this business, to
see the use of rare earths literally explode in front of our
eyes. However, while rare earth-based technologies have become
more and more essential and more and more a part of our
everyday lives, the United States--as well as the rest of the
world--has become almost completely dependent on China for
access to the rare earth resources and the metals, alloys and
magnets that derive from them.
A combination of three factors should make this situation
one of urgent concern to policymakers: first, the
indispensability of rare earths in clean energy and defense
technologies; two, the almost complete dominance of rare earth
production by China; and three, China's accelerating
consumption of their own rare earth resources.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
On the screen in front of you is a slide that just touches
the surface of some of the uses of rare earths in the world
today. On the clean energy side, rare earths are used in the
advanced nickel hydride batteries for hybrid cars as well as
the rare earth permanent magnets that power the highly
efficient next generation of wind turbines and the electric and
hybrid vehicle motors and generators. Rare earth phosphors are
what illuminate compact fluorescent light bulbs which are
currently mandated in the European Union.
On the defense side, missile guidance systems, electronics,
communications and surveillance equipment, just to name a few
applications, all require rare earths. None, let me repeat,
none of these technologies will work without rare earths, and
yet each is tied directly to some of the Nation's highest
national priorities today.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
On the screen in front of you now I have provided a
simplified version of a wind turbine supply chain from a rare
earth perspective. With the exception of our historic rare
earth mineral production at the very start, none of the
capabilities in the green box really exist in the United States
today. The result is a supply chain capability gap in the
United States that has the potential to become a very serious
strategic and economic disadvantage. Today, China actually
produces over 97 percent of the world's rare earth oxides. They
produce almost 100 percent of the associated metals and 80
percent of the rare earth magnets. For the last 15 years,
China's production has been able to satisfy their own internal
needs as well as those of the rest of the world. However, it is
predicted that rapid Chinese demand growth, coupled with lower
and lower Chinese government-controlled export quotas, will
continue to decrease the amount of rare earths available to the
rest of the world, thereby creating a serious supply gap.
Forecasts conclude that this shortage could occur by 2012, and
with China's recently announced commitment to be the world's
largest producer of wind energy and electric vehicles, this
will certainly not help that timeframe.
In order to truly break our near-total dependence on China,
Molycorp has developed its mining-to-magnet strategy. Molycorp
has 57 years of experience in the rare earth industry and has a
world-class ore deposit at its rare earth facility in Mountain
Pass. We have invested over $20 million in process technology
improvements in advance of our restart project, and the
resulting efficiencies will drastically improve our overall
cost competitiveness, as well as our environmental stewardship.
We also believe that our mine-to-magnets project could
create an estimated 900 new direct jobs as well as 700
temporary construction jobs in the United States, not to
mention the multiplier effect this will have in both green and
defense technological industries in this country.
Molycorp is the only rare earth company outside of China
that stands shovel-ready. We are uniquely well-positioned to
rebuild the rare earth supply chain from mining to magnets, and
we can do it in the shortest timeframe possible.
The Federal Government clearly has a role to play. As you
consider legislation, there are four areas I think you can have
the greatest impact on. The first is Federal loan guarantees.
We applied for the DOE's loan guarantee program in the fall of
2009, and our application was recently rejected as ineligible.
The DOE contends that this project goes too far upstream and
that their program was not intended to cover projects that go
all the way back to mining. Congress will need to provide
legislative direction or new legislative language clarifying
the use of loan guarantees for strategically vital supply chain
projects.
Second, the Federal Government and this committee in
particular can play a pivotal role in reestablishing our world
class rare earth knowledge and expertise the way it used to be.
Number three, as noted earlier, the White House OSTP is
working with the Departments of Commerce, Defense and State to
lead a collaborative interagency effort on this issue. We are
very encouraged by this effort, but the imminent global supply
and demand challenge clearly necessitates more urgency by the
Administration right now.
And finally, Federal funding support for competitive grants
specifically directed at the rare earth research and technology
industry, including recycling, will certainly help to further
expand the United States' capabilities in the rare earth world.
Thank you, Mr. Chairman, for this time today, and I would
be happy to answer any questions later.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Mark A. Smith
Introduction
Chairman Miller, Ranking Member Broun, and Members of the
Subcommittee, I want to thank you for the opportunity to share my
observations, experiences, and insights on the subject of rare earths,
the critical role they play in the technologies that will shape our
future, the looming supply challenges that are ahead of us, and the
work we are doing at our facility at Mountain Pass, California. This is
the first Committee to hold a hearing specifically on this important
topic, and I want to commend you for your leadership and forethought.
I'm the CEO of rare earths technology company Molycorp Minerals,
LLC. Molycorp owns the rare earth mine and processing facility at
Mountain Pass, California, one of the richest rare earth deposits in
the world, and we are the only active producer of rare earths in the
Western Hemisphere. I have worked with Molycorp and its former parent
companies, Unocal and Chevron, for over 25 years, and have watched
closely the evolution of this industry over the past decade. It has
been remarkable to watch the applications for rare earths explode.
However, as rare earth-based technologies have become more and more
essential, the U.S., which invented rare earth processing and
manufacturing technology, has become almost completely dependent on
China for access to rare earths and, more' specifically, the metals,
alloys and magnets that derive from them.
On its face it may not seem any more disconcerting than any other
material dependency. However, it is the combination of three key
factors that make this situation one of urgent concern to policymakers:
1) the indispensability of rare earths in key clean energy and defense
technologies; 2) the dominance of rare earth production by one country,
China, and 3) China's accelerating consumption of their own rare earth
resources, leaving the rest of the world without a viable alternative
source.
The development of clean energy technology is a top national
priority, as these innovations are key to our broader national
objectives of greater energy security and independence, reduced carbon
emissions, long term economic competitiveness, and robust job creation.
Yet all of these crucial national objectives become less achievable if
we lack access to rare earth resources.
Our company has produced rare earths for 57 years, and we are in
the process of restarting active mining and down-stream processing at
Mountain Pass. We are redeveloping our facilities to dramatically
increase our production, and we are executing a strategy to rebuild the
rare earth metal and magnet manufacturing capabilities that our country
has lost in the past decade. This effort will help to address rare
earth access concerns and may help to catalyze clean tech
manufacturing, but the lingering question is how quickly we can make
this happen, as the looming supply concerns seem to accelerate every
day.
Below I offer my perspective on rare earths and their applications,
America's rare earth capability gap, the global supply concerns and
their implications, our work at Molycorp to expand our domestic rare
earth access, and the role the Federal Government can play to help
address the looming supply concerns.
Rare Earth Elements and Key Applications
Rare earths are a group of 17 elements (atomic numbers 57-71 along
with Sc and Y) whose unique properties make them indispensable in a
wide variety of advanced technologies. One rare earth in particular--
neodymium (Nd)--is used to create the very high powered but lightweight
magnets that have enabled miniaturization of a long list of consumer
electronics, such as hard disk drives and cell phones. While high-tech
applications such as these have dominated the usage of rare earths over
the past decade, it is their application in clean energy technologies
and defense systems that has brought heightened attention to rare
earths.
Rare earths are indispensable in a wide variety of clean energy
technologies. Rare earth metals are used in the advanced nickel-metal
hydride (NiMH) batteries that are found in most current model hybrids;
powerful rare earth magnets enable next generation wind turbines,
electric vehicle motors, and hybrid vehicle motors and generators; and
rare earth phosphors are what illuminate compact fluorescent light
bulbs. On the defense side, missile guidance systems, military
electronics, communications and surveillance equipment all require rare
earths. None of these technologies will work without rare earths, and
yet each of these technologies is tied closely to some of the nation's
highest national priorities, our energy and national security.
The list of rare earth applications is long and varied, but there
are additional applications that are worth noting specifically. The
automotive sector is a big user of rare earths. Cerium is used to
polish glass and provides protection from UV rays. In the 1970s, rare
earths replaced palladium for use in catalytic converters, and if
palladium were still used today, cars would be significantly more
expensive. They are also used in petroleum refining and as diesel
additives.
At Molycorp, we have also found a use for cerium in water
filtration. We have developed proprietary water filtration technology
that has applications in industrial wastewater treatment, clean water
production in the developing world, and the recreation and backpacking
market.
The diagram below offers a broader view of rare earths'
applications:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Despite their name, rare earths are not rare. If you were to go
outside right now and grab a handful of dirt from the ground, it would
contain rare earths. However, it is far more difficult to find rare
earths in a concentration high enough to be mined and separated
economically. When rare earths are extracted from the ground, the ore
contains all of the rare earths, and it is through highly complex
separation processes that each individual rare earth oxide can be
produced. It is this separation process that largely drives the cost of
rare earth production. Ore bodies that contain rare earths at
percentages in the low single digits cannot be mined economically under
current prices for rare earths.
Thus, today, there are only 3 known and verified locations where a
sufficiently high concentration of rare earths exists: Baotou, China;
Mountain Pass, California, where Molycorp's mine is located; and Mt.
Weld, Australia, which has a rich ore deposit but none of the
infrastructure necessary to begin extraction, separation, and
distribution to market. Given these circumstances, Molycorp's mine at
Mountain Pass is clearly one of the only rare earth resources in the
world that is immediately minable, economically viable, and can provide
a near-term source of rare earth materials. With supply concerns
becoming increasingly imminent, the greatest challenge facing Molycorp
is the speed at which we can bring these needed resources online. I
will discuss this in further detail later in this testimony.
Industrial Supply Chain and America's Capability Gap
One of the biggest challenges in raising awareness and
understanding about rare earths is that they are found so early in the
industrial supply chain that it is difficult to contemplate their usage
in products that we see every day. To illustrate this point, consider
the example of the new generation of wind turbines, which employ rare
earth-based permanent magnet generators with reliability and efficiency
improvements of 70% over the current industry standard. Below is a
simplified supply chain:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Once the rare earths are mined, they are separated and converted to
oxides and then converted into metals. The metals are then manufactured
into alloys and magnet powders. The powders are then bonded or.
sintered to form the magnets required for turbine production. The
turbine, in turn, is included in the windmill assembly, and the final
product is installed. All of the functions within the green box are
necessary to be able to produce the magnets required for this clean
energy technology and so many others. However, other than the rare
earth mineral extraction and conversion to oxides, the other
manufacturing capabilities in the green box no longer exist in the
United States. The U.S. did at one time possess all of these
capabilities, and in fact, these technologies largely originated here.
However, over the past decade as American manufacturing has steadily
eroded, the U.S. has ceded this technological ground to competitors in
China, Japan and Germany.
China has become particularly dominant, and some would contend that
it has been by design. In the early 1990s, China's Deng Xiaoping was
quoted as saying, ``There is oil in the Middle East; there is rare
earth in China.'' \1\ China realized that it had a significant natural
resource advantage, and through the development of new applications in
an ever-expanding number of advanced technologies, China helped to grow
the market for rare earths from 40,000 tons in the early 1990s to
roughly 125,000 tons in 2008. It is over that same period that, due to
a variety of factors, the U.S. ceased active mining of rare earths.
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\1\ Cox, Clint. (2006, October 10). Rare earth may be China's
checkmate. Retrieved from the Anchor House web site on February 5, 2010
at http://www.theanchorsite.com/2006/10/.
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While the U.S. still possesses the technical expertise, we have
lost the necessary infrastructure to manufacture the rare earth metals
and magnets that fuel next generation technologies. The last rare earth
magnet manufacturer in the U.S. was a company called Magnaquench,
formerly located in Valparaiso, Indiana, and owned by General Motors.
Magnaquench and all of its U.S. assets were sold to a Chinese company
in the early 2000s in an effort to help GM gain access to the Chinese
market.\2\ Two domestic companies can produce small quantities of rare
earth based alloys but none can convert the rare earth oxides to metal.
The result is a significant rare earth ``capability gap'' in the U.S.
that has the potential to quickly become a major strategic and economic
disadvantage.
---------------------------------------------------------------------------
\2\ Moberg, David. (2004, January 23). Magnet Consolidation
Threatens Both U.S. Jabs and Security. Retrieved from the In These
Times web site on February 5, 2010 at http://www.inthesetimes.com/
article/685/.
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Global Supply Concerns and Implications for the U.S.
Today, the production of rare earths, and the metals and magnets
that derive from them, is overwhelmingly dominated by China. At
present, China produces 97% of the world's rare earth supply, almost
100% of the associated metal production, and 80% of the rare earth
magnets. Complicating this picture even further, China's national
consumption of rare earth resources is growing at an intense pace,
consistent with their meteoric GDP growth, and it is leaving the rest
of the world with less of these critical materials just as the clean
energy economy is beginning to gain momentum. As the chart below from
rare earths research firm, the Industrial Minerals Company of Australia
(IMCOA) demonstrates, China's massive production has been able to
satisfy both their own internal needs and those of the rest of the
world. However, as the blue line indicates Chinese demand for its own
rare earths will soon match, if not eclipse, its own internal supply,
and with global demand (in yellow) growing at a parallel pace, there is
a significant production gap--around 60,000 tons--that must be filled
in a very short timeframe.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
IMCOA's previous forecasts concluded that this critical shortage
for the rest of the world outside of China would occur by 2012, but
China has recently said that it intends to be the world's largest
producer of wind energy and electric vehicles and has committed $150
billion and $29 billion to these two respective clean technology
sectors (by comparison, the entire amount of stimulus funding under the
American Recovery and Reinvestment Act directed at all areas of clean
energy deployment was $60 billion). The new, more efficient wind
turbines that use rare earth permanent magnet generators require around
2 tons of rare earth magnets per windmill. The rare earth industry has
never seen this level of demand. To date, rare earth producers like
Molycorp have filled orders by the pound or kilogram, not by the ton.
If China's commitment holds true, this will vastly accelerate their
consumption of rare earths and speed up the date when the rest of the
world will find its access to rare earths severely limited.
Around the same time that China was outlining its clean energy
investments, it also began to consider steps to reduce the availability
of its rare earths to the rest of the world. As if the demand forecasts
weren't disconcerting enough, China heightened international supply
concerns last fall when its Interior Ministry signaled that it would
further restrict its exports of rare earth resources. China has been
steadily decreasing its exports by an average of 6% per year since
2002, but these new restrictions portend a more aggressive effort to
use its own resources domestically. This critical issue was featured on
the front page of the New York Time's business section on August 31,
2009, and I've included the article for the Committee's record.
Finally, in late December, China announced that it will begin to
stockpile rare earths. It is our estimation that if they are announcing
it officially to the rest of the world, it is highly likely that the
stockpiling has been occurring for some time. Regardless, it will have
a further depressive effect on global supply.
Energy Security and Global Competitiveness
Disruption in the global supply of rare earths poses a significant
concern for America's energy security and clean energy objectives, its
future defense needs, and its long-term global competitiveness. Rare
earths may not be familiar to most people, hidden deep in the
industrial supply chain, but they are absolutely indispensable for so
many of the advanced technologies that will allow us to achieve
critical national objectives.
Efforts to decrease U.S. dependence on foreign oil and develop a
clean energy economy, as well as the jobs that come with it, have
received broad bipartisan support, and few would disagree that the U.S.
must diversify its sources of energy and slow the demand for fossil
fuels. Wind power and electric vehicles (EVs) have emerged as
technologies that will play important roles in these efforts, and the
U.S. has indicated it intends to be a leader in both. As noted above,
the most efficient wind turbines require multiple tons of rare earths,
and as the U.S. moves to increase the percentage of power that comes
from wind, there will be a commensurate increase in domestic demand for
rare earths. The American automotive industry is expanding the number
of hybrid, plug-in hybrid (PHEV), and full electric vehicle (EV) models
in an effort to produce far more fuel efficient products, and yet many
of the advanced batteries that power hybrids and PHEVs utilize several
kilograms of rare earth metals in each unit. The motors and generators
in these new vehicles also use several kilograms of rare earth
permanent magnets. Similar implications exist for our national defense
capabilities. From military communications equipment to missile
guidance systems, rare earths enable a long list of advanced defense
technologies. We have had extensive discussions with the Department of
Defense (DOD), and they are paying far greater attention to this
concern. In fact, the FY 2011 DOD Authorization signed into law last
October included a provision requiring the Department to submit a
report to Congress no later than April 1, 2010, assessing the usage of
rare earth materials in DOD's supply chain, looking at projected
availability for use by DOD, the extent to which the DOD is dependent
on rare earth materials, steps that the Department is taking to address
any risks to national security, and recommendations for further action.
Access to rare earths is obviously essential, but without
rebuilding the manufacturing capacity to produce rare earth metals and
magnets, the U.S. could find itself dependent on China for key
technological building blocks. But even this scenario presumes that the
U.S. has the manufacturing capabilities to put Chinese rare earth
materials to use in final products. Right now, given the current state
of U.S. manufacturing, it is unfortunately more likely that we would
become a raw material supplier to Chinese manufacturers.
Viewed through this lens, the domestic development of rare earth
resources and manufacturing capabilities is not only a strategic
necessity but also a potential catalyst for job growth in the clean
energy and advanced technology manufacturing sectors. If these
resources and capabilities were built up domestically, it could have a
multiplier effect on downstream, value added manufacturing. Consider
China's experience. It has to create 10-15 million jobs a year just to
accommodate new entrants into its job market, and it has viewed the
rare earths industry as a ``magnet'' for jobs. China repeatedly
attracted high-tech manufacturers to move to its shores in exchange for
access to rare earths among other enticements. The U.S. could
experience a similar jobs boost by making a concerted effort to rebuild
the clean energy supply chain, beginning with rare earths, within its
borders.
Molycorp Minerals' Mining to Magnets Strategy
Molycorp Minerals has been in the rare earths business for 57
years, and while the company and its facilities have changed ownership
over the years, it has remained one of the world's only viable sources
of rare earth minerals. On October 1, 2008, a group of U.S. based
investors, including myself, formed Molycorp Minerals, LLC, and we
acquired from Chevron its rare earth assets at Mountain Pass, which the
U.S. Geological Survey has deemed ``the greatest concentration of rare
earth minerals now known.'' From the outset, we have sought to combine
this world-class rare earth deposit with a ``mining to magnets''
strategy. Our redevelopment of Mountain Pass is the starting point of a
broader effort to reestablish domestic manufacturing of the rare earth
metals, alloys and magnets that enable and are indispensable to the
clean energy economy and advanced technology manufacturing.
Our work at Mountain Pass provides a timely, well-planned, and
economically viable means to address the rare earth access challenges
on the shortest timeline possible. While Molycorp has been processing
existing rare earth stockpiles since 2007, it has invested $20 million
to begin the restart of active mining. Our team matches this remarkable
natural resource with 57 years of rare earth mining, milling, and
processing experience. We have obtained the necessary 30-year mine plan
permit, and the Environmental Impact Report for the mining-to-oxides
portion of the redevelopment has been reviewed and approved by all
applicable Federal, state, and local agencies. Molycorp's footprint
will be limited to its privately-held land, using state-of-the-art
technologies for water treatment and mineral recovery. Through new
advances in our production processes, Molycorp will produce 20,000
tons, or 40,000,000 pounds, of rare earth oxides per year, and our
increased production and capabilities can potentially create 900 new
jobs for the hard hit San Bernardino-Riverside and Henderson-Las Vegas
regions of California and Nevada. Molycorp is the only domestic rare
earth provider that stands ``shovel-ready'' to create jobs and commence
the mining-to-magnets work required to meet multiple customer-specific
product demands.
Access to the raw, rare earth minerals is obviously essential, but
as noted earlier, it resolves only part of the challenge. As part of
our mining to magnets development, we will build out the metals,
alloying and magnet powder manufacturing capabilities. We would also
establish the production of rare earth permanent magnets, all here in
the United States. Our company is uniquely well-positioned to rebuild
these early steps in the clean energy supply chain and fully extend the
value and capabilities of the rare earth resources at Mountain Pass.
Environmental Stewardship as a Source of Cost-Competitiveness
Many industry observers question how a U.S. producer of rare earths
can ever compete with the Chinese, when the possibility always lingers
that the Chinese could flood the market and dramatically depress rare
earth prices, a practice they have demonstrated previously. We have
spent the better part of the past 8 years developing the answer to this
question. We changed the orientation of our thinking and discovered
that by focusing principally on energy and resource efficiency, we
could make major improvements in our cost competitiveness while at the
same time advance our environmental stewardship.
We will incorporate a wide variety of manufacturing processes that
are new to the rare earth industry, which will increase resource
efficiency, improve environmental performance, and reduce carbon
emissions. Specifically:
Our overall processing improvements will almost cut
in half the amount of raw ore needed to produce the same amount
of rare earth oxides that we have produced historically. This
effectively doubles the life of the ore body and further
minimizes the mine's footprint;
Our extraction improvements will increase the
processing facility's rare earth recovery rates to 95% (up from
60-65%) and decrease the amount of reagents needed by over 30%;
Our reagent recycling, through proprietary technology
that Molycorp has developed, could lead to even greater
decreases in reagent use;
Our new water recycling and treatment processes
reduce the mine's fresh water usage from 850 gallons per minute
(gpm) to 30 gpm a 96% reduction;
Finally, the construction of a Combined Heat and
Power (CHP) plant--fueled by natural gas--will eliminate usage
of fuel oil and propane. This will significantly reduce the
facility's carbon emissions, reduce electricity costs by 50%,
and improve electricity reliability.
These process improvements fundamentally reverse the conventional
wisdom that superior environmental stewardship increases production
costs. At the same time, we significantly distinguish ourselves from
the Chinese rare earth industry that has been plagued by a history of
significant environmental degradation, one that it is just beginning to
recognize and rectify.
Need for Federal Leadership
Over the past year, I have spent a significant amount of time in
Washington meeting with Members of Congress and their staffs as well as
officials in a variety of Federal agencies to direct greater attention
to this issue. I'm pleased to report, just over one year since we began
our efforts, that the Federal Government is beginning to take
meaningful steps toward understanding and addressing our rare earth
vulnerabilities. The question remains, however, if it will be able to
make its assessments, determine the required actions, and execute them
within a timeline that seems to be accelerating daily.
In each of these meetings, and as this Committee has also inquired,
I am asked what role the Federal Government should play in tackling
this pressing concern, and I believe that there are 4 areas where it
can have the greatest near- and long-term in impact: 1) federally based
financing and/or loan guarantee support for highly capital intensive
projects like ours; 2) assistance rebuilding America's rare earth
knowledge infrastructure (university-based rare earth research,
development of academic curricula and fields of study, training and
exposure to the chemical and physical science related to rare earths,
etc.); 3) increased interagency collaboration at the highest levels on
the impact of rare earth accessibility on major national objectives;
and 4) funding competitive grants for public and private sector rare
earth research. I'll explore each in greater depth below:
Financing support: Given the size, scale, ambition,
and necessity of Molycorp's redevelopment efforts, we submitted
an application for the Department of Energy's Loan Guarantee
Program (LGP). We believed that the program was well-suited for
our project, particularly given that the project's substantial
implications closely match the program's paramount objectives.
Traditional bank financing in the current climate--with very
short repayment periods and interest rates near double digits--
is not economically feasible. The LGP offers longer term
financing and lower interest rates and would allow Molycorp to
accelerate development in the near-term while ensuring rare
earth resource availability in the long term. However, the DOE
summarily rejected our application in December, saying that the
project did not qualify as a ``New or Significantly Improved
Technology.'' We reviewed the relevant portion of the Rule,
Section 609.2, and our project meets every one of the stated
criteria. We requested further discussion with the DOE to
understand how it came to its conclusion and how Molycorp might
proceed. After almost two months, the DOE finally responded to
our request. During the meeting, the DOE contended that this
project goes ``too far upstream'' and that the program was not
intended to cover mining projects. We have yet to find the
legislative or regulatory language that provides such a
limitation. However, it appears we may need to ask Congress for
legislative direction or possibly new legislative language
specifically authorizing the use of loan guarantees for
strategically important projects like this. Our frustrations
with the loan guarantee notwithstanding, I still believe that
this kind of financing support is exactly what a project like
ours needs. We will be in a very strong position to both raise
our portion of the capital to execute the project and repay the
loan well-within the required timeline. We will continue to
pursue this financing support despite the DOE's current
position.
Rebuilding the rare earth knowledge infrastructure:
The United States used to be the world's preeminent source of
rare earth information and expertise, but it has ceded that
advantage over the past decade, as its position in the industry
has become subordinate to China and other countries in East
Asia. The Federal Government, and the House Science and
Technology Committee in particular, can play a pivotal role in
reestablishing that institutional knowledge and expertise and
sharing it with a wider audience of researchers, scholars, and
practitioners here in the U.S. and abroad. At Molycorp, we are
fortunate to have a team of 17 rare earth researchers and
technologists who are second to none in the world, but almost
all of them had no previous expertise in rare earths prior to
joining Molycorp. It will be difficult for the U.S. to
reestablish its preeminence without a concerted effort to
attract the brightest scientists and researchers to the field
of rare earths. Rebuilding the knowledge infrastructure and the
research support will go a long way toward that goal. Dr.
Gschneidner, who I'm honored to testify with today, is regarded
as the father of rare earths, and his work at Ames Laboratory
and Iowa State University as well as the great work being done
by Dr. Eggert and his colleagues at the Colorado School of
Mines can serve as the foundation on which to expand America's
rare earth expertise. As a reminder of the rest of the world's
interests and actions in this regard, the Korea Times recently
reported that Korea is developing rare earth metals for
industrial use at a government-funded research center.
Interagency Cooperation: Over the past several
months, we have been very pleased to learn about efforts within
many Federal agencies to direct specific attention to rare
earth issues. We have been in direct contact with the
Departments of Defense, Commerce, and State, and each is
examining this issue within the unique context of their
agencies' work. It is also worth noting that the Commerce
Department convened a group of stakeholders from both the
government and the private sector in December, 2009, which
included representatives from DOD, GAO, USTR, and OSTP. We have
also had multiple discussions with the Office of Science and
Technology Policy directly and have been very appreciative of
their engagement on this issue. In fact, OSTP, along with
Commerce, is facilitating interagency collaboration going
forward. While we are encouraged by these recent efforts, it is
our hope that the agencies and the White House recognize that
the global supply-demand challenges are approaching at an
increasingly rapid pace and that their efforts should reflect
the requisite urgency.
Funding support for rare earth research: Part of
China's success in growing and dominating the market for rare
earths can be attributed to their efforts to find and
commercialize new applications for rare earth materials.
Federal funding support for competitive grants specifically
directed at, rare earth research will help to expand the U.S.'s
ability to do the same. This has the potential to broaden the
economic impact of rare earths, and contribute to the goal
mentioned above of reestablishing America's superior expertise
in rare earth research.
Conclusion
The global rare earth supply concerns facing the U.S. and all other
countries outside China are obviously disconcerting, but they are not
insurmountable. A combination of geologic good fortune and an
accelerated effort to ramp up domestic production and rebuild lost
manufacturing capabilities could provide a solution for the U.S. and
ensure that our leading national objectives are not jeopardized. At
Molycorp, our ``mining to magnets'' strategy is far more than an
approach to a new business, it is a cause with far reaching
implications. If executed effectively, it could prove to be catalytic
for our development of a clean energy economy and the resurgence of
domestic manufacturing. This project will have meaningful and
significant impact on leading national priorities, and as such, we
stand ready to work with Congress and the Administration to find ways
to accelerate our work at Mountain Pass and bring these needed
capabilities online as soon as possible.
Thank you once again for the opportunity to share my perspective on
rare earths, and I look forward to working with the Committee in the
weeks and months to come as it continues to examine this important
topic and determine potential actions.
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Biography for Mark A. Smith
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mark A. Smith is Chief Executive Officer, member of the Board of
Directors and a shareholder of Molycorp Minerals, LLC. Prior to
Molycorp Minerals, Mr. Smith was the president and chief executive
officer of Chevron Mining Inc. a wholly-owned subsidiary of Chevron
Corporation. Mr. Smith was appointed President and Chief Executive
Officer in April 2006. Chevron Mining Inc. operated five mines one of
which was the Mountain Pass, CA Rare Earth mine.
Prior to this appointment, Mr. Smith was a vice president for
Unocal Corporation, where he was responsible for managing the real
estate, remediation and mining divisions. Mr. Smith worked for Unocal
for over 22 years.
Mr. Smith received his Bachelor of Science degree in agricultural
engineering from Colorado State University in 1981 and his Juris
Doctor, cum laude, from Western State University, College of Law, in
1990. He is a registered professional engineer and an active member of
the State Bar of California and Colorado. Mr. Smith and his wife live
in Denver, Colorado.
Chairman Miller. Thank you, Mr. Smith. Dr. Broun and I are
worried what percentage of rare earths the Chinese will control
by----
Mr. Smith. It is growing every day.
Chairman Miller. --the end of the hearing.
Mr. Smith. 97.3 to be precise.
Chairman Miller. Mr. Stewart for five minutes.
STATEMENT OF MR. TERENCE STEWART, ESQ., MANAGING PARTNER,
STEWART AND STEWART
Mr. Stewart. Mr. Chairman, members of the Subcommittee,
good afternoon. China's policy on rare earth minerals is
similar to that nation's actions on a large number of other raw
materials. The general goals seem to be reducing availability
of supply for global customers as well as making foreign
purchases more expensive through the imposition of export
duties, export licenses and other trade-impeding measures.
China's policy encourages foreign investors to move production
and investment to China and ensures low price supplies for
targeted rapid-growth sectors within China.
Last year the United States filed a WTO case against
China's export restraints on numerous raw materials critical to
U.S. manufacturers and workers. The raw materials subject to
export restraints are used in some of the key industries
identified in China's industrial policies such as steel,
aluminum and chemicals. China's most recent 5-year plan, which
goes through 2010, continues to focus development in certain
strategic sectors and to ensure a leading role for state-owned
enterprises in many of those sectors.
Recently the European Chamber in China reviewed the massive
problems of overcapacity in a number of important industries in
China including steel, aluminum, cement, chemicals, oil
refining, wind power equipment, shipbuilding, flat glass and
photovoltaics. This overcapacity, coupled with export
restraints on key raw materials, effectively shifts the burden
of adjusting global excess capacity from China to trading
partners by limiting access to affordably priced key raw
materials. Moreover, limiting access to key raw materials can
be used to force investment within China.
According to the 2009 U.S.-China Economic and Security
Review Commission in an annual report to Congress, China is
targeting rare earth dependent components of key strategic
industries for production within China including many of the
green technologies reviewed earlier. China is attempting to
make significant cuts to rare earth exports through a
combination of export duties and export quotas. These actions
are intended to raise prices outside of China, and in an
indication that commissions reach the common number, they found
that China currently produces 93 percent of rare earth
minerals, somewhere between 90 and 97----
Chairman Miller. The trend is heading in the right
direction now.
Mr. Stewart. China's export restraints have understandably
caused concern in many countries, including our own.
So what can be done? First and foremost, the United States
and its trading partners should bring a second trade action
against China on the range of export restraints being imposed
on rare earth minerals. Such restraints are in clear violation
of obligations that China undertook to become a member of the
World Trade Organization in 2001. At that time, China agreed to
limit the use of export taxes to 84 product categories, none of
which included rare earth minerals. In 2010, China is imposing
export taxes not on 84 products, but on 329 product categories
including 23 rare earth mineral categories, a plain violation
of their commitments.
On the domestic front, it is my understanding that both the
government and the private sector are taking actions to
understand the nature of the potential problems as well as
looking for alternative sources of supply. For example, the
National Defense Authorization Act for Fiscal Year 2010 \7\
requires the Comptroller General to deliver a report by this
April 1st on rare earth materials in the defense supply
chain.\8\ Obviously, understanding the national security
implications of Chinese rare earth policies is critical.
---------------------------------------------------------------------------
\7\ Public Law 118-84; enacted October 28, 2009. The study was
authorized in Section 843.
\8\ See GAO Report GAO-10-617R (April 14, 2010).
---------------------------------------------------------------------------
The Chairman and Members of this Subcommittee might want to
advocate creation of a similar report for the civilian sector
to help Members of Congress understand the challenges facing
the American economy from the current reliance on China's
supply and what legislative approaches might be pursued to
safeguard our commercial as well as our military interests.
A positive trend in recent years has been renewed interest
in developing rare earth mineral resources outside of China
including in North America, obviously the Molycorp example
being one of the key elements. Reports are encouraging,
although cost structures with environmental needs versus China
remain important challenges. The Government through the
Committee on Foreign Investment in the United States must help
ensure that mines in the United States are not purchased by
foreign interests whose governments have limited supply to U.S.
users and that any new mines receive priority attention in
terms of various government licenses and reviews.
Finally, the USGS indicates that for most rare earth
minerals there are substitute products available, although
known substitutes are less effective currently than the rare
earth minerals themselves. The United States Government can
support efforts to develop alternative solutions to current
rare earth needs, both through publicly financed research and
through tax policies and other actions to support private
sector research.
Thank you very much.
[The prepared statement of Mr. Stewart follows:]
Prepared Statement of Terence Stewart
Mr. Chairman and members of the Subcommittee. Good afternoon. I am
pleased to appear this afternoon as part of your hearing on rare earth
minerals and 21st century industry to try to address three questions
that I understand are of interest to the Subcommittee:
1. How do Chinese actions in the rare earths sector fit into
China's policies on strategic industries and economic
development?
2. Are there policies that the Federal Government can adopt,
or strategies that the U.S. private sector can adopt, that can
help assure a consistent and sustainable domestic supply of
economically and militarily critical materials such as rare
earths?
3. Are there policies that the Federal Government can adopt,
or strategies that the U.S. private sector can adopt, that
would support firms dependent on rare earth elements to retain
their manufacturing capacity in the U.S.?
Let me start with some acknowledgments on my limitations as a
witness on rare earth minerals. First, my background and expertise is
on international trade law matters, including the World Trade
Organization, and manufacturing competitiveness issues. Others on the
panel today are the experts on minerals in general or rare earth
minerals policies.
Our firm, over the years, has looked at many aspects of the U.S.-
China relationship and has prepared for the U.S.-China Economic and
Security Review Commission various studies looking at the trade and
manufacturing impacts of China's practices. For example, on March 24,
2009 I testified at a hearing before the Commission on ``China's
Industrial Policy and its Impact on U.S. Companies, Workers and the
American Economy.''
Rare earths are not part of the current WTO challenges brought by
the U.S., the EU and Mexico of China's export restraints on various
materials. (see WT/DS394/1, China--Measures Related to the Exportation
of Various Raw Materials, request for consultations by the United
States) Purchasers of rare earths are concerned about similar types of
restraints imposed by China on rare earth minerals and that there have
been discussions by the U.S. with key allies about a possible future
case. Inside U.S.-China Trade, October 21, 2009, ``U.S. and Allies
Discuss Rare Earth Metals Action at WTO.''
Now let me turn to the questions of interest to the Subcommittee.
China's Actions on Rare Earth Minerals
What China is doing on rare earth minerals mirrors what it is doing
on a large number of other raw materials: reducing availability of
supply for global customers and/or making purchases more expensive
through the imposition of export duties, export licenses, etc. The
objective can be to encourage foreign investors to move investment to
China to produce downstream products in the Middle Kingdom versus
overseas, or to ensure low priced supplies for sectors in China
targeted for rapid industrial growth.
China's most recent five-year plan (covering 2006-10) continues to
focus development in certain sectors and to ensure a leading role for
state-owned enterprises (``SOEs'') in certain sectors.
Specific guidance regarding SOEs was provided in December 2006 by
the National Development and Reform Commission (NDRC) when it issued a
guiding opinion on state-owned assets restructuring. The opinion states
that SASAC's state-owned assets should concentrate on ``important
industries and key areas'' (i.e., strategic industries). The opinion
then explained that the ``important industry and key areas'' shall
``mainly include industries that involve national security, large and
important infrastructures, important mineral resources, important
public utilities and public services, and key enterprises in the pillar
industries and high-tech industries.''
Seven important industries and key areas were identified: defense,
electric power and grid, petroleum and petrochemical,
telecommunications, coal, civil aviation, and shipping. Basic and
pillar industries where the state would also maintain an important role
included equipment manufacturing, auto, information technology,
construction, iron and steel, non-ferrous metals, chemicals, and
surveying and design.
The counterpart to rapid development of key industries is
maintaining low prices and ready availability of key raw materials. Not
surprisingly, the cases filed by the US, the EU and Mexico against
Chinese export restraints on certain raw materials involve raw
materials used in some of the key industries identified in China's
industrial policies--steel, aluminum and chemicals. As the USTR press
release of November 28, 2009, announcing the panel request against
China indicated, ``The materials at issue are: bauxite, coke,
fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow
phosphorus and zinc, key inputs for numerous downstream products in the
steel, aluminum and chemical sectors across the globe.''
A corollary to keeping prices at home low is the ability to force
trading partners to shutter capacity in downstream industries. For
example, a study came out in December 2009, published by the European
Chamber, entitled ``Overcapacity in China: Causes, Impacts and
Recommendations.'' http://www.europeanchamber.com.cn/view/static/
?sid=6388. The European Chamber in China reviewed the massive problems
of overcapacity in a number of important industries including steel,
aluminum, cement, chemicals, refining, wind power equipment, ship
building, flat glass, and photovoltaics. While the causes of
overcapacity in China are varied as reviewed in the study, when coupled
with export restraints on key raw materials, China can apply pressure
on trading partners to make the adjustments for excess capacity created
in China by limiting access at affordable prices to key raw materials
or preempting development of key new technologies in the U.S. and
elsewhere.
And control of key raw materials can be used to attract foreign
investment by limiting access to such materials to those with a local
presence. As discussed on one Web site, China is apparently offering to
give ample supplies of rare earth minerals to companies that invest in
China, even as China moves to limit or eliminate availability of
product for export.
Chinese officials have made it very clear: If foreign
manufacturing companies move their facilities to China, they
will be guaranteed a steady supply of rare earths. Many
technology companies are reluctant to do this because they want
to protect their intellectual property, but will the temptation
of an endless REE supply be too much? Companies continue to
move operations to China, but the tension still exists.
Clint Cox, The Anchor House, Inc. (Research on Rare Earth
Elements), December 17, 2009, http://theanchorhouse.com (page 5).
When one looks at China, one sees all of the effects and/or
purposes behind the wide ranging export restraints applied to rare
earths and other materials. A series of articles in the last four
months of 2009 reflects a range of concerns and purposes behind the
draft ``2009-2015 Rare Earth Industry Development Plan'' from the
Ministry of Industry and Information Technology:
[A]s early as 1998, China has started to limit the export
quantities of rare earth products, and implemented the
differentiating principle of ``forbid, encourage, and
restrict:'' forbid the export of rare earth raw materials;
restrict oxides and metals by using export quota; encourage
downstream rare earth products, such as high value-added
products like magnetic materials and fluorescent powder.
However, under the increasing global demand and China's
increasingly reduced number of eligible export companies and export
quotas, some companies with large quotas started to sell their quotas
illegally. In addition, some developed countries' companies started to
invest and establish factories in tungsten, antimony, and other rare
earth reserves areas, bought large quantities of raw materials,
processed them simply before shipping them overseas for further
processing or storage, thereby effectively evaded China's export
control. From 1990 to 2008, China's rare earth export grew almost 10
times, but the average export price has lowered to about 60% of the
original price.
All these demonstrate that China's rare earth industry has three
serious problems: overcapacity, disorderly competition, and cheap
export on a large scale. It is of great urgency that we protect our
rare earth resources and establish our reserve system.
MIIT's 2009-2015 Plan aims to macro-manage the rare earth industry,
strengthen the control of strategic resources, and strictly control
production capacity, by both administrative and market means. In the
next six years, no new rare earth mining penult will be approved,
separation of newly formed rare earth smelting companies will be
strictly reviewed, and existing rare earth companies will be eliminated
[by judging their performance] in the three areas of technology and
equipment, environmental protection, and management.
At the same time, industry access standards will be higher,
elimination of outdated capacity will be accelerated through ``shut
down, pause, merger, transfer.'' Promote merger and reorganization of
companies, strengthen and enlarge rare earth industry, form leading
rare earth companies, establish a ``China Rare Earth OPEC,'' form
companies with absolute dominating power in the market so that China
can be the leader in controlling international market price.
Of course, to accomplish this, merely depending on controlling
resources and export is not enough. More importantly, we must grasp
rare earth core technology patents, rare earth application market, rare
earth products standards. Therefore, we must start from the technology
innovation, invest more in technology, and at the same time value
intellectual property, implement IP strategies, and seize the
commanding ground of technology. Break out of the technology
restrictions of foreign-invested enterprises, and establish our own
rare earth ``high-way'' industry chain.
``2009-15 Rare Earth Industry Development Plan'' Has Been Passed,
Hardware Business Web site (an electronic business Web site formed by
Wenzhou Shengqi Internet Technology, Co., Ltd.), November 6, 2009
(unofficial translation).
China is attempting to make significant cuts to both rare earth
exports. China has implemented its program to limit foreign
availability of rare earths through a combination of both export duties
and export quotas. These actions will raise prices outside of China by
curtailing supplies and by raising import prices (with all relevant
taxes or duties).
The quota for rare earth materials was 31,300 MTs in 2009,
down 8.33% from 2008. This is the fifth year since China
started decreasing its rare earth export.
As a corresponding policy to the annual 35,000 MTs quota from
2009 to 2015 proposed by MIIT, China will restrict its mineral
annual production to 130,000 to 170,000 MTs and its rare earth
smelting products' production to 120,000 to 150,000 MTs from
2009 to 2015.
``2009-15 Rare Earth Industry Development Plan,'' China Suppliers'
Web site (under the guidance of State Council Information Office,
Internet Promotion Division; MOFCOM Department of Market Operation
Regulation; National Development and Reform Commission, International
Cooperation Center), September 4, 2009 (unofficial translation).
For 2010, the Chinese export duty and quota programs are reviewed
in a series of documents issued in late 2009.
Included as Exhibit 1 to this testimony is an unofficial
translation of the export duty rate chart for 2010, which is an
attachment to a notice titled ``State Council Customs Tariff
Commission's Notice on the Implementation of the 2010 Tariff
Schedule,'' Customs Tariff Commission Pub. [2009] No. 28, December 8,
2009. The exhibit shows export duties being assessed on 329 products in
2010 including many rare earth items (e.g., items 47, 89-92, 122-139
(export duties of 10-25%)).
Exhibit 2 to this testimony is an unofficial translation to the
Ministry of Commerce of the People's Republic of China (MOFCOM) Trade
Letter [2009] No. 147, December 29, 2009, ``2010 1st Batch Export Quota
Distribution for Rare-Earth Materials in General Trade.'' The total
quota for the ``1st batch'' is 16,304 MT, with allocations given to
twenty-two companies. A month and a half earlier, MOFCOM had published
``Notice on Application Criteria and Procedures for 2010 Rare-Earth
Materials Export Quota.'' MOFCOM Pub. [2009] No. 94, November 6, 2009.
An unofficial translation is included as Exhibit 3.
The U.S.-China Economic and Security Review Commission (USCC) has
done great work summarizing the general problem of export restrictions
found in China as well as the USCC's understanding of how this problem
plays out with rare earths. I have quoted the USCC at length because
nobody has synthesized this data better. A complete excerpt of the
USCC's views from its 2009 Report to Congress is available in Exhibit
4.
Regarding China's general export restrictions, the USCC states in
its 2009 Report to Congress,
Export restrictions or export quotas, especially on energy and
raw materials, have two general effects: First, they suppress
prices in the domestic market for these goods, which lowers
production costs for industries that use the export-restricted
materials; and second, these restrictions increase the world
price for the raw materials that are affected by limiting the
world supply, thereby raising production costs in competing
countries.
U.S.-China Economic and Security Review Commission (USCC) 2009
Report to Congress, at 62. Available at http://www.uscc.gov/
annual-report/2009/annual-report-full
09.pdf.
While specifically addressing China's restrictions on the export of
rare earth minerals, the USCC notes,
China appears to be tightening its control over the supply of
rare earth elements, valuable minerals that are used
prominently in the production of such high-technology goods as
flat panel screens and cell phones, and crucial green
technologies such as hybrid car batteries and the special
magnets used in wind turbines. USCC 2009 Report to Congress, at
63.
This reduction in supply by China is problematic because, according
to the USCC, ``China accounts for the vast majority--93 percent--of the
world's production of rare earth minerals, and for the last three years
it has been reducing the amount that can be exported.'' 2009 Report to
Congress, at 63. China admits that rare earth elements are ``the most
important resource for Inner Mongolia,'' which contains 75 percent of
China's deposits. Id. Accordingly, the USCC cautions that by limiting
exports and controlling production, the Chinese government is
attempting to ``consolidate its rare earths industry, with the aim of
creating a consortium of miners and processors in Inner Mongolia.'' Id.
And according to the USCC, these tighter limits on exports of rare
earths will place foreign manufacturers at a disadvantage compared to
the domestic producers, whose access will not be so restricted. Id.
Policies and Solutions for Government and Private Sector Consideration
First and foremost, the U.S. and its trading partners should be
considering a second trade action against China on the range of export
restraints being imposed on rare earths (and possibly other products).
The U.S. and others were concerned about China's use of export
restrictions during China's negotiations for accession to the World
Trade Organization. China agreed to limit the use of export taxes to 84
product categories (none of which included rare earth items) at rates
no higher than included in Annex 6 of the Protocol of Accession. The
fact that in 2010 China has imposed export taxes on 329 product
categories, including twenty-three rare earth categories, creates a
strong case of violation by China on the export taxes alone. Other
violations from the use of export quotas are likely as well. Hopefully,
Congressional interest will help move the Administration towards a
second case on an expedited basis.
On the domestic front, it is my understanding that both the
government and the private sector are taking actions to understand the
nature of the potential problems as well as looking for alternative
sources of supply.
For example, it is my understanding that the National Defense
Authorization Act for Fiscal Year 2010, Public Law 111-84, requires the
Comptroller General to deliver a report to the House and Senate
Committees on Armed Services by April 1st this year on ``rare earth
materials in the defense supply chain.'' Section 843, 50 USC app. 2093
note. The nature of the report suggests that it is likely to provide
important options that should be considered by the Government to
safeguard the military needs of the country moving forward in this
area. Section 843(b) is reprinted below:
(b) Matters Addressed.--The report required by subsection (a)
shall address at a minimum, the following:
(1) An analysis of the current and projected domestic
and worldwide availability of rare earths for use in
defense systems, including an analysis of projected
availability of these materials in the export market.
(2) An analysis of actions or events outside the
control of the Government of the United States that
could restrict the access of the Department of Defense
to rare earth materials, such as past procurements and
attempted procurements of rare earth mines and mineral
rights.
(3) A determination as to which defense systems are
currently dependent on, or projected to become
dependent on, rare earth materials, particularly
neodymium iron boron magnets, whose supply could be
restricted
(A) by actions or events identified pursuant
to paragraph (2); or
(B) by other actions or events outside the
control of the Government of the United States.
(4) The risk to national security, if any, of the
dependencies (current or projected) identified pursuant
to paragraph (3).
(5) Any steps that the Department of Defense has taken
or is planning to take to address any such risk to
national security.
(6) Such recommendations for further action to address
the matters covered by the report as the Comptroller
General considers appropriate.
Historically, the U.S. maintained a strategic stockpile of critical
materials for national defense. Presumably, one of the issues that will
be addressed in the report is the extent to which stockpiling rare
earth materials is appropriate or feasible.
The Chairman and Members of this Subcommittee might want to
advocate creation of a similar report for the civilian sector. Such a
report would obviously be helpful to Members of Congress in
understanding the challenges facing the American economy from the
current reliance on China as the source of supply and what legislative
approaches might be pursued to safeguard our commercial and military
interests.
Press accounts suggest that in recent years there has been renewed
interest in developing rare earth mineral resources outside of China
and that several mines are in the process of being reactivated or
developed. See, e.g., ``New USGS Rare Earth Report Includes Thorium
Energy, Inc.,'' Earth Times, Oct. 8, 2009; http://www.earthtimes.org/
articles/show/new-usgs-rare-earth-report-includes-thorium-energy-
inc,991131.shtml; ``Canadian firms set up search for rare-earth
metals,'' New York Times, Sept. 9, 2009, http://www.nytimes.com/2009/
09/10/business/global/10mineral.html?r=1&scp=10&sq=br
Possible American sources of rare-earths include a separation plant
at Mount Pass, CA. Bastnasite concentrates and other rare-earth
intermediates and refined products continue to be sold from mine stocks
at Mountain Pass. Exploration for rare earths continued in 2009;
however, global economic conditions were not as favorable as in early
2008. Economic assessments continued at Bear Lodge in Wyoming; Diamond
Creek in Idaho; Elk Creek in Nebraska; and Lemhi Pass in Idaho-Montana.
Thus, government and the private sector may have additional sources
of supply of rare earths beyond China, although the challenge may be
overall cost of supply, particularly in countries like the U.S. or
Canada where environmental needs are more likely to be addressed at
present than in China.
Presumably, the government, under CFIUS, can help ensure that mines
in the U.S. are not purchased by foreign interests whose governments
have limited supply to U.S. users and that new mines receive priority
attention in terms of various government licenses and reviews.
I note that the Senate Committee on Energy and Natural Resources
held a hearing last summer on mining law reform. The hearing had a
number of witnesses who talked about the ability to improve the U.S.
ability to supply more of its rare earth mineral needs and what
challenges they faced based on various pending bills. Mining Law
Reform, S. Hrg. 111-116, 111th Cong., 1st Sess. (July 14, 2009)(S. 796;
S. 140). Certainly, the Congress will want to be sure that any
legislation balances our needs for access to critical raw materials
with the other concerns prompting legislative modifications.
Finally, the USGS indicates that for most rare earth minerals there
are substitute products available, although known substitutes are less
effective than the rare earth minerals. The U.S. government can support
research efforts into the development of alternative solutions to
current rare earth needs both directly through basic and applied
research and through tax policies and other actions to support private
sector research.
Thank you for the opportunity to appear today. I would be pleased
to respond to any questions.
Biography for Terence Stewart
Terry Stewart is the Managing Partner of Stewart and Stewart. Mr.
Stewart's practice focuses on international trade matters (litigation,
negotiations, policy) and customs law. He has worked with various U.S.
industries and labor unions to solve trade matters in the U.S. and
abroad, including representing agricultural, industrial and services
groups. He is a currently a member of the Advisory Council to the U.S.
Court of Appeals for the Federal Circuit and a member of the Steering
Group of the International Trade Committee of the American Bar
Association's International Law Section. Mr. Stewart is one of
America's leading academic experts on the WTO system and has advised
several governments on their WTO accession processes.
In recent years, Mr. Stewart has written extensively on trade
relations with the People's Republic of China, including volumes on the
WTO accession commitments undertaken and progress made in meeting those
commitments over time, a review of intellectual property protection
within China and steps being taken to address problems in enforcement,
and reports on subsidies provided to major sectors of the Chinese
economy.
Mr. Stewart is the editor of the 2009 book, Opportunities and
Obligations: New Perspectives on Global and U.S. Trade Policy; and
author and editor of numerous other publications. Previously, he was
best known for editing a four-volume treatise on The GATT Uruguay
Round: A Negotiating History (1986-92)(Vols. I-III); and The End Game
(Vol. IV) published in July 1996 by the American Bar Association.
Mr. Stewart is an adjunct professor at Georgetown University Law
Center where he currently teaches a graduate seminar on the WTO. He
received his law degree from Georgetown University, his masters in
Business Administration from Harvard University, and his bachelors from
the College of the Holy Cross.
Chairman Miller. Thank you, Mr. Stewart. At this point we
will begin our first round of questions. Typically I would
recognize myself, but I would be happy to recognize--well, I
will do what is typical then. I will recognize myself for five
minutes.
Early Warning for Material Supply Problems
The questions are probably somewhat redundant to your oral
testimony, but we did pass a law 30 years ago that called upon
the President to establish early warning systems for material
supply problems. That didn't work. That is why we are having
this hearing today. What would have been needed to warn us
about the problems that we have with rare earth, with the
Chinese controlling 90, 93, 95, 97, way too much of the earth's
supply, at least commercially available rare earths? And how do
we keep everyone interested in the materials issues when there
ceases to be a crisis? That is sort of a problem with Congress.
There is either complete inactivity or frenzy, with little in
between. How can we keep our attention on the need for the
necessary supply of rare earths? Any of you may begin. Mr.
Smith?
Mr. Smith. Thank you, Mr. Chairman. I think that the answer
rests in the ability to look at things from a full supply chain
concept. It is very difficult to talk to people about rare
earths in the world today. We go and talk to defense
contractors that work for the Department of Defense, and
sometimes we have to go down nine different tiers before we
find the party that actually purchases the rare earths. So I
don't think that anybody has done anything intentionally here,
but these things are very ubiquitous, they only use very, very
small quantities, and I think we have to continue to look at
things on a full supply chain basis, not on an element-by-
element basis.
Chairman Miller. Dr. Freiman?
Dr. Freiman. We argued, in the report that I spoke to, that
one of the things that was needed--and I spoke to it when you
saw the diagram--that what is needed is up-to-date data that we
can rely on. As you hear, technology moves quickly and changes
in availability move quickly as well. And we felt that what was
needed was an agency which had the autonomy and the authority
to collect the necessary data, rapidly, and to disperse that to
the people who need it so that you could keep up-to-date on
what was really the situation with respect to not just rare
earths but, in our case, many of the critical minerals.
Chairman Miller. Dr. Duclos?
Dr. Duclos. I would certainly agree with that, and as I
said in my verbal testimony, you know, appointing a lead agency
that is able to do that assessment is absolutely critical--but
recognize that the assessment itself is just a very start and
represents a relatively small part of actually solving the
problem, which will involve bringing in the research into the
various areas that I describe in my verbal testimony.
The issue with the rare earths came on very gradually
through the '90s, systematically but gradually, and I think
without an agency assessing these things quantitatively over
time, you won't see these gradual increases in the crisis level
unless you do that.
Chairman Miller. Anyone else? Dr. Gschneidner?
Dr. Gschneidner. I would just sort of like to recite a
little bit of history concerning Magnequench--which was
established by General Motors, of course, to make motors for
the magnets and so forth. Eventually, the Chinese bought a good
percentage of that, and they didn't think too much about it.
Then as they got a higher percentage of it, the union in
Anderson, Indiana, said that they were opposed to this thing.
The Chinese said, well, we won't move the factory out of
Anderson for five years. Well, when the fifth year came up,
right at the end of the time, they moved everything, lock,
stock and barrel, out of Anderson, Indiana. So we lost lots of
jobs. And the reason why I know that is a number of my students
and post-docs have worked there at Magnequench. And so we know
what happened to that, and I think the government probably
should have interfered and said, no, we are not going to allow
you to sell the whole thing. But again, it is the same thing as
the other gentleman made. How do you get the warning signal out
to the government to stop this sort of action?
How to Compete With China
Chairman Miller. Thank you, Dr. Gschneidner. Mr. Smith,
Molycorp has to compete in a market economy. China doesn't play
by those rules and are quite willing to subsidize, provide
funds, to develop, to mine, to make commercially available rare
earth minerals to gain a strategic advantage. Is being in a
subsidy war the only response that we have to the way China
plays?
Mr. Smith. Absolutely not, Mr. Chairman. I think our best
attack is actually technology. Molycorp sat for about ten years
when the Chinese came in and flooded the United States' rare
earth markets with lots of product and low prices. We sat there
for about ten years and whined and cried about the low wages
that the Chinese had to pay, et cetera. We finally got over
that, and we used our own American ingenuity to figure out
process technologies that drastically cut our costs in
producing these materials, and we feel that with these new
technologies, we can in fact be the lowest-cost producer in the
world. But we do need help in that regard. I have 17 scientists
and engineers that are competing with over 6,000 Chinese
scientists, and I can't find any students from any university
in the United States that have any rare earth experience or
curricula today.
Chairman Miller. My time is expired, and I recognize Dr.
Broun for five minutes.
Prioritizing Responses to Shortage
Mr. Broun. Thank you, Mr. Chairman. Today's testimony
highlighted several themes for rare earth research and
development. We have heard about the need to reconstitute our
Nation's rare earth knowledge base and infrastructure.
Witnesses have highlighted the need to find new applications
and uses for rare earths as well as identifying efficiencies in
its production.
We have also heard of the need to find substitutes and
technologies that greatly reduce the use of rare earths. We
probably won't all agree on how to prioritize these topics as I
doubt Mr. Smith will want to focus on eliminating the need for
a product that his company has invested hundreds of millions of
dollars in developing. Understanding that you may disagree, how
would you prioritize these topics and are there any additional
areas of focus you would suggest? We will start here and go
down. Dr. Freiman?
Dr. Freiman. Well, I think prioritizing is quite difficult,
and I won't attempt to do that. But one of the main outcomes of
our committee was a recognition that what we can do in helping
not just rare earth but other critical minerals is, as I
mentioned earlier, is to know well in advance what the change
in the availability will be, and I think that is a critical
point.
We also emphasized the need for more research and
development and more coordination between agencies in what is
going on so we understand what each other is doing. As most of
you know, there was this coordination present, certainly I know
in the materials area, for many years and it sort of has
disappeared at the OSTP level. And putting that back together
again and developing that kind of agency coordination in
research and development, certainly in rare earths, and we hear
that that is starting to go on now, but in other critical
minerals I think is an important factor.
Dr. Duclos. I would like to point out that there are 17
rare earths in the periodic table, and each one of its
applications is different. And the solution will be different
for each one of the 17. And with that in mind, that is why we
recommend the five solutions, going from certainly developing
new sources, all the way to developing technologies that
eliminate the use. It will be different, and we have seen
within GE on materials not necessarily dealing with rare earths
but other rare elements.
They have to take a number of the solutions in order to
make it all work. So I don't think there is a single answer to
the question except that all five of these areas of work are
absolutely needed.
Mr. Broun. Anybody else? Mr. Smith?
Mr. Smith. Thank you. I would concur with Dr. Duclos. I
think that we have to balance the many needs of the rare earth
world, and we are not adverse to finding substitutes for rare
earths, either, contrary to what may seem quite obvious.
But on the other hand, I can use the rare earth magnets as
an example. The permanent rare earth magnets, the neodymium-
iron-boron type, have been around for well over 20, close to 30
years now. We have been researching for this entire time for a
substitute for those magnets, and we haven't found one yet. But
that doesn't mean that we should stop. The problem we have in
between is that we have got about a two- or three-year window
here before a major supply gap occurs between what China can
supply to the rest of the world and what the rest of the world
needs for their own needs. And we need to prioritize that right
now as an immediate need that we have to address because the
research will take a lot of time. But we certainly advocate
research on all aspects, including replacement.
Mr. Broun. Mr. Stewart, quickly. I have about run out of
time. I have another question or two I want to ask.
Mr. Stewart. Just very quickly, while I support those
positions, the WTO process is about a two-year process and
should get started immediately to get our trading partners to
honor the commitments that they have made as well.
Role of Federal Agencies
Mr. Broun. OK. Thank you so much. Dr. Freiman pointed out
in his testimony that the Federal Government should enhance the
types of data and information it collects, disseminates, and
analyzes on minerals and on mineral products. His committee
also suggested the Energy Information Administration as a
model. What agency or office should be tasked with that
responsibility, Dr. Freiman?
Dr. Freiman. I would point out we chose not to select an
agency. We didn't feel that was our business.
Mr. Broun. No recommendation whatsoever?
Dr. Freiman. No. No. We pointed out that whoever was
chosen, they need to have enough authority to be able to demand
that they could collect the kind of data and information they
need in a timely manner.
Mr. Broun. Anybody else want to suggest an agency?
Dr. Gschneidner. I would suggest the United States
Geological Service. They have done an outstanding job for the
last 20 years of pointing out this problem, with rare earths in
particular, and I think what we need to do is to figure out how
to communicate their results better amongst all the parties.
Mr. Broun. Thank you. Mr. Chairman, my time is expired. I
yield back.
Chairman Miller. And now the regular order, the Full
Committee Chairman, Mr. Gordon, for five minutes.
Mr. Gordon. Thank you, Mr. Miller. You know, it is somewhat
rare also that Mr. Miller and Dr. Broun can be in such strong
agreement, so I think that we are onto something here and I
want to thank the committee for being here. As Mr. Smith
pointed out, this is the first of these type of hearings, and
hopefully this will pull back the curtain.
Now, in this committee, we don't have jurisdiction on WTO
and some tax benefits and that sort of thing. So I want to try
to bring this discussion back to what we can do here, and
listening to you, it seems that we should appoint or anoint a
lead agency to try to collect and assess data. We need to have
some type of research. Although you didn't say it, I would say
also workforce in terms of potentially through the National
Science Foundation having fellowships and grants for those
students that would go into the rare research area.
And so I want to get your suggestions on what else within
our sort of jurisdiction, which is the research and deployment,
what public/private role should be played, and when it comes to
research, is a research center adequate or do you have more
than one for more different elements or do we parcel this
around to various universities? How should we approach that?
And I will open it up for the field.
Dr. Duclos. One area that this agency could do is actually
collect sensitive information. I think you can imagine, for a
corporation that has challenges in these areas, it is not
exactly something that we talk about publicly, and therefore
the data collection can be done, for example, by an agency in
confidence and then can use that data to help prioritize the
materials that need immediate attention. And so long as that
can lead to--as I said, the assessing of the situation is just
the first part.
Mr. Gordon. Well, it seems to me if you are collecting data
and trying to determine what is immediate need, you are ten
years behind.
Dr. Duclos. You know, what you can do, and in fact this is
what we do, we use this criticality diagram matrix that Dr.
Freiman discussed to quantify where the elements are on this
table, and then we do that annually, OK? So we can see them
moving around. We can tell generally which direction the
elements are going and have some hope of seeing it a little bit
in advance what the----
Improving Research Infrastructure
Mr. Gordon. Let me go back in terms of research. Would we
want a single research center? Is there already something at
NIST or elsewhere that we would build upon? Do we need to have
multiple? Do we need to make this university based and what is
the private/public sector partnerships? What should there be
there?
Dr. Gschneidner. I would like to address that question.
First of all, I don't think you want to spread it out too far
because things you have criticality as far as people, groups,
and so forth and I think advocate a strong center which can
then tie together research that is being carried out at other
places and so forth, and I think a university is a good place
to start because you can be training students which will go
into industry eventually and help them out.
I think one thing you don't want to do is divide the rare
earth, the 17 elements, into 17 research centers. Even though
they may be somewhat different, there is a lot of commonality
in there which can be used. I mentioned earlier today that
neodymium-iron-boron magnet here using a new process which is
very energy efficient in green technology. We have also just
made last week, made the measurements on a lanthanum-nickel
hydride battery material which is very competitive with what
you can get from industry. So what we learned there applies to
some of the other elements.
So I think a strong center, and it should be well-funded
because if you underfund it, it is not going to do the job you
want it to do.
Mr. Gordon. And is there an existing place? Is there an
existing Federal agency again like NIST or a national lab that
would be a lead agency here?
Dr. Gschneidner. Well, one possibility of course is the
Department of Energy because they have already funding--and
that is a critical need in this country, and possibly the
military would be another place to fund such a center.
Mr. Gordon. Thank you. I am sorry. We have got a vote on
again.
Chairman Miller. OK. In our regular order, Ms. Dahlkemper
is recognized for five minutes.
Funding for Rare Earth Research
Ms. Dahlkemper. Thank you, Mr. Chairman, and thank you to
the witnesses for being here today. A very interesting topic of
discussion.
I want to just kind of go on with the Chairman's discussion
here, Dr. Gschneidner. Right now your laboratory is being
funded by the DOE. Where else is the DOE funding this kind of
research in this country?
Dr. Gschneidner. Well, a smattering of things at Oak Ridge,
at Los Alamos. There is some up in Hanford up in there. There
is also Argonne. You know, there are specialized areas or
research where people are doing this. But there is really--I
mean, we are the most coherent laboratory devoted to rare earth
materials, but there is a lot of research being carried out.
And also they fund a number of universities. But it is usually
one or two groups at a university. It is very small. It is not
critical----
Ms. Dahlkemper. So of the percentage of their dollars going
to this, how much of it would be going to your lab, do you
think? Do you have any idea? Coming out of DOE.
Dr. Gschneidner. From all of DOE? Well, I will talk from
basically----
Ms. Dahlkemper. You said you are the most concentrated.
Dr. Gschneidner. Well, our laboratory gets about $16
million. Maybe 25 percent of that might go into rare earth
materials, different people in the laboratory, something like
that.
Ms. Dahlkemper. Do you think the research is adequate for
what we need to do in terms of energy and----
Dr. Gschneidner. No.
Ms. Dahlkemper. Can you give me any idea by how much more
we would need? Do you have any----
Dr. Gschneidner. Well, I think a research center is
something like I mentioned in here of about 30 people, full-
time equivalence. You probably should be funding that center
alone by about $5 million per year, something like this with a
5-year lead time to show that they can produce what they claim
they want to do.
Ms. Dahlkemper. Dr. Freiman, you wanted to say something?
Dr. Freiman. Yes, briefly I was going to say one of the
things I think we don't know is what research has been carried
out over the past few years or even numbers of years in this
area of rare earths. It is scattered about, National Science
Foundation, Department of Energy, et cetera, and one of the
things that would be nice to know right now is, you know, what
has been done and therefore what could be done now or in the
future in this area.
Ms. Dahlkemper. So again, having a central lead agency that
can collect all that data and bring that together?
Dr. Freiman. Right.
Ms. Dahlkemper. Dr. Duclos, did you want to say something?
Dr. Duclos. Yeah, I just wanted to give you an idea of this
sort of funding that it takes to solve some of these. These are
very challenging problems. But generally, in our experience,
and we have been through a number of challenges here in terms
of materials, you are probably talking something between $5 and
$50 million per element per application for a solution.
Ms. Dahlkemper. And obviously we have huge budget concerns
here. What would be the ramifications if we were not able to
fund at the level you think we need to fund?
Dr. Duclos. Well, what you do is you go through those five
solutions. You take the shorter term ones, the quicker ones,
and then you know, basically challenge yourself to ensure that
you have a supply and work the best you can without doing the
longer term, more expensive work that is the cleaner solution.
Domestic Sources of Rare Earths
Ms. Dahlkemper. Mr. Smith, a question for you. Mountain
Pass Mine. If you go back in, if you have domestic production,
can you get all 17 rare earth minerals out of your locations
that you have and how soon to supply the American, you know,
the U.S. needs?
Mr. Smith. Understood. Thank you. We have all 15 of the
lanthanide rare earths in our ore body. We can recover nine of
those economically at today's prices, and we can start doing
that as early as 2012.
Ms. Dahlkemper. And the others?
Mr. Smith. Prices will have to go up before they are
economic to recover.
Ms. Dahlkemper. And then there are two that you do not have
supplies?
Mr. Smith. Right, yttrium and scandium.
Ms. Dahlkemper. OK. And those are only found in?
Mr. Smith. They are found in various places, China being
one, Canada has some yttrium.
Ms. Dahlkemper. OK. So they are found in other countries
besides China?
Mr. Smith. Correct, although not in the quantities and the
concentrations that they are found in China.
Expanding U.S. Workforce
Ms. Dahlkemper. I did want to ask you just one more
question. I have just a few seconds left here, but if I am back
talking to students in my district, because you talked about
having an issue with not being able to find the educated people
that you need to work in your industry; what should I tell them
to do?
Mr. Smith. Tell them to go into rare earths and that we
would like to hire them as interns as soon as possible. We can
use all the people that we can get that have rare earth
experience. We found none when we went out to hire, and we went
ahead and took a risk, hired people with zero experience and
about three-and-a-half years later, they became very productive
in our organization.
Ms. Dahlkemper. And are there programs out there in
different educational institutions----
Mr. Smith. No, they will have to be established.
Ms. Dahlkemper. OK. Thank you very much.
Mr. Smith. Thank you.
Chairman Miller. Thank you. Mr. Coffman is now recognized
for five minutes.
Dependence on Foreign Products
Mr. Coffman. Thank you, Mr. Chairman. Mr. Smith, I come to
the rest of the panel, so I come to this committee via being on
the Armed Services Committee where I became alarmed about the
need and the supply for rare earth elements for advanced
weapons systems.
The one question that I have, Mr. Smith, to ask you a
question, even if the Mountain Pass Mine is reopened, will the
United States still be dependent upon foreign rare earth
products? I think you mentioned there are two that we would
still be dependent on.
Mr. Smith. Yttrium and scandium, yes. And we would still be
dependent on other countries like China for portions of our
supply needs. For instance, dysprosium is a very critical rare
earth element needed for neodymium-iron-boron magnets. It is
part of the alloy, and it allows the magnet to be used in a
higher temperature application. Mountain Pass can produce a
quantity of that material, but it will likely not be enough to
suit the full needs of the United States relative to the hybrid
vehicle industry.
Mr. Coffman. OK. Because I read an analysis where at full
production that your mine could produce 20,000 tons of rare
earth metals or elements. Is that figure correct?
Mr. Smith. That is correct. That is our design capacity
right now, and we can, with existing permits in hand, we can
actually double that production to 40,000 tons per year.
Mr. Coffman. How long would it take you to get to full
production?
Mr. Smith. We think it would take us until about the middle
of 2012 to reach our full, 20,000 ton, design capacity right
now.
Mr. Coffman. But I understand, if I hear some of the
testimony from today is that China, its demand will meet its
supply in the vicinity of 2012 and that we will have to
drastically curb exports. Am I correct in that?
Mr. Smith. That is very, very accurate. The problem will
be, they will produce enough for themselves, and it will be the
rest of the world that has to find their alternative supply.
Mr. Coffman. Anybody else on the panel? Yes?
Dr. Gschneidner. I would like to address this product of,
you know, yttrium and scandium, for example. The Canadians have
several mines up there which are rich, and of course, the
disposing point that Mark pointed out, but they are a little
bit behind Molycorp in getting their products up. So I mean, as
far as I am concerned, maybe the Canadians will like it. They
are almost another state of the United States. Actually, there
is no problem getting materials from them.
Australia has some mines. We have a representative right
back here from the Australian group, and they have several good
mines with materials and they are probably about a year or two
behind Molycorp, so these materials are coming.
Scandium is a little bit rarer but a lot of it comes from
Russia. China has some, too, but I don't think it is a real
critical problem, but it could be in the future. We don't have
much scandium. There aren't very good ore sources of scandium.
That is the problem, I think.
Maintaining a Complete Supply Chain
Mr. Coffman. It would seem that the first phase of that
supply chain in terms of mining, it seems that Molycorp may be
able to bridge the gap in terms of China. But I also have a
concern about the other levels of the supply chain in terms of
the processing, and it seems that we have a real deficit in
that area, and I think Dr. Gschneidner, I think you had
mentioned the plant in Indiana that was moved to China. And so,
can somebody speak to where we are in terms of that next step
in the supply chain in terms of processing? Mr. Smith, would
you like to address that first?
Mr. Smith. Thank you, Congressman Coffman. To my knowledge,
there are not a whole lot of activities in that regard, other
than Molycorp's mining-to-magnets strategy where we will put in
the conversion capabilities to go from oxides to metals. We
will have the capability of taking the metals and alloying
them, and we will have the capability of producing neodymium-
iron-boron magnets here in the United States.
Mr. Coffman. That is great. Yes?
Dr. Gschneidner. Well, as I told you, we were preparing
these neodymium-iron-boron magnet material, and that was one of
the things we had come up with--a new process for making these
metals. And Molycorp, of course, is quite interested and wants
to obtain licenses for our technology but will also bring in a
battery. So we are already solving part of that problem, but we
are training people, too, at the same time. So this will help
the supply train down the road. But again, it takes four years
to get a Ph.D. out and two years for a Master's, so you just
can't hit a light switch button and they pop up. But there are
people out there that are reasonably well-trained and could
move in pretty fast.
Mr. Coffman. Mr. Chairman, I am afraid I am out of time. I
yield back.
Keeping Manufacturing in the U.S.
Chairman Miller. Thank you, Mr. Coffman. I will now
recognize myself for a second round of questions. I agree with
Mr. Coffman. I am worried about sophisticated weapons systems
that may need rare earth minerals, but I am also concerned
about manufacturing jobs. My part of North Carolina has seen
the loss of a great many manufacturing jobs that were less-
skilled, cut-and-sew jobs in the apparel industry, but our hope
has been to replace those jobs with highly skilled jobs in very
sophisticated, innovative industries.
China seems to be using the leverage of their rare earths
to say if you need these minerals, these rare earth minerals in
your products, come build your plant here. Mr. Stewart, you are
nodding. This is the area you work in. What can we do to
respond to that?
Mr. Stewart. Well, it is unusual for a country that has
joined the WTO to take on specific obligations in the export
arena because most countries do not maintain these types of
restrictions or impediments. So just as the United States has
brought the first case dealing with, I think, eight or nine raw
materials that are used in steel and aluminum and chemicals,
the most direct approach is to take a second case, at least on
rare earth products, to the WTO. It is a process that could
take two years to resolve, but the resolution of that should be
a very clear finding that China is not permitted to close its
markets. It is doing this in a whole range of products. There
was an article in the New York Times yesterday talking about
how China is taking advantage of the rules in the WTO and the
rules in the IMF to maximize their advantage.\9\ Well, that is
what countries should do. They should be looking after their
own interests. As a commercial power, we should be looking
after our interest which is to see that China is not allowed to
violate the commitments they have made without their being a
cost, and the cost is to bring them in line, which would
require them to take the taxes off, take the quotas off, and in
fact make the products available to the highest bidders
globally as most raw materials are done.
---------------------------------------------------------------------------
\9\ Keith Bradsher. ``China Uses Rules on Global Trade to Its
Advantage.'' New York Times, March 15, 2010: pp. A1, A10.
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Balancing Private and Public Needs
Chairman Miller. Industry's need seems to be more of a
short-term solution how to get production started again.
Government seems to be more focused on what the long-term risk
is of not having these minerals available. How can we kind of
allocate our time and energy between industry and government to
address both? Dr. Duclos.
Dr. Duclos. Well, actually, I would say that industry's
interest is both short and long term. To the point earlier, I
think an answer is technology, technology in developing systems
and materials technologies that reduce the use of the material,
technologies that involve recycling because, as I think
everyone has seen, even if we develop all the sources of the
rare earths that we--and it depends a little bit, rare earth by
rare earth. But even if we develop all the sources of rare
earths that we see around the world today, we are still not
going to have enough in the sort of 5- to 10-year timeframe.
The solution is to minimize the use of these materials and
develop those technologies. That is the long-term solution. The
short-term solution is to certainly develop these sources which
we absolutely need, but the long term is to do the technology
development, recycling materials development.
Chairman Miller. I will yield back my remaining 40 seconds.
Mr. Coffman, do you have an additional round?
Chinese Industrial Strategy
Mr. Coffman. Thank you, Mr. Chairman. Just to any Member of
the Committee, this strategy which China has deployed to secure
really what is a strategic resource for its domestic industry,
is this in any way calculated to rare earth metals that is
different than any other commodity that China seeks to control
for its own industrial base, in your view? Yes, Mr. Stewart.
Mr. Stewart. Well, it is similar to some of the strategies
they have employed on other products where they have a dominant
share of global supply, but there are specific documents that
have come out at the provincial and central government level,
both laying out their strategy to be dominant players in these
products and the downstream use of those products and to force
investment through these kinds of strategies. So while it is
similar to what they have been trying to do in some others
because these are perceived as high-growth sectors, obviously
is the reason that it is of such great concern to us and many
other countries.
Mr. Coffman. Very well. Anybody else? Mr. Smith?
Mr. Smith. I guess it wouldn't be a full rare earth hearing
if we didn't hear this quote, but there was a Chinese premier
back in the 1980s that said the Middle East has oil and China
has rare earths.
Mr. Coffman. Anybody else? Thank you so much for your
testimony today. Mr. Chairman, I yield back the balance of my
time.
Funding Models for Materials Research
Chairman Miller. Thank you. Mr. Smith, when you said there
was a Chinese from here, I thought you were starting a
limerick.
I will now recognize myself for five minutes, although I
will not use five minutes. With other technologies we need to
develop, we feel some urgency about developing high-speed
computing and nanotechnology. We do instruct OMB to publish, to
make budget requests for all agencies contributing to the
programs as a whole and publish an explanation with the
President's request to Congress. Is that a model that we should
follow for materials research for rare earths? Any of you? Not
a topic you have thought a lot about. OK.
Then I think, Mr. Coffman, unless you want another round of
questioning?
Timeframe for Re-Starting Domestic Production
Mr. Coffman. Mr. Chairman, yes, I have a question for Mr.
Smith. I understand so we are talking full production in your
California mine by 2012?
Mr. Smith. Correct, the middle of 2012.
Mr. Coffman. And obviously you seem to be the only game in
town in the United States. Am I correct in that?
Mr. Smith. So far that is correct.
Mr. Coffman. Now, is there anything that, I mean,
unforeseen--not necessarily unforeseen. You can't control that.
But is there anything that would in fact inhibit you or delay
that capability of bringing that mine on line at that 20,000
ton capability?
Mr. Smith. There is only one thing that the company needs
right now, Congressman Coffman, and that is the capital to put
the project into play, and that is what we are working on very
hard as we speak.
Mr. Coffman. How hard is that? I mean, in your view, how
hard is that?
Mr. Smith. I think that there will be challenges just
because of the current climate in the banking industry where
project financing is a very difficult way to finance things
right now. If you can get the money at all, it is going to be
at very high interest rates and it is going to be at very short
terms, and that is where the DOE loan guarantee program comes
in to help the problem because they do offer lower interest
rates and longer payback periods, and that is a much more
attractive form of capital to use.
Mr. Coffman. So in your view, that would seal the deal in
terms of your ability to go forward?
Mr. Smith. There is no doubt in my mind.
Mr. Coffman. Give me a timeframe because it seems to me
that we have a problem here in the sense that if in fact these
timeframes are right where China, its demand catches up with
the supply in 2012, and I have heard that from a variety of
sources.
Mr. Smith. Right.
Mr. Coffman. Your mine needs to come on line in the
vicinity of 2012, and you think you could have full production
of 20,000 tons which meets the U.S. demand for the rare earth
elements that you would produce out of your mine. If in fact
those things don't occur, it would seem to me that that would
be an extraordinary escalation of price in these rare earth
elements because where in fact would we get them from at that
time?
Mr. Smith. There would only be one place, although there
are other mines that are certainly trying to open right now in
other countries. But we are the only game in the United States
right now. It is absolutely imperative that we get this
operation up and running by 2012. The one thing I have learned
in my 28 years in this business is that forecasters are never
accurate in what they forecast, so is it precisely 2012 or is
it 2013, 2014, I don't know. But I think that we can meet the
window given the trends that we see today, but we do need to
get going on our project and get going on it immediately.
Mr. Coffman. Mr. Smith, according to your business plan,
when do you have to have your financing in place in order to be
in full production in the vicinity of 2012?
Mr. Smith. It would have to be in place this summer in
order to have the full production on line and running by the
middle of 2012. Every day we do not have the financing in
place, it will be another day or so delay on the other end.
Mr. Coffman. OK. Thank you, Mr. Chairman. I yield back the
balance of my time.
Chairman Miller. Thank you, Mr. Coffman. I think that is a
fine note to end on, Mr. Coffman's call for a more active role
for government in the economy. And before we bring the hearing
to a close, I want to thank our witnesses for testifying before
the Subcommittee today. Under the rules of the committee, the
record will remain open for two weeks for additional statements
from the members and for answers to any follow-up questions the
Subcommittee may have for the witnesses and for the submission
of extraneous materials. The witnesses are excused, and the
hearing is now adjourned.
[Whereupon, at 3:25 p.m., the Subcommittee was adjourned.]
Appendix:
----------
Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Stephen Freiman, President, Freiman Consulting, Inc.
Questions submitted by Chairman Brad Miller
Q1. In developing the ``criticality matrix,'' and in applying it to
the test cases discussed in the report, your committee appears to have
gone through many of the steps that an ``early warning'' organization
would take. If that's true, what should Congress learn from your
experience that it can apply in setting up similar capabilities within
the Government?
A1. To use the matrix as a tool in an early-warning system, the
evaluation method must be become more quantitative. That is, it will be
important to base the placement of minerals within the matrix on more
quantitative indicators of supply risk and impact of a supply
disruption than the committee was able to do in its testing of the
matrix (e.g., to employ and adapt the matrix in a manner similar to the
approach used by General Electric). As I noted in my testimony, the
matrix is only as good as the input data. The Federal Government's
access to data and information about some of the rarer minerals and
metals will need to improve because at present many of these markets
are not very transparent (e.g., rare earths, antimony, indium, etc.).
As the committee noted in its recommendations, whatever agency is
tasked with collecting mineral data, it must have the authority to
require such submissions, as occurs with Principal Statistical Agencies
such as the Energy Information Agency.
Q2. If the ``early warning systems for material supply problems''
required under the National Materials and Minerals Policy Act of 1980
are finally established, which Federal agencies should play a role in
them, and what roles should they play?
A2. The 1980 Act calls out the Departments of the Interior, Commerce,
and Defense as having principal roles. I would add the Department of
Energy and the National Science Foundation(?), and possibly the
Department of Transportation, since a number of applications of
critical minerals relate to automobiles, etc. The roles of each of the
agencies will differ, e.g. Interior (USGS) would be expected to play
the lead role in collecting and analyzing mineral data, Commerce would
have a dual role, through NIST in measurement and fundamental data and
through Commerce's role in analyzing international trade. An important
aspect in implementing the 1980 Act would be to reestablish a
coordination of activities of the agencies through OSTP.
Q3. As the former deputy director of the National Institute of
Standards and Technology's Materials Science and Engineering
Laboratory, how would you say the Laboratory can contribute to a
national research program for rare earth minerals?
A3. The mission of the NIST laboratories is to conduct research that
advances the nation's technology infrastructure. As such, within the
Materials Science and Engineering Laboratory there are ongoing efforts
in developing and maintaining databases on crystal structure and phase
diagrams, both of which will be important in any research program on
rare earths.
In addition, the Technology Innovation Program provides cost-shared
awards to industry, universities, and consortia for research on
potentially revolutionary technologies that address critical national
and societal needs.
Q4. Given your knowledge of Federal capabilities in materials
research, which agencies would you see as able to contribute to the
development and execution of a research program as called for by the
1980 Act (30 U.S.C. 1603 (2))?
A4. As the committee noted in its recommendations, and included in my
testimony, a number of Federal agencies, including the National Science
Foundation, Departments of the Interior, Defense, Energy, and Commerce
should develop and fund activities to encourage U.S. innovation in the
area of critical minerals. These same agencies should coordinate such
programs as noted in number (2) above.
Answers to Post-Hearing Questions
Responses by Steven J. Duclos, Chief Scientist and Manager, Material
Sustainability, General Electric Global Research
Questions submitted by Chairman Brad Miller
Q1. What information does the Government need, and what information
should government and users of minerals be sharing, in order to
maximize the lead times it will have for deciding which of the
strategies you described at the hearing should be pursued in a
particular case?
A1. From a manufacturing perspective the sourcing, recycling,
manufacturing efficiency, materials substitution, and systems
strategies outlined in my testimony will only be carried out on
materials that the U.S. considers both critical to the country's
defense and manufacturing base and at risk from a supply and demand
perspective. To assess which materials fall into this category an
assessment could be done that is similar to the one proposed by the
National Research Council in Minerals, Critical Minerals, and the US.
Economy in 2008. The government would need to update and expand the
list of elements considered by the NRC panel, but the assessment
metrics used by this panel remain viable. Collection in confidence of
anticipated future use of materials by industry in the three to five
year timeframe, as well as augmenting current supply information
collected by USGS with anticipated future supplies, would greatly
improve the accuracy of evaluation of future supply and demand risks.
For those materials deemed to be at greatest risk the government could
then solicit business and technology solutions along the strategies
outlined in my testimony. Government support of the longer term, higher
risk solutions would enable industry to pursue a greater breadth of
solutions that would minimize the risk of disruption to U.S.
manufacturing. By completing this assessment annually the government
would better understand the progression of elements along the
criticality diagram, which could lead to an early warning on future
risks.
Q2. If GE were interested in partnering with an academic institution
or a government facility to develop a substitute material (or find a
replacement) for something like Rhenium, what would it be looking for
in that partner and what resources would that partner bring to the
collaboration?
A2. Pre-competitive information, such as materials property databases,
material property testing capability, and basic understanding of
material behavior in systems is important to accelerate the insertion
of new and substitute materials into OEM systems. Specific details of
resources that a partner could bring to such a collaboration would
depend greatly on the material to be reduced since each substitution
effort tends to be unique to both the element and the application.
Q3. Would General Electric's materials scientists be interested in
collaborating with the type of Centers proposed by Dr. Gschneidner?
A3. Since GE uses permanent magnets in a wide array of products the
company would welcome the opportunity to participate in the type of
Center that Dr. Gschneidner has proposed. In addition to providing
material science know-how, the company would provide a critical role in
ensuring that the properties, cost, and reliability of developed
substitute materials and processes are compatible with the systems in
which they would be used.
Q4. As you serve as the ``early warning system'' for General Electric,
what advice would you give a counterpart in the Federal Government
trying to provide the same service for the Nation?
A4. The assessment of risks related to supply and demand should be made
as quantitatively as possible. National and international data is
available on both the supply and demand sides of the equation, and
development of a quantitative risk rating, similar to that discussed in
the invited contribution to this hearing Operationalizing the Concept
of Criticality by Dr. Thomas Graedel of Yale University, would aid
building the risk assessment. Such an assessment should include a
specific recent elemental challenge, perhaps one from among the rare
earths. Comparison of the position on the criticality diagram of this
recent elemental risk would provide a useful relative level of risk of
the other elements assessed. In addition, future material supply
scenarios, akin to those built for economies, could be built for those
elements and materials indicated to be at high risk on the criticality
diagram. Such scenario building may help elucidate which of the risk
reduction processes are most likely to lead to a solution. Finally,
since the assessment is only the start of the process it needs to be
done expeditiously, to allow time for new sources, recycling, efficient
manufacturing, and material research on substitutions to be developed.
Answers to Post-Hearing Questions
Responses by Karl A. Gschneidner, Jr., Anson Marston Distinguished
Professor, Department of Materials Science and Engineering,
Iowa State University
Questions submitted by Chairman Brad Miller
Q1. What level of funding would you consider necessary to support the
two Centers you proposed in your testimony?
NATIONAL RESEARCH CENTER ON RARE EARTHS AND ENERGY
A1. The National Research Center on Rare Earths and Energy (NRCREE)
should be composed of five research groups covering the following five
areas of greatest need:
1. Process Metallurgy and Scrap Recovery
2. Permanent Magnet Materials
3. Battery and Electronic Materials
4. Catalytic Materials
5. Materials for Nano Science and Nano Technology
A typical research group would consist of a group leader; staff
scientist(s); post-doctoral, graduate and undergraduate students;
technical and secretarial support.
The NRCREE would also have critical in-house analytical chemistry
and characterization expertise (x-ray diffraction, and optical,
electron, atomic force and magnetic force microscopy) as a support
group shared by all research groups.
NRCREE would also initiate and support projects in important areas,
not covered by the five research groups at other universities, non-
profit research groups, national laboratories, and industry. Some
potential topics may be separation science, optical and photonic
research, organometallic chemistry, analytical chemistry.
NRCREE would have a full-time director and a part-time associate
director (probably one of the group leaders), an advisory board made up
of representatives of the university, government, industry and general
public.
The cost would be $10M per year. The Center should be funded for
five years and reviewed in its fourth year for extension for an
additional five year term.
The NRCREE would need a new building for offices and laboratories.
There would be some special space requirements for the Process
Metallurgy and Scrap Recovery Group because it would be involved in
scaling up metallurgy production from laboratory size to bench scale to
a full pilot plant scale. In addition a special handling facility would
be needed for hydrofluoration process, which uses hazardous HF
(hydrogen fluoride) gas, to prepare the fluorides which are later
reduced to the metals. The cost of this building is $60M.
NATIONAL RESEARCH CENTER FOR MAGNETIC COOLING
The National Research Center for Magnetic Cooling (NRCMC) would be
a fully integrated center devoted to bringing the energy efficient
magnetic cooling (air conditioning/climate control, refrigeration and
freezing) from the exploratory stage to commercial products. Today
there are about 30 individual (a few persons at the most) laboratories
scattered around the world (including about 5 in the USA) working on
various aspects related to magnetic refrigeration but there is only one
group (Denmark) which is concerned with the complete technology. The
NRCMC would consist of five research groups devoted to the following
areas:
1. Modeling and Theory
2. Magnetocaloric Materials
3. Regenerator Design and Fabrication
4. Magnetic Arrays
5. Cooling Machines
A typical group would consist of a group leader; staff
scientist(s); post-doctoral, graduate and undergraduate students;
technical and secretarial support.
The NRCMC would also have a key characterization capabilities (x-
ray diffraction; optical, electron, atomic force and magnetic force
microscopy; and magnetic property and thermal transport measurements)
support group.
NRCMC would also initiate and support projects in important areas
not covered by the five research groups at other universities, non-
profit research groups, national laboratories, and industry. Some
topics might be exploratory research on special fabrication techniques
and unusual magnetocaloric materials.
NRCMC would have a full-time director and a part-time associate
director (probably one of the group leaders), an advisory board made up
of representatives of the university, government, industry and general
public.
The cost would be $9M per year. The Center should be funded for
five years and reviewed in its fourth year for extension for an
additional five year term.
The NRCMC would need a new building for offices and laboratories.
Some special facilities would need to be considered, for example
fabrication equipment for fabrication of regenerators, and machine
shops for prototyping cooling machines. The cost of this building is
$50M.
SPECIAL COMMENTS
The above estimates were made on the assumption that the two
Centers would not be co-located. If, however, they were located on the
same campus, they should be combined into one building which would
result in some cost savings. For example, the operating expenses would
be reduced because the NRCREE and NRCMC could share the
characterization support group personnel and facilities, also the
administrative cost could be reduced, i.e. instead of a sum of $19M per
year, the operating costs for the two Centers it could be reduced to
$18M per year. Also the cost of the buildings, one instead of two, the
combined building would be $95M (compared to $110M for separate
buildings).
There are also additional advantages because persons carrying out
research and development activities on permanent magnets in the NRCREE
would have access to the NRCMC scientists and engineers designing
permanent magnet arrays and vice versa, this would be an important
synergism. There may be some other indirect interactions, but there is
essentially no overlap between the missions of the two Centers.
Q2. Which Federal Agencies, other than the Department of Energy, could
contribute to the research programs you would contemplate for the
proposed Centers?
A2. The Department of Defense (DOD) and National Institute for Science
and Technology (NIST) are logical choices of Federal agencies which
could contribute to the research programs of NRCREE and NRCMC. For
example, at the present time the Office of Naval Research (DOE) is
funding a project for cooling electronic hardware on seafaring vessels,
and the U.S. Air Force has funded a few (at least one) SBIR for
magnetic cooling below about 200 C. As far as I am aware NIST has one
internal (quite small) project on magnetic cooling. All three of these
projects would complement research carried out at the NRCMC.
Q3. Given your knowledge of Federal capabilities in rare earths
research, which agencies do you regard as able to contribute to the
development and execution of a research program as called for by
Section 1603(2) of the National Materials and Minerals Policy Act of
1980?
A3. The best Federal agency to develop and execute a research program
called for by Section 1603(2) of the National Materials and Minerals
Policy Act of 1980 would have been the U.S. Bureau of Mines, Department
of Interior, but unfortunately all of the research laboratories were
closed down in 1995 when the Bureau of Mines went out of existence.
Today there is no Federal agency that could easily undertake the tasks
required in Section 1603(2). But with some realignment and priority
changes one of the following Federal agencies should be able to
accomplish the goals of this act: DOE, DOD, NIST and NSF.
Answers to Post-Hearing Questions
Responses by Mark Smith, Chief Executive Officer, Molycorp Minerals,
LLC
Questions submitted by Chairman Brad Miller
Q1. As you are planning to operate throughout the rare earths supply
chain, can you tell us what processes in your production chain need
immediate increases in R&D support?
A1. Re-establishing for America a domestic ``mining-to-magnets'' supply
chain, on which Molycorp is focused virtually round-the-clock, involves
deploying five fundamental steps of production: 1) rare earth mining
and milling; 2) oxide production; 3) oxide-to-metals production; 4)
metal alloying; and 5) magnet manufacture. All of these steps are
integrally linked to one another, and failure at any one step will
prevent the U.S. from building a full domestic supply chain. Molycorp
is investing significant capital and research and development across
all five steps of production. The new technologies and processes that
we are developing and seeking to deploy at each step of production are
contributing to lowering production costs and improving environmental
performance. In other words, we are finding that investment in
``green'' process technologies at each step of production is a key
driver to lowering costs and will help the U.S. become the low-cost
producer of rare earth materials and products. This is why investment
is needed across the entire production chain, as opposed to any single
step.
Q2. Would you be interested in collaborating with the type of Center
Dr. Gschneidner proposed at the hearing?
A2. Absolutely. As I testified, virtually all analyses show that the
U.S. and the world will need both to increase production of rare earth
materials and products as well as find economic paths to rare earth
recycling and substitution technologies.
Questions submitted by Representative Kathleen Dahlkemper
Q1. If you are successful in developing the new magnet production
capability, how likely are we to see a repeat of the Magnaquench
episode, where the Defense Department and General Motors set up a
domestic magnet producer only to see its facilities shipped off to
China?
A1. Molycorp is committed to establishing and operating the entire rare
earth magnet supply chain on U.S. soil. If we are successful in
establishing this supply chain, and if we are able to compete
successfully in the global market--as we are confident of doing--the
odds of another Magnaquench happening as a result of investment in our
project are practically zero. That is because we, as a company, believe
very strongly that America's national and economic security demand that
the entire rare earth magnet supply chain be established and maintained
here in America. This is our goal and our commitment.
Q2. What will guarantee that the benefits that come from investing in
your project will be captured for and kept in the U.S. domestic
economy?
A2. If Molycorp is successful in re-establishing a domestic mining-to-
magnets supply chain on U.S. soil, then the benefits of that supply
chain will clearly flow to the U.S. economy, including re-establishing
a manufacturing base for many end-use products using rare earth
elements. Moreover, studies have clearly shown that research and
development activities closely follow industrial bases. Hence, our
establishment of the entire supply chain will actually foster research
related activities relating to rare earths. Perhaps more importantly,
the U.S. will reap substantial long-term benefits from a reduction of
our dependence on foreign countries for these strategic materials.
Answers to Post-Hearing Questions
Responses by Terence Stewart, Esq., Managing Partner, Stewart and
Stewart
Questions submitted by Chairman Brad Miller
Q1. What are the leading trade considerations that should shape a U.S.
national policy for minerals and materials?
A1. Any new U.S. policy on minerals and materials would presumably be
focused on tracking (1) use and anticipated growth in demand, (2)
availability, (3) development of additional sources, (4) development of
alternative products and (5) risks to availability.
WTO rules already in place should reflect the types of trade
considerations of importance to the U.S. and any policy it has or
develops on minerals and materials to increase availability (Item 2).
These rules could be bolstered by ongoing negotiations within the WTO
(Doha negotiations) and in bilateral and plurilateral talks with major
trading partners.
As a general matter, international trade rules and ongoing
negotiations look to open markets and limit restrictions on access to
materials and to limit distortions flowing from government largesse.
While there are exceptions that can be important from a national
security perspective, the key element of a proactive policy is the need
to eliminate discrimination in availability of products or access to
markets or raw materials.
More specifically, Article I of GATT 1994 deals with most favored
nation treatment of goods on a market access perspective (this means no
discrimination between WTO members); Article III of GATT 1994 requires
the provision of national treatment (requiring governments to treat
foreign goods the same as domestic goods once imported) and Article XI
of GATT 1994 seeks to eliminate limitations on both imports and exports
outside of duties, taxes and other charges. Moreover, some countries in
their accession protocols have undertaken specific commitments not to
apply export taxes or duties. This includes China as it pertains to
rare earth minerals, as my testimony at the hearing reviewed.
Hopefully, the current U.S. challenge to China's export duties,
quotas and licensing requirements on certain raw materials that are not
rare earth minerals will confirm the vitality of these considerations
vis-a-vis China within the WTO. If China fairly implements any adverse
determination, that may eliminate at least one source of trade concern
for the U.S. on minerals and materials.
Probably it will be necessary for the U.S. to bring a second WTO
case against China dealing with rare earth minerals, to provide
additional pressure on China, and to provide a path forward to a
positive resolution of the rare earths dilemma faced by the United
States.
There are trade considerations as well for subsidies which can, of
course, be used to develop capacity, new uses and alternative materials
(issues (1), (3) and (4) above). Trade considerations prohibit export
subsidies for most countries and subsidies which are ``contingent,
whether solely or as one of several other conditions, upon the use of
domestic over imported goods.'' Article 3.1(b) of the Agreement on
Subsidies and Countervailing Measures. At the same time, domestic
subsidies for mineral and materials production and development are
permitted where such subsidies are either general in reach or not
causing injury to foreign producers (serious prejudice; nullification
or impairment of benefits; injury to the domestic industry of another
member). The U.S. should be vigilant in pursuing trade actions against
trading partners who engage in the use of prohibited subsidies or use
domestic subsidies in a manner harmful to U.S. manufacturing. This is
particularly true for minerals and materials.
Q2. Which elements of the nation's trade apparatus should participate
in or contribute to the development of the ``early warning system'' for
materials and minerals bottlenecks discussed at the hearing?
A2. The U.S. Trade Representative's office prepares annually a National
Trade Estimate in cooperation with input from other government agencies
and our embassies and consulates overseas and information from the
business community reviewing barriers to U.S. exports. Actions and
policies by many of our trading partners are reviewed annually. This
report could be modified to have a section within the overall report as
well as a section in every country that looks at actions by foreign
governments that affect any of the five policy issues on minerals and
materials.
In addition, the U.S. Department of Commerce and the U.S. Trade
Representative put out an annual report on subsidy practices of our
trading partners. In the past, the report has focused on particular
industries where there was Congressional interest. Requiring a section
in this report that examines the subsidy practices of trading partners
on minerals and metals would be an important step to take.
Finally, historically there has been a so-called ``special 301''
provision in law to address annually concerns on intellectual property
laws and protections amongst our trading partners. Through a statutory
change, a special 301 provision could require an annual evaluation of
government policies affecting availability, non-discrimination,
national treatment, development and subsidy issues and require
consultations with nations viewed as creating artificial barriers to
minerals and materials.