[Senate Hearing 115-183]
[From the U.S. Government Publishing Office]
S. Hrg. 115-183
THE UNITED STATES' INCREASING DEPENDENCE ON FOREIGN SOURCES OF MINERALS
AND OPPORTUNITIES TO REBUILD AND IMPROVE THE SUPPLY CHAIN IN THE UNITED
STATES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 28, 2017
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona DEBBIE STABENOW, Michigan
STEVE DAINES, Montana AL FRANKEN, Minnesota
CORY GARDNER, Colorado JOE MANCHIN III, West Virginia
LAMAR ALEXANDER, Tennessee MARTIN HEINRICH, New Mexico
JOHN HOEVEN, North Dakota MAZIE K. HIRONO, Hawaii
BILL CASSIDY, Louisiana ANGUS S. KING, JR., Maine
ROB PORTMAN, Ohio TAMMY DUCKWORTH, Illinois
LUTHER STRANGE, Alabama CATHERINE CORTEZ MASTO, Nevada
Colin Hayes, Staff Director
Patrick J. McCormick III, Chief Counsel
Annie Hoefler, Professional Staff Member
Severin Wiggenhorn, Senior Counsel
Angela Becker-Dippmann, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Spencer Gray, Democratic Professional Staff Member
Melanie Stansbury, Democratic Professional Staff Member
C O N T E N T S
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OPENING STATEMENTS
Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska.... 1
Cortez Masto, Hon. Catherine, a U.S. Senator from Nevada......... 3
WITNESSES
Hitzman, Dr. Murray, Associate Director-Energy and Minerals, U.S.
Geological Survey, U.S. Department of the Interior............. 4
Barrios, Alf, Chief Executive, Rio Tinto Aluminum................ 12
Hinde, Dr. Chris, Director, Reports, S&P Global Market
Intelligence................................................... 21
MacGillivray, Randy, Vice President Project Development, Ucore
Rare Metals, Inc............................................... 25
Cosgriff, Vice Admiral Kevin J., USN (Retired), President and
CEO, National Electrical Manufacturers Association............. 30
Eggert, Dr. Roderick G., Viola Vestal Coulter Foundation Chair in
Mineral Economics, Division of Economics and Business, Colorado
School of Mines................................................ 36
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Barrios, Alf:
Opening Statement............................................ 12
Written Testimony............................................ 14
Responses to Questions for the Record........................ 74
Cortez Masto, Hon. Catherine:
Opening Statement............................................ 3
Cosgriff, Vice Admiral Kevin J.:
Opening Statement............................................ 30
Written Testimony............................................ 32
Responses to Questions for the Record........................ 86
Eggert, Dr. Roderick G.:
Opening Statement............................................ 36
Written Testimony............................................ 38
Responses to Questions for the Record........................ 88
Hinde, Dr. Chris:
Opening Statement............................................ 21
Written Testimony............................................ 23
Responses to Questions for the Record........................ 76
Hitzman, Dr. Murray:
Opening Statement............................................ 4
Written Testimony............................................ 6
Responses to Questions for the Record........................ 68
MacGillivray, Randy:
Opening Statement............................................ 25
Written Testimony............................................ 27
Responses to Questions for the Record........................ 81
(The) Minerals Science and Information Coalition:
Statement for the Record..................................... 94
Murkowski, Hon. Lisa:
Opening Statement............................................ 1
THE UNITED STATES' INCREASING DEPENDENCE ON FOREIGN SOURCES OF MINERALS
AND OPPORTUNITIES TO REBUILD AND IMPROVE THE SUPPLY CHAIN IN THE UNITED
STATES
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TUESDAY, MARCH 28, 2017
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Lisa
Murkowski, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
ALASKA
Chairman. Good morning. The Committee will come to order.
I understand Senator Cantwell will be coming later, but
Senator Cortez Masto will be subbing in this morning. We
appreciate that a great deal.
We are here today to receive testimony on the United
States' foreign mineral dependence. It will probably come as no
surprise to anyone here that, I believe, this is a significant
and a growing threat to our nation. Resolving it and restoring
our mineral security is a priority for me and many members of
this Committee.
Our starting point is to recognize that minerals are
important because they are the building blocks of our modern
society, from the smallest computer chips to the tallest
skyscrapers and just about everything in-between.
Minerals are fundamental to fracking, MRI machines, and jet
engines. The homes that we live in, the food we eat, the cars
we drive, and the computers we use, all depend on minerals.
Almost every product in our nation is made from, or uses,
minerals, yet more and more these minerals are now being
produced somewhere else.
According to the U.S. Geological Survey (USGS), we imported
at least 50 percent of our supply of 50 different minerals,
including 100 percent of our supply of 20 of them, just last
year in 2016. That is a major increase from our foreign
dependence levels in 1978 when this data was first collected,
and it suggests that we are on the verge of replacing our
dependence on foreign oil with an equally, if not even more
damaging, dependence on foreign minerals.
Rare earth elements are perhaps the best-known example.
With the Mountain Pass Mine in California now closed, we once
again import 100 percent of our supply of rare earths, exposing
us to potential supply shortages and price volatility while
reducing our international leverage and attractiveness for
manufacturing. It is the same story with graphite, palladium,
indium, manganese, niobium and many others.
When you look at the list of what it is that we import,
where we import it from, and what it is used for, it quickly
becomes clear that we have a problem on our hands. Our foreign
mineral dependence is a threat to our ability to create jobs in
this country. It limits our growth, our competitiveness, and
our national security. It may seem abstract right now for some
who are not responsible for managing a supply chain, but there
will come a day when it will become real for all of us when we
simply cannot acquire a mineral or when the market for a
mineral changes so dramatically that entire industries are
affected.
Some agencies have begun to wake up to the threats posed by
our foreign mineral dependence, but on the whole, the Federal
Government is not paying anywhere near enough attention.
Executive agencies are not as focused or as coordinated as they
need to be, and they do not have the direction or authority
that they need to make lasting progress to restore our mineral
security.
That is why, for the past three Congresses, I have
introduced legislation to improve our nation's mineral security
along with members from both sides of our Committee. Last
Congress we included our work in our broad, bipartisan energy
bill which both the Committee and the Senate overwhelmingly
approved.
As we examine policy options in this new Congress, I remain
convinced that our ideas on minerals are on the right track and
they are as timely as ever.
I continue to believe that we should have a mechanism to
track which minerals are critical in use and susceptible to
supply disruption. When a mineral is listed as critical, we
should survey our lands to determine the extent of our resource
base.
When it comes to permitting delays for new mines, our
nation is among the worst in the world, so fixing our broken
system is one of the single most important steps we can take.
We should also promote research into alternatives,
efficiency, and recycling options, especially for minerals that
we do not have in significant abundance.
We should build out our minerals forecasting capability to
provide a better understanding of mineral-related trends and
early warnings when problems do arise.
And we need to pay attention to workforce issues so that
smart kids are taught by qualified professionals and can go on
to find success in environmentally-responsible mining
operations.
This Congress offers a perfect opportunity to finally bring
our minerals policies into the 21st century and to begin to
restore our nation's mineral security. Today we start that
effort by focusing on the importance of minerals, the threats
posed by our rising foreign dependence, and a discussion of the
solutions that are within our reach. So I look forward to
hearing from each member of the panel this morning.
I will now turn to Senator Cortez Masto and welcome her for
her comments.
STATEMENT OF HON. CATHERINE CORTEZ MASTO, U.S. SENATOR FROM
NEVADA
Senator Cortez Masto. Thank you.
I want to thank Madam Chair Murkowski and Ranking Member
Cantwell for bringing together this hearing that is incredibly
salient to our interest in not only rebuilding our mining
industry but in retooling our economy for a high-tech world.
The United States is at a critical stage of innovation. The
technologies that we all use demand a steady supply of critical
minerals, minerals that are primarily imported with an
increasing global demand.
When our dependence on foreign minerals increases and we
are 100 percent import reliant for 20 minerals, including 8
identified as critical, it is absolutely necessary to
prioritize the security of our supply chain.
We have the opportunity, right now, to seize on mineral
supply independence as we have in the energy sector with fuel.
Our country has the supplies, workforce, technology and
government programs to rebuild our domestic supply, but they
require investment.
Not only does improving our supplies ensure our mining
industry's success, but it will also improve our economy, other
important industries and resilience to global competition.
Mining companies provide thousands of good jobs for
residents in Nevada, pay millions of dollars in tax revenues
and help support other parts of our state's economy.
Additionally, mining companies like Barrick and Newmont not
only employ thousands of Nevadans but also prioritize digital
improvements that increase efficiency, transparency and
corporate sustainability. The ripple effect of an expanded
domestic mining industry includes technology companies,
research institutions, energy systems and the military.
Technology minerals are absolutely critical for many of the
technologies that are part of our everyday lives and stand to
improve our energy systems from our cell phones, to solar
panels and battery storage. Leveraging our resources is a real
opportunity which, if done responsibly, continues the charge of
my state and the country into a great age of innovation and
resiliency in a competitive global market.
But know that there are challenges that we must address. I
am eager to hear from our esteemed experts who will inform us
about the challenges they face or the solutions they believe
will move us forward. I know that investments in technologies,
research, education and a trained workforce and improving the
permitting review process, all are priorities moving forward as
our country increases its domestic supply of critical minerals
and the innovation dependent upon those resources.
Thank you very much for joining us today.
Chairman. Thank you, Senator.
We will now turn to our witnesses. Thank you. I appreciate
not only your input this morning but what you have done in the
various sectors and spaces that you operate. Your leadership is
greatly appreciated.
We are going to start off this morning with Dr. Murray
Hitzman, who is the Associate Director for Energy and Minerals
at the U.S. Geological Survey. Welcome to you, Mr. Hitzman.
He will be followed by Mr. Alf Barrios, who is the Chief
Executive of Rio Tinto Aluminum. Welcome.
Dr. Chris Hinde is the Director of Reports, Metals and
Mining at S&P Global Market Intelligence. We thank him for
being here.
Next is a friend of mine, Mr. Randy MacGillivray, who is
the Vice President of Project Development at Ucore Rare Metals,
Incorporated. Welcome.
We are joined by Vice Admiral Kevin Cosgriff, U.S. Navy
Retired. He is the President and CEO of the National Electric
Manufacturers Association (NEMA). We appreciate you being here.
Rounding out the panel is Dr. Roderick Eggert, who is the
Viola Vestal Coulter Foundation Chair in Mineral Economics at
the Division of Economics and Business at the Colorado School
of Mines. We appreciate your contributions this morning.
Dr. Hitzman, we will ask you to lead off the panel. I would
ask each of you to limit your comments to five minutes. Your
full testimony will be incorporated as part of the record, and
we will hold our questions until each of you has spoken. I look
forward to your input this morning.
Dr. Hitzman, welcome.
STATEMENT OF DR. MURRAY HITZMAN, ASSOCIATE DIRECTOR-ENERGY AND
MINERALS, U.S. GEOLOGICAL SURVEY, U.S. DEPARTMENT OF THE
INTERIOR
Dr. Hitzman. Good morning, Chairman Murkowski, and thanks
to the members of the Committee. Thank you for the opportunity
to be here to testify about the nation's foreign mineral
dependence.
The U.S. Geological Survey is responsible for conducting
research and collecting data on a wide variety of mineral
resources. The USGS collects, analyzes and disseminates
information on current production and consumption of 84 mineral
commodities, both domestically and internationally for 180
countries. These data include information on domestic
production and use, import sources, world production capacity,
and recycling. These mineral data are published annually in the
Mineral Commodities Summaries.
Global demand for mineral commodities is on the rise, and
the United States is increasingly reliant on foreign sources
for raw processed mineral materials. In 2016, our studies show
that imports made up more than one-half of the U.S. apparent
consumption of 50 non-fuel mineral commodities valued at $32.3
billion. The United States was 100 percent reliant for 20 of
these mineral commodities, including 8 identified as critical.
This is an increase from 2015 when the country was more than 50
percent dependent on 47 non-fuel mineral commodities and 100
percent reliant on 19.
The list of mineral commodities for which the United States
is 100 percent import reliant includes both well-known and
obscure commodities. Elements that the U.S. depends on from
foreign sources include the rare-earth element, Europium, which
is essential for getting a bright red color out of a TV screen
and metal oxides that are responsible for some popular
automobile paint colors.
The metal oxides are an example of the effect of supply
disruptions. For several months after the 2011 Japanese
earthquake and tsunami, American vehicle manufacturers were
unable to supply customers with popular red and black sports
cars and trucks due to the unavailability of a critical mineral
ingredient.
In 2015, the USGS, in cooperation with the Department of
Energy, developed a screening tool to identify critical
minerals of concern for economic and national security and to
stay ahead of technology changes and geopolitical unrest. This
criticality tool accounts for several variables in identifying
critical minerals, including how vulnerable the supply chain is
to disruption, how much production growth is expected for the
material and market dynamics. These studies allow the users to
rank minerals from lower to higher potential criticality. The
resultant rankings are being used today by the Defense
Logistics Agency.
An accurate assessment of the nation's mineral resources
must include not only the resources available in the ground but
also those that become available through recycling. Metal
supply consists of primary material from a mining operation and
secondary material which is composed of new and old scrap.
Although recycling is a significant source of some non-fuel
mineral resources such as aluminum, technical difficulties with
recycling mean that for other mineral commodities such as the
rare earths, recycling is extremely challenging.
In addition to providing information on mineral production
and consumption, the USGS also produces data that aids in
assessing the mineral potential of the nation. For example, the
USGS recently released a study on critical minerals in Alaska.
To help source minerals domestically, the USGS undertakes
both geologic mapping and the production of regional-scale
geophysical maps that help define areas favorable for mineral
exploration.
Currently only about one-third of the United States has
been mapped at the detailed scales required for mineral
exploration. Other countries, such as Canada and Australia,
have undertaken such geological and geophysical surveys and
have reported that investments of $1 by the government have
resulted in further investments of over $5 by the private
sector.
The Department, through the USGS, stands ready to fulfill
its role as the federal provider of unbiased research on known
mineral resources, assessment of undiscovered mineral
resources, data to aid mineral exploration by the private
sector and information on domestic and global production and
consumption of mineral resources for use in global critical
mineral supply chain analysis.
Thank you for the opportunity to testify. I'm very happy to
answer any questions.
[The prepared statement of Dr. Hitzman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman. Thank you, Dr. Hitzman.
I believe that other members of the Committee have received
the USGS report on the Alaska assessment which I found was very
helpful with the maps, thank you.
Mr. Barrios, welcome.
STATEMENT OF ALF BARRIOS, CHIEF EXECUTIVE,
RIO TINTO ALUMINUM
Mr. Barrios. Good morning, Chairman Murkowski and members
of the Committee.
My name is Alf Barrios. I am the Chief Executive of Rio
Tinto Aluminum. I sit on the Rio Tinto Executive Committee and
serve as the company's country sponsor for Canada and the
United States.
Rio Tinto has been operating in the U.S. for over 100
years. Our operations include Kennecott Copper in Salt Lake
City, Utah; Resolution Copper in Superior, Arizona; and Rio
Tinto Boron in California.
The most recent Mineral Commodity Summaries by the U.S.
Geological Survey should set off alarm bells in the White House
and Congress. The study, published earlier this year, indicates
the U.S. is now import-dependent for 50 different metals and
minerals and 100 percent import-dependent for 20. The trend is
troubling.
U.S. mineral dependency is at a record-high, now double
what it was 20 years ago. During that same timeframe,
investment in minerals exploration projects has dropped from 20
percent to seven percent. This drift away from greater self-
sufficiency for the basic building blocks of our economy
compromises our economic and national security and ignores
North America's rich reserves of metals and minerals that are
at the front-end of the manufacturing supply chain. Dependence
on imported essential materials to meet the needs of key
domestic industries leaves the U.S. unnecessarily vulnerable to
disruptions to vital supply chains.
Of course, no country, not even the United States, is
blessed with top tier deposits of every essential mineral.
Enhancing the U.S.' ability to access its own resources does
not mean we should raise barriers to imported materials.
Nowhere are the mutual benefits of trade more apparent than the
integrated supply chains in North America where imports from
Canada make U.S. manufacturers more competitive and vice versa.
We have a real opportunity to realize the full potential of
the domestic mining industry. Clearly demands for minerals is
increasing as global population expands and minerals are used
in a greater range of applications, particularly associated
with the deployment of new technologies.
The manufacturing sector has expressed heightened concerns
about securing access to the minerals they need when they need
them. According to a survey of 400 manufacturing executives,
more than 90 percent are concerned about supply disruptions,
citing geopolitics and increasing global demand as the most
pressing factors. In addition, 80 percent of U.S. manufacturing
leaders recognize the importance of sourcing domestic minerals
and metals, noting strengthened national security as reasons
for doing so.
An outdated, inefficient permitting system presents a major
barrier to the domestic mining sector's ability to perform to
its full potential and supply more of our infrastructure needs.
The U.S. has one of the longest permitting processes in the
world for mining projects. In the U.S., necessary government
authorizations now take approximately seven to ten years to
secure, placing the U.S. at a competitive disadvantage in
attracting investment for mineral development. By comparison,
permitting in Australia and Canada, which have similar
environmental standards and practices as the U.S., takes
between two and three years.
Authorities, ranging from the National Academy of Sciences
to the Departments of Energy and Defense to international
mining consulting firms, have identified permitting delays as
among the most significant risk and impediments to mining
projects in the United States. Most recently, the U.S.
Government Accountability Office linked the need to streamline
the mine permitting process to mitigate supply risks.
To address supply chain vulnerability and import
dependence, President Trump and Congress should continue to
examine ways to improve permitting of new U.S. mines and
smelters. The mining industry strongly supports efforts in the
House and Senate to address the mine permitting process
including S. 145, the National Strategic and Critical Minerals
Production Act. The bill provides for efficient, timely, and
thorough permit reviews and incorporates best practices for
coordination between state and federal agencies.
We also appreciate the efforts by Chairman Murkowski last
Congress to move forward the American Mineral Security Act. Her
legislation, cosponsored by many on this Committee, was a step
forward in bringing the U.S. in line with its global peers who
are preparing to meet the 21st century challenges of mineral
supply chain reliability and security.
I would like to conclude by reemphasizing the important
role the mining industry has in supporting U.S. manufacturing
and infrastructure development, but also by acknowledging that
Rio Tinto understands responsibility extends far beyond.
We must lead by example when it comes to community
engagement, reclamation and pioneering technology innovation.
For example, on Lake Chelan in north-central Washington State,
we have been working to rehabilitate the old copper mine which
we obtained through a large acquisition in 2008. Despite never
commercially benefiting from the mine, Rio Tinto has brought
its global expertise to the project and has spent hundreds of
millions of dollars to rehabilitate Holden Village.
Thank you for the opportunity to testify today. I
appreciate the Committee's leadership on this very important
issue.
[The prepared statement of Mr. Barrios follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman. Thank you, sir.
Let's go to Dr. Hinde. Welcome.
STATEMENT OF DR. CHRIS HINDE, DIRECTOR, REPORTS,
S&P GLOBAL MARKET INTELLIGENCE
Dr. Hinde. Chair and Members of the Committee, good morning
and thank you for inviting me to present to this Committee.
My written testimony can be summarized in six parts.
First, if I may, what authority can I bring to bear? I've
been writing about the mining industry for 30 years at S&P
Global Market Intelligence, as the world's largest database of
exploration and mining activity.
Second, a comment about the supply/demand scene in the USA.
S&P Global has conducted two relevant studies within the past
three years. In September 2014, we argued that a healthy, local
exploration and mining sector is important for the American
economy. And in mid-2015, we quantified the impact of
permitting delays on mine development in the USA.
The second of these reports identified the destruction of
value of the results from even short delays in the permitting
process whilst the first reports demonstrated a clear mismatch
in the USA between consumption and the local supply of required
metals and minerals.
This country is still the world's largest economy and per
capita metals consumption in the USA is far in excess of the
citizens of other countries. In contrast, the USA ranks as only
the seventh largest mining nation by value of production. This
shortfall is especially regrettable because manufacturing
activity is returning to the USA. This move is driven by
manufacturers' desire to reduce the risks in their supply
chains and a consumer's increasing concerns regarding corporate
accountability. We found that the USA miners are highly
efficient and generally apply best practices with regard to
productivity, sustainability, and safety.
Third, mining is a very uncertain business with geology and
mineral endowment being extremely difficult to assess, and its
companies being price takers rather than having the luxury of
being able to set the price of their products. Because of this
extra risk, the industry acquires financial returns that are in
excess of most of business activities.
The fourth of my six points is the USA offers some key
advantages to miners including a stable political and economic
environment, but most companies with comparable mineral
resources and similar environmental standards offer a much more
certain permitting process. Like companies and industries the
world over, mining executives simply seek certainty in the
legal and fiscal processes that they face.
As one of my colleagues just mentioned, it takes, on
average, seven to ten years to secure the permits needed for
mines to reach production in the USA. In contrast and with very
similar overall requirements, Canada and Australia are managing
their average permitting periods of barely two years.
In the USA, many agencies and stakeholders are involved
with a requirement for multiple permits and rather undefined
goals for indigenous groups, the general public, and non-
governmental organizations. Rigorous permitting is, of course,
necessary and is to a similar standard to our knowledge in the
USA, Canada, and Australia; however, the permitting process is
much better defined in Canada and Australia with a shorter
timeline for the various agencies to respond.
Fifth, a quick note on the global scene. In our corporate
exploration strategies we report, we identified $7.2 billion of
global, non-ferrous exploration last year. That's not including
iron ore and coal exploration. Only $500 million of this was
spent here on exploration compared with very nearly $900
million in Australia and close to $1 billion in Canada. Indeed,
the USA exploration expenditure has fallen from the record $1.7
billion spent on exploration locally in 2012. So current
exploration is running at a third of the record level.
Finally, an observation from a foreigner. The USA remains
highly prospective from a geological point of view.
Unfortunately, the country's existing permitting system
presents a formidable barrier to the development of its own
mineral wealth. This has left the USA unnecessarily dependent
on local mines, whose remaining life is declining or on foreign
sources of metals and mineral resources.
Your country and its mining industry would benefit from a
more streamlined permitting process, ideally, something similar
to those already being applied by the world's leading mining
nations.
Thank you.
[The prepared statement of Dr. Hinde follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman. Thank you, Doctor.
Mr. MacGillivray, welcome.
STATEMENT OF RANDY MACGILLIVRAY, VICE PRESIDENT PROJECT
DEVELOPMENT, UCORE RARE METALS, INC.
Mr. MacGillivray. Madam Chair Murkowski, Acting Ranking
Member Cortez Masto, and distinguished Members of the
Committee, I would first like to thank you for the invitation
to testify before you today. It's a great honor to testify
before the United States Senate and I hope to provide you with
some valuable information regarding the state of the industrial
base for the production of strategic and critical materials in
the United States from the perspective of a domestic miner.
I presently serve as the Vice President of Project
Development for Ucore Rare Metals, a junior mining company with
a rare-earth element project located in Southeast Alaska. Ucore
is currently developing its Bokan-Dotson Ridge Rare Earth
Project which presents the opportunity for near-term recovery
of crucial, heavy, rare earth elements. Located in Alaska, the
project would give the U.S., the world's leading consumer of
rare earth elements, strategic access to a domestic supply.
The issue of foreign mineral dependence is not new, but its
importance cannot be overstated. At present, the People's
Republic of China dominates the production of numerous metals,
including rare earth elements, which are essential for the
proper function of everything from smartphones in our pockets,
to advanced weapons systems used by the modern warfighter. In
fact, China exhibits a near monopoly on the production of these
materials introducing a dangerous risk into our supply chains.
Meanwhile, the U.S. has no operating producer of rare earth
elements after the highly-publicized bankruptcy and closure of
the only domestic rare earth mine in 2015. To date, the sole
mitigation strategy adopted by the U.S. has been to stockpile
small reserves of materials deemed to be critical and to
promote substitution and recycling efforts, an inadequate
approach given the criticality of these materials. Without a
U.S. supply base, should the Chinese ever decide to curtail the
supply of these materials to the U.S., we would be left without
access, endangering both our domestic economy and our military.
Furthermore, Chinese production of these materials often
relies on outdated and environmentally destructive mining and
processing practices. The solvent extraction separation process
used extensively by the Chinese to recover rare earths has a
low selectivity for individual elements, necessitating the use
of numerous separation stages using highly corrosive chemicals
and generating vast amounts of toxic and radioactive waste for
which very little care is taken in disposal.
To witness firsthand the toll that Chinese rare earth
production is having on the environment, one need not look
farther than the artificial lake located in China's Inner
Mongolia region where black chemical sludge, a byproduct of
solvent extraction, stains the landscape. This embrace of
environmental pollution on behalf of the Chinese, in
combination with the lack of worker protections, allows the
Chinese to manipulate the market and effectively control global
prices. Chinese producers have willingly undercut the rare-
earth price driving foreign competition out of the market while
the Chinese government has refused to address illegal mining
and trading operations which have led to greater supply, lower
prices, and further consolidation of rare earth production in
China.
In light of the current situation and American dependence
on these materials, the need for domestic sources and
production is paramount to ensuring our national security;
however, Chinese market manipulation over the past decade and
notable failed domestic projects have left capital markets
unwilling to fund critical material projects. Domestic mining
and separation firms, with advancements in environmentally
friendly technologies, would benefit from support to bridge the
divide between operating on a pilot scale and full
commercialization of the new technology.
The technologies to secure American independence in the
critical materials markets exist, but government needs to be
the key to unlocking the door for a domestic supply of critical
materials for energy and defense applications.
Congress has previously been supportive of the domestic
mining sector as seen by the introduction of legislation last
Congress by the Madam Chair which would have promoted the
development of green technology to meet the nation's demand for
critical materials. Ucore remains fully committed to solving
the critical materials issues facing our country and working
toward solutions developed in coordination with Congress to
alleviate our dependence on foreign nations for these
materials.
Thank you.
[The prepared statement of Mr. MacGillivray follows:]
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Chairman. Thank you, Mr. MacGillivray.
Vice Admiral Cosgriff, welcome.
STATEMENT OF VICE ADMIRAL KEVIN J. COSGRIFF, USN (RETIRED),
PRESIDENT AND CEO, NATIONAL ELECTRICAL MANUFACTURERS
ASSOCIATION
Admiral Cosgriff. Thank you, Madam Chairman. Members of the
Committee, we appreciate the opportunity for the National
Electrical Manufacturers Association to appear here today on
this important subject.
To put that into context, that's some 350 member companies
in the electro industry, as we like to call it, and also
importantly the medical imaging industry. Industry-wide that's
some 400,000 American jobs with 7,000 facilities in every state
of the Union. It's approximately $114 billion a year in
production and $50 billion in exports.
As you might expect, NEMA supports policies that provide
greater assurance to our companies of stable, continuous, and
affordable inputs for their domestic manufacturing. Challenging
supply conditions and price volatility in those inputs can be a
significant concern to U.S. companies in multiple sectors,
including our own. When we speak to our members, supply chain
risk management is very much on their minds every day.
While some of our companies source raw materials, many are
one or more steps away from that and purchase processed or
semi-processed material that's more ready for the manufacturing
effort. But one way or another, every one of our companies is
dependent on reliable access to raw materials.
In the area of rare earths, the supply crisis several years
ago has eased due to multiple factors, including some changes
in technology and also the market that has been commented on,
including in China. But U.S. firms still remain largely
dependent on shipments from China for rare earths.
Foreign sourcing of lithium, not a rare earth, but
nonetheless an important element, is significant as well,
although not absolute.
We're also hearing from our members about the state of the
U.S. aluminum industry, and factors that are leading to
occasional constrained conditions. A number of our
manufacturers of electrical wire and cable report that previous
suppliers have either gone out of business or are otherwise
operating at reduced capacity.
Copper, as you might expect, is another key metal, and
about one-third of the total used is from overseas.
In the area of medical imaging there is a metal substance
of essential importance, specifically Molybdenum-99, I'll call
it Moly 99, and its parent is the parent isotope of Technetium-
99m, call that Tech 99, is used in approximately 40,000
diagnostic procedures a day. Tech 99 has a very short half-life
and therefore must be produced on a continuous basis. The U.S.
consumes about half of the world's Moly 99 and has no domestic
source. Canada, which used to supply the U.S. with half of our
needs, ceased routine production last year.
In 2012, Congress enacted S. 99, the American Medical
Isotopes Production Act as part of the Defense Authorization
bill. We commend this Committee for its work on S. 99, and we
encourage its oversight responsibilities to monitor
implementation of this law so that patients can get the right
scan at the right time.
Returning to the bigger picture, we support a federal role
in minerals policy, including research and development, as well
as minerals information and analysis. It's important to add
that a balanced mineral policy is an important support to
domestic manufacturing and employment.
Despite many efforts to date, many manufacturers'
dependence on foreign sources of critical minerals, including
rare earths and other raw materials, remains a concern.
Companies manage this risk by diversifying supplies and, if
possible, holding more inventory, both of which can impact
operating costs and therefore, competitiveness. Having access
to more secure, price competitive supplies closer to home,
domestic as well as the other NAFTA countries, or Western
Hemisphere, more broadly, is desirable.
At the end of the day, the issue we are discussing is about
whether the U.S. electro and medical imaging companies can
manufacture what they need to manufacture here at home. Clearly
this involves access to minerals, related information, and a
regulatory environment that helps them compete globally.
Thank you again for this opportunity and I look forward to
any questions you may have.
[The prepared statement of Admiral Cosgriff follows:]
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[G
Chairman. Thank you very much for your testimony.
Finally, Dr. Eggert, welcome.
STATEMENT OF DR. RODERICK G. EGGERT, VIOLA VESTAL COULTER
FOUNDATION CHAIR IN MINERAL ECONOMICS, DIVISION OF ECONOMICS
AND BUSINESS, COLORADO SCHOOL OF MINES
Dr. Eggert. Thank you. Good morning.
I have three key points in my testimony. First, government
plays an essential role in fostering domestic supply chains of
raw materials through research and education which, in turn,
are important determinants of innovation. Second, both
recycling and new mines will be important in meeting future raw
material challenges. And third, I would suggest that it is
risky imports rather than import dependence itself that is the
problem, and in turn, risky imports are but one aspect of the
larger issue of supply chain risks and long term resource
availability.
Now consider research, education, and recycling in turn and
starting with research.
Two aspects of research, I believe, are especially worthy
of government involvement. First, early stage research and
development which the private sector acting alone is likely to
underinvest in from the perspective of society as a whole
because its benefits are risky, far in the future and difficult
for private companies to fully capture. Second, activities
aimed at facilitating the transition, the conversion of new
knowledge to commercial products and applications insights from
basic research often languish because of insufficient
communication between basic researchers and commercial
developers of new technology.
More narrowly, and with respect to extracting and
recovering materials from both mineral deposits and wastes, I
believe there are two grand research challenges. The first is
chemical separations. The challenge of separating one element
from another in a mineral deposit or in a waste material. The
second, resource efficiency, optimizing the recovery of
multiple elements from the same mineral deposit or from the
same waste product.
Turning to education. Part of the issue with education in
this area is basic science, technology, engineering and math,
but part of it is discipline specific. The dearth of resource
discipline graduates in fields like economic geology, mineral
processing, extractive metallurgy and even material science and
engineering is highlighted by a 2013 National Research Council
study.
With respect to recycling for the major metals, iron and
steel, aluminum, copper, lead, zinc, there are already well-
established recycling industries and recycling already plays an
important role in the supply chain.
For minor metals, however, very little recycling occurs.
Many, and I'm thinking about many of the so-called high-tech,
specialty, or critical minerals and metals that are used in
small quantities and yet provide essential properties or
functionality to modern engineered materials, things like
lithium and cobalt in batteries, neodymium and dysprosium in
magnets, gallium and indium in electronics in flat-panel
displays, and a variety of other applications.
Both research challenges apply here, chemical separations
and resource efficiency, when it comes to improving and
enhancing recycling of and recovery of minor metals from waste
products.
With respect to recycling end-of-life products, as opposed
to manufacturing wastes, demand for metals, almost certainly,
will grow because of population growth, economic development,
the lifting of many of the poorest people around the world out
of poverty, and the improvement of their material well-being.
Recycling by itself will not be able to meet this new demand
because the quantities available for recycling today reflect
the level of demand in the past. This is not to minimize the
importance of enhanced recycling but rather to be cautious
about the ultimate role of recycling in meeting our supply
chain challenges.
So, as I began, government plays an essential role in
fostering domestic supply chains of raw materials through
research and education.
Thank you very much.
[The prepared statement of Dr. Eggert follows:]
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Chairman. Thank you, Dr. Eggert.
Thank you all. We have heard very interesting comments this
morning.
I am going to begin with just a general question to
whomever may want to jump in or multiples of you. This is the
fourth hearing we have had in this Committee on the issue of
mineral security.
A couple of you have testified before the Committee before.
We have heard from USGS before. Three of you have flown in from
other countries. You are clearly paying attention to the
situation here in the United States. Other countries are paying
attention to this issue. I think, most notably, China.
But here we are, and the information that you have given me
this morning is that instead of lessening our dependence, we
are actually increasing our dependence. We have increased it
from just last year. We are not making headway on this issue.
It is a little bit frustrating, maybe because I feel like I
am a voice in the wilderness sometimes here on these issues,
but I have been trying to raise the issue, raise the profile,
speak to what it means when we are more vulnerable or relying
more on risky imports, to use the terminology that was given
here today. What are we doing wrong here?
This smartphone that you all have in your pockets, that you
are using to take pictures, it does not happen without these
critical minerals. Those of you that flew here would never have
been able to arrive had we not had these.
So much of this is education, education, education. I think
it, kind of, fits with my view of how many people, how many in
this country, view energy in general. There is this immaculate
conception theory of energy. It just happens.
I am starting to think that same view holds true when it
comes to how we are able to operate as a society. We do not
make the connection to where our minerals fit in. What can we
be doing more to make this connection?
Dr. Hitzman, you mentioned the fact that to this point in
time only one-third of the United States has been mapped. We
clearly have some room to grow there.
But from the perspective of educating, whether it is our
manufacturers, who are part of that supply chain so I think
they get it. But do we, as a society, get it?
It is one thing when you mentioned that we are impacted by
the ability to get a red car or a black car because the Chinese
acted and cutoff those rare earths there. I don't think people
get too alarmed about the fact that they might not be able to
get the color of their choice. But when they view that this is
a security threat, that changes the discussion, one would
think.
I am kind of throwing this out there for general
discussion. What are we? Where are we failing to connect with
Americans, not only John Q. Public out there, but folks in the
White House as well? How do we raise this up beyond just this
Committee?
I welcome anyone to comment. Dr. Hinde?
Dr. Hinde. I'd love to say I had an answer, but as I----
Chairman. I was hoping for it.
Dr. Hinde. I've been writing about this issue for 30 years.
In fact, I launched an environmental magazine about 15 years
ago to address these very issues.
I mean, it stems, of course, to state the blindingly
obvious, from a mistrust of the industry. I can't speak for
here, but certainly in Europe, we were pretty bad miners in the
last century and we were awful the century before that. Even
the Romans didn't mine terribly responsibly.
So throughout Europe we've got historical baggage. We've
got some pretty shocking lignite, remains of lignite, mines.
And so, most Europeans certainly grow up with a dislike,
inherent dislike, of the mining industry.
I'm a mining engineer, but neither of my sons went into
mining, both went into accountancy. We have a serious issue
facing the industry because at the school level, it's not
understood.
I think it's probably more serious than even you've painted
it in that it's not just the link between metals and what we
use. That should be doable. I mean, the popular, certainly in
North America and Europe, should understand these things. They
might choose not to notice.
The more serious thing is just not getting mining. They're
quite happy for it not to be in their backyard. They want
someone else to do the hard yards and make the metal. As we've
elucidated here, that isn't a very clever strategy for the
future in terms of security of supply.
But if you can have your products and someone else does the
digging, that looks preferable to most people at the moment.
So, that's not an answer to how to solve it, but it's clearly
got to start at the school level, that responsible mining is a
way forward. It just has to be done environmentally in a
friendly manner which we are now doing.
Chairman. Yes, I appreciate that.
Mr. Barrios?
Mr. Barrios. I would say also in terms of storytelling and
comparing to other countries. If we compare the permitting
process in the U.S. versus Canada, we can clearly see that in
terms of scope and depth, the permitting process in Canada is
very similar to the process in the U.S., the consultation
process, the amount of rigor and discipline that goes into the
process.
I think talking about how the people are doing it and
trying to address the issues that are becoming obstacles, to be
able to be as effective as other countries in allowing mining
projects to progress at an acceptable speed. And I think the
timeline, what I mentioned before, is critical.
If you look at the process in Canada, clearly the timeline
is very different. A number of colleagues mentioned it. I mean,
it's truly about being rigorous and disciplined with the amount
of time that one is assigning for these permitting processes to
take place. And it is important for companies like ourselves
and other mining companies. If there is one thing which we're
looking for is certainty. Clearly, that lack of certainty in
the timeline does impact our ability to be able to put forward
projects in the U.S. and make them as competitive as projects
in other parts of the world.
Chairman. Well, I appreciate that. I have, kind of, thrown
it out to all of you. My time has expired, but if we want to
come back to visit at the end of the hearing, if any of you
have additional comments you want to add to that, I would
welcome that.
Senator Cortez Masto?
Senator Cortez Masto. Thank you, Madam Chair.
Let me follow up on this discussion on permitting because,
as a new member to the Committee and somebody who is from a
state that grew up with mining in our state, this is something
I have constantly heard is the permitting process impeding,
really, the movement forward when it comes to mining. I
constantly hear it, but I don't hear specifics. Now I am sure
our Chairwoman or Ranking Member and many others are focused on
this.
Can you give me an idea, when we are talking about a
permitting process that has taken seven to ten years, what is
it, specifically, that we can do at the federal level to
streamline it or are there duplicative processes that I have
heard from Dr. Hinde as well? What is it, specifically, that we
can focus on to cut that time down to address what I have heard
today from all of you?
Dr. Hinde. I don't pretend to be an expert on USA
permitting but we've, obviously, done quite a lot of surveys
asking other people's opinions, but there were two primary
differences.
In Canada and Australia, for example, and certainly at the
federal level there, they're also not coordinated. It's at the
state level the difference comes in. Broadly speaking at the
state level in Australia and Canada, one agency takes the lead.
They set the goals, they set the timeframes and other agencies
link to them. And in that way, they try and avoid overlapping
requirements. The total requirements are no more rigorous.
They're very similar, but what they do is they set the
benchmark for other people to do and generally speaking, they
hit the time tables.
The second thing that is different is that in both those
countries it is the mining company that does the environmental
impact statement (EIS). They obviously use third parties. They
use consultancies that, I think, can be relied upon, but the
company pays for it and organizes it and does the timeframe. Of
course, it's in their interest to drive it. If it's left as it
is here with an agency to set the environmental impact
statement, there isn't quite the same urgency. Clearly, the
agency needs to monitor and make sure that EIS has been done,
done adequately. More often than not, it's done by an
international consultancy company, whoever it is that's tasked
them with the requirement.
Senator Cortez Masto. Thank you.
Mr. Barrios, I am curious, any specific thoughts on how we
can streamline it or concerns?
Mr. Barrios. I think, similarly, I mean, when we look at it
from a Canadian perspective, that my colleague mentioned as
well, but I would really highlight if one looks at Canada the
standards are very similar.
It's about the timelines. It's about making sure the roles
and responsibilities of each agency and the timeline base
targets are agreed and published at the start of the
application process so we all know what the timelines are and
those are adhered to. And that, really, is one of the key
elements that is making a difference in the permitting process
where we're finding that in two to three years you can obtain
them in Canada. It's been lengthening here in the U.S. from
five to seven, now to seven to ten. And this really is hurting
investment.
Senator Cortez Masto. Thank you.
Dr. Hinde. Can I, sorry?
Senator Cortez Masto. Please.
Dr. Hinde. Can I just add to that?
The one thing I forgot to mention that we did find in our
survey of a year and a half ago, was that here, unlike in
Canada and Australia, sometimes the same requirement can be
repeated over rather than sit down in the beginning and hear
from the various interested parties what is it you need to test
or check and put it together in one document and do it in one
go.
The mining companies here, to a certain extent, are asked
to do one particular environmental impact assessment and then
perhaps six months later someone else chips in and it's oh, I
would like to do something slightly different and they do it
again.
Far better, clearly, to get it all done in one go, even if
it's more rigorous at that point and takes longer. It's
parallel permitting as opposed to in series.
Senator Cortez Masto. Thank you.
I know my time is running short, but Dr. Eggert, I am
curious, your thoughts on this?
As you well know, besides a school like yours, Nevada also
has a College of Mines. I know that approximately 70 percent of
mining engineers will retire within the next decade. And
because fewer and fewer students are enrolling in mining
engineering programs, we will not be able to replace them at an
adequate pace.
What recommendations do you have to increase enrollment of
students in these programs so that we do have a robust
workforce?
Dr. Eggert. I think one of the key actions that would help
improve enrollments in mining engineering, mineral processing
and extractive metallurgy is actual research funding in this
area that will allow faculty members in these departments to
hire graduate students.
Senator Cortez Masto. Thank you.
Dr. Eggert. I mean the single thing that I would suggest.
Senator Cortez Masto. Thank you, I appreciate it.
I know my time is up. Thank you, Madam Chair.
Chairman. Thank you.
Senator Daines?
Senator Daines. Thank you, Madam Chair, for having this
hearing today. This is very important for my home state of
Montana.
I do want to thank the Committee and the witnesses today
for highlighting the importance of critical materials for the
United States and the very high hurdles we have to jump over to
extract them.
What too many people forget, and the Chair mentioned this
in her opening comments, is that if the U.S. wants to continue
to be a leader in high tech, in communications, renewable
energy, we have to be a leader in critical mineral development.
Everything from our cell phones, telephone lines and wind
turbines require these critical minerals.
In my home state of Montana, mining is a backbone, so much
so that it is written into our state motto, ``Oro Y Plata,''
gold and silver. If you look at the Montana State flag, it says
Montana on it and then there's Oro Y Plata. Those are the only
words on it. They are in Spanish. In fact, you will see a
shovel and a pick axe there next to a plow, going back to the
very roots and the foundation of our state of agriculture as
well as mining and natural resources.
The Still Water Mine in Montana is the only, let me say
that again, is the only producer in the United States of
platinum and palladium, the only one.
We are a major copper producing state as well.
At the same time, Montana has received awards for our
first-class reclamation work. Most Montanans are passionate
about fly fishing and hunting and the outdoors and preserving
the incredible, pristine environment that we have in Montana.
And count me in on that.
At the same time, we must continue to responsibly develop
our resources so that moms and dads can still stay there, raise
their children there, and still go to Walmart to buy an elk
tag, so we do not turn into a land only for the rich and famous
because we do not have jobs there that working families need to
have a living wage. These jobs, the mining industries, provide
that. We are only producing in Montana about one percent of our
potential, so there is a lot there.
We can begin to expand our critical mineral production by
streamlining and speeding up the permitting process that was
talked about here in your testimonies. The U.S., as was
mentioned, has one of the longest permitting processes in the
world. I will give you a couple of examples.
In Montana, we have the Rock Creek and the Montanore
projects. They have been in the permitting process, now I heard
seven to ten years, we would be envious of that kind of result.
The Montanore and Rock Creek projects have been more than 30
years in the permitting process, and they are still not up and
running. Do the quick math. Go back 30 years. Ronald Reagan was
President. It seems like irony that we now have statues of
presidents in Statuary Hall that were serving when the
permitting process began some 30 years ago.
Here is the impact for families in Montana. The Forest
Service estimates the Montanore Project would provide full-time
employment for 450 people. The Rock Creek Mine will provide
more than 300 full-time jobs. That is $667 million in direct
payroll over the life of the project, and $175 million in tax
revenue.
I can tell you, I spent a lot of time talking to my county
commissioners back home, and they are struggling to find ways
here to make ends meet from a tax base viewpoint. The indirect
economic benefits are even greater than that.
By the way, these projects are in Lincoln County. It is a
county in my state that has one of the highest unemployment
rates. They can benefit greatly from this. I spoke to a couple
a few years ago from Eureka, Montana, in Lincoln County and
they said, ``Steve, basically what we have in Lincoln County
now is poverty with a view.'' We need to change that.
Mr. Barrios, in your testimony you speak about the length
and the duplicity of the permitting process. Could you expand
your suggestions to simplify the process? I know you had
somewhat a similar question before. Maybe specifically, what
can this Committee do? What would you recommend to us in terms
of action we can take here to try to streamline the process?
Mr. Barrios. I think when you look globally at what are the
overarching themes that a company like ours looks at when it is
thinking about investment, it really is around regulatory
certainty and it's in three areas. The reliable timeline of the
permitting process, the second thing is creating certainty in
access to minerals, and the third thing is finally having
something that is reasonable around financial assurance,
closure.
If we look at the timeline, I think that's where we
emphasize that's one of the critical elements that we need to
ensure that, similar to what we have in Canada, there are set
lengths that are adhered to.
If we look at our Resolution Copper Project in Arizona, we
started the permitting process in 2013. We've spent so far $1.3
billion, and we're far from completing the process there. This
is a mine that will supply, could supply, 25 percent of the
U.S. copper needs, and create 3,700 jobs. It's quite staggering
that now in another country like Canada, we would be having
those permits in our hands and processing--progressing with the
project. We are still, through the process, trying to obtain
those permits.
Senator Daines. Thank you. I am out of time, but it sounds
like our neighbors to the north may have some examples of,
perhaps, processes and some parameters that may be helpful for
us here.
Thank you.
Chairman. Thank you, Senator Daines.
Senator Stabenow.
Senator Stabenow. Thank you, Madam Chair, and thank you to
each of you.
Coming from a state like Michigan, where particularly in
Northern Michigan in what we call the upper peninsula, which
has been mineral rich for a century, when watching things
change there based on mining and having jobs and then not
having jobs, I certainly understand the economic impact of what
is being talked about.
Looking at your testimony I know that you are talking
significantly about permitting issues and regulatory barriers
impacting the industry, but I would like to talk for a moment
about the importance of transportation infrastructure in all of
this.
In Northern Michigan in the upper peninsula in Sault Ste.
Marie we have a lock and dam that is vital to transporting
mining goods, including iron ore, throughout the Great Lakes
region and the country. According to the report by the
Department of Homeland Security, a shutdown of the Sault locks
would likely result in all North American production of mining
equipment and automobiles and farming equipment to stop within
weeks.
We have a very old infrastructure there, only one of the
locks is big enough to handle most of the cargo going through
there. I think we are on borrowed time at the moment with that
lock.
Eleven million people would become unemployed if that lock
shut down, even for a few weeks, and the North American economy
would enter a severe recession.
I wonder if each of you might speak to how important it is
from a mining industry standpoint to have well-functioning
locks and dams, roads and bridges and rail to operate
efficiently and compete in the global marketplace? And what
does our aging infrastructure mean for our ability to move
minerals and materials where they need to go?
I guess I will start at the end, yes.
Dr. Hitzman. Thank you, Senator.
In terms of the USGS, we're not so much looking at the
infrastructure, we're looking at where to get the minerals.
Michigan, most people don't know, was actually the major
supplier of copper to the world for a number of years.
Senator Stabenow. Yes, that is right.
Dr. Hitzman. Clearly in any area of the world or the
country where we're going to do mining, one of the things that
the companies look for is sufficient infrastructure to actually
move materials and then the mine products out. So it's clearly
a critical part of the equation.
Senator Stabenow. Mr. Barrios?
Mr. Barrios. I think, similarly, one has to look project by
project. It's very difficult to give a general answer.
Generally it really depends where the resource is and how far
it is to get it to market. So it is a critical element, and it
makes a big difference in the evaluation of a project. That's
usually, the transportation costs, are a significant cost of
exploration. So it is a very critical, important element. But
it really depends, resource-by-resource.
Senator Stabenow. Dr. Hinde?
Dr. Hinde. Yeah, the important part, I think, of
infrastructure is to recall that infrastructure is absolutely
crucial for bulk commodities, such as in your state, Senator.
Clearly coal, copper and those big, bulk commodities, railway
lines and infrastructure and ports are absolutely required.
But of course, half the mining industry, in terms of
expenditure, is gold and that you can fly out by helicopter.
It's less required for infrastructure, so it rather depends, as
my colleague said, on a project-by-project basis.
The other thing to bear in mind is the USA constantly rates
right at the top in terms of infrastructure on a world
perspective. We all know, in this room, that your
infrastructure is aging and needs work. But on a world
perspective, it is highly regarded. And so, companies come here
because of your infrastructure, notwithstanding your problems.
And so, you know, there are other things that are damaging
the industry here like permitting rather than infrastructure.
Senator Stabenow. Well, it is interesting though being in
China and being in Brazil and other places where they are
putting large amounts of money into infrastructure. At some
point, they are going to be ahead of us because we have not
been doing that.
Dr. Hinde. Indeed, yeah.
Senator Stabenow. Yes, so--yes, Mr. MacGillivray?
Mr. MacGillivray. The only thing I could possibly say is
that in Alaska we are actually looking for the roads in the
first place.
[Laughter.]
Sort of, roads to resources is our common theme that Madam
Chair has been a proponent of. So, from our perspective, you
have a good problem that you are able to readily access your
resource base.
Senator Stabenow. Vice Admiral?
Admiral Cosgriff. If the Chair will indulge me, thank you
for asking a question about ships.
Senator Stabenow. Yes.
Admiral Cosgriff. But if you're going to move something
like an ore or heavy, dense commodity, then you'll want to move
it on water. And if you can't get it out on water that flows,
you'll want it in a pipeline and if it doesn't flow, you'll
want it on a train and so on down the path.
At the far end of this process we've received these
materials largely over road, rail and road, and then when we
finish our jobs as manufacturers, they go out the other side
on, principally, road and rail.
This full scope look at our infrastructure is, in our
opinion, long overdue. It, in and of itself, is an investment
in real estate or in infrastructure, transportation
infrastructure, along with other types, like electrical, which
will pay dividends for this country over the longer run.
Senator Stabenow. Thank you.
Dr. Eggert?
Dr. Eggert. Yes, I agree with what others have said.
Infrastructure, in general, is important for mining and other
forms of economic activity. With respect to mining, it's
especially important, as Dr. Hinde said, for the bulk
commodities.
Senator Stabenow. Thank you, Madam Chair.
Chairman. That is a great question, and it is so key to
everything.
As Mr. MacGillivray says, we have got the resources there
but we do not have any way to get to them or get them out. So
infrastructure is key and certainly something that this
Committee has been focused on of late.
Senator King.
Senator King. Thank you, Madam Chair.
Some specific questions.
First, Mr. MacGillivray, what is the nature of rare earth
mining? In other words, is it tunnels, pits, mountain top
removal? What are we talking about here in terms of how it is
actually, physically, done?
Mr. MacGillivray. So the nature of the deposits do vary.
There are proposed projects in the United States that are open
pit but our project in Southeast Alaska is a vein-hosted
deposit; therefore, it would be accessed by underground
methods.
Senator King. So it varies? It varies according to the
deposit and where it is?
Mr. MacGillivray. Based on the geological occurrence.
Senator King. Are there any special environmental problems
associated with these particular minerals as compared with coal
or oil or gas?
Mr. MacGillivray. No, I don't think there's anything unique
with rare earth deposits. Maybe there is, you know, some slight
enrichment in uranium and thorium that has to be considered and
dealt with appropriately, but by and large they're similar to
other commodities.
Senator King. Mr. Hitzman, do we have rare earths,
significant deposits of rare earths, in the United States if we
could do the development necessary?
Dr. Hitzman. I think you're hearing from one of our panel
members who has one. So that's one, and there are others that
companies are working on in various parts of the United States,
Wyoming and of course, the large deposit in Southern California
that has gone in and out of production. So, the answer is yes,
we do have deposits.
Senator King. Is there more, is there potentially more, if
we had better mapping and geology?
Dr. Hitzman. Absolutely.
Senator King. I know the Chinese, for example, are buying
up mines and resources around the world, not necessarily in
China, but they are buying properties in Africa and South
America. Is that, are our mining companies doing something
similar? Are we looking all over the world for these materials?
Somebody?
Dr. Hitzman. I can answer that from USGS.
Yes, American mining companies are exploring around the
planet. Just like Rio Tinto which is a major, multi-national
company working all over the world. Freeport and other
companies in the United States, Newmont, are also doing the
same.
Senator King. Okay. We have talked about the fact that we
are dependent. I commend the Committee's attention to the chart
the Committee staff included that is really pretty shocking
that shows--we are 100 percent dependent on 21 minerals from
other countries, which is a dangerous place to be, particularly
when they have strategic value.
What is the bottleneck? I know you have talked about
permitting. It sounds like we have a loss of engineers; we have
financing issues, in part relating to permitting; we have
permitting; and, we have fundamental geological research. Is
that a good list of what the obstacles are? Does somebody want
to echo that?
Yes, sir?
Dr. Eggert. Yes, that's a reasonable list. It's, I would
say, not a single factor, but a combination of several factors.
With respect to rare earth resources, in particular, there
are special technical challenges associated with separating the
rare earth elements from one another.
Senator King. Does that have to happen at the mine or can
it be shipped somewhere else with the separating happening
somewhere else?
Dr. Eggert. Typically what happens is that the mineral
resource is concentrated at the mine site and then often,
initial separation. There are 15 or so rare earth elements and
the initial separations involve separating them into,
basically, two or three piles.
Senator King. Okay.
Dr. Eggert. And then there are subsequent separations that
can take place at the mine site or elsewhere.
Senator King. I want to talk a bit about permitting, and I
know I am running out of time.
Quick question. If federal lands are used for one of these
mines, are there royalties paid to the taxpayers for the
extraction? Mr. Hitzman?
Dr. Hitzman. Yes.
Senator King. Okay, so there are royalties that come back
for whatever the value is of the mined minerals.
Obviously, Madam Chair, we have got to talk a lot about
permitting. I would like to know, specifically, where the
bottlenecks are in the permitting. And is it a lack of
deadlines, is it multiple studies, is it multiple agencies?
In Maine we had these issues and we, in part, solved them
by having a lead agency where it was a one stop permitting. The
lead agency would coordinate the studies that were necessary.
I am getting a lot of nods. Is that a----
Dr. Hinde. Yeah, that's exactly the issue and that's what
they essentially do in Canada and Australia, somebody takes the
lead and organizes all the other interested parties.
Senator King. I take it that does not happen here? You have
got to get 27 separate permits.
Dr. Hinde. It would be, appear to be, the exception rather
than the rule.
Senator King. So that is something, Madam Chair, obviously,
we want to look at.
My final question is for you, Madam Chair. Are you going to
reintroduce S. 883, or have you?
Chairman. From this wonderful hearing I plan on
reintroducing it if we need to add anything, but the purpose of
the hearing was designed to help us, kind of, supplement that,
if necessary. So yes, I am intending to reintroduce S. 883 and
would welcome the support from other colleagues.
Senator King. Well I would like to work with you on this
because, based upon my service on the Armed Services and
Intelligence Committees, this is a national security issue and
I think we need to find ways to have a predictable and timely
permitting process that still adequately protects the
environment. So I would like to work with you on that.
Chairman. I appreciate that. Know that I absolutely concur
in terms of the security perspective. It is something that we
need to be working on, so I appreciate that.
Senator Barrasso.
Senator Barrasso. Thank you, Madam Chairman.
Dr. Hitzman, soda ash producers in Wyoming, like so many
others in the minerals industry, face increasing transportation
costs, as well as intense competition from foreign markets. The
cost to ship soda ash from rural Wyoming to ports and domestic
consumers is substantial. So foreign suppliers are able to
subsidize their production and do not face many of the
regulatory overheads that the suppliers in the United States
face.
In your view, what can Congress do to ensure a strong,
domestic market so that American producers are able to remain
competitive?
Dr. Hitzman. Well, it's, sort of, many different things,
not one individual thing. One is ensuring that the
transportation infrastructure exists to help get things to
market. Ensure that various parts of the tax code work to the
benefit. That's something that's coming up. And actually,
ensure that producers have, as other people have said,
certainly with how the laws are applied to the minerals
industry.
Senator Barrasso. Nearly all of you on the panel today have
suggested in one way or another that the United States should
reduce our reliance on imported minerals for either economic or
national security reasons. Senator King just made that
reference.
The other side of the coin is improving the ability to
export raw materials and goods. You know, in Wyoming and in any
other mineral producing state, our resource industries require
access to foreign markets and you need to get through ports. It
is becoming increasingly more difficult for these industries, I
believe, to gain access to these ports.
Mr. MacGillivray, to your point, you discussed ongoing
environmental issues with Chinese production of certain
minerals that the United States also produces. So in your
opinion, what steps can Congress take to improve trade pathways
through coastal ports so that these cleaner, American-made, raw
materials and goods have access to foreign markets?
Mr. MacGillivray. So in my answer I'd like to restrict my
comments to rare earth materials, critical and strategic
materials.
As Dr. Eggert correctly identified, the crux of the issue
with production in the United States is the separation
technology. It's the sole reason that China dominates the
monopoly that they do with rare earth production right now
because they have limited regard for the environment so they
use a technology called, or a technique called, solvent
extraction.
Ucore Rare Metals knew when we were permitting the Bokan-
Dotson Ridge Project that solvent extraction would not be
permittable in Southeast Alaska, an environmentally sensitive
area, so we shopped the world for alternative technologies and
came across a Nobel prize winning technology called molecular
recognition technology. It's a technology that's not only
limited to mining, it's also used in the healthcare industry.
But the basis of it is ligand based, so there are no solvents.
There are no extreme pollutants from this process. It's very
innovative and adapted toward this issue.
So, I guess, a shorter answer here is that, some sort of
support to help develop rare earth separation in the United
States will enable us to have domestic supply and then be able
to export, eventually, materials to other manufacturers
worldwide.
Thank you.
Senator Barrasso. Thank you.
In your written testimony, Dr. Eggert, you identified the
need for the government to establish an efficient framework
that both protects the environment and considers the needs of
the community where the development occurs, and I agree.
Dr. Hinde, in your written testimony you mentioned that new
mines can lose one third of their economic value as a result of
delays in production, more than 30 percent of the value of a
mine could be lost because of permitting delays.
In Wyoming we have one of the biggest reserves of rare
earth minerals in the world, but companies face decades long
permitting delays and tens of millions of dollars in up-front
costs. So, I believe, now is the time that we should create
some certainty in the job market and in national security.
Dr. Hinde, Dr. Eggert, can you just talk a little bit about
how much certainty do you think addressing these unnecessary
permitting delays would bring to the industry, and how do we
eliminate these unnecessary and unreasonable permitting delays,
especially those not caused by the applicants themselves?
Dr. Eggert?
Dr. Eggert. I think Dr. Hinde made a couple of very useful
suggestions, the appointment of a lead agency that establishes
the framework and a timeline for the permitting process.
More generally, I think what companies are looking for is
certainty in a process as opposed to certainty in actual
outcomes. In other words, a process that gives them a fair
hearing, you know, in what various parties, all parties, would
consider to be a reasonable timeframe.
Senator Barrasso. Okay.
Dr. Hinde?
Dr. Hinde. Yeah, essentially, exactly the same. I mean,
almost across mining, it's certainty whether it's in tax or any
sort of legislative and working environment. It is just
certainty. Given that, we can plan accordingly.
Senator Barrasso. Thank you.
Thank you, Madam Chairman.
Chairman. Thank you.
Senator Cantwell.
Senator Cantwell. Thank you, Madam Chair, and thanks for
holding this hearing.
I had a chance to chair a hearing a few years ago on
critical minerals in general, so it is very important for us to
continue our focus in this area.
Dr. Eggert, I wanted to ask you about recycling of critical
mineral materials and what you think the recycling
opportunities are for us, as it relates to supply?
One of the things we have been proud to do in the
northwest, as we shift to composite manufacturing, is to look
at recycling as a way to drive down the cost of composite
materials for smaller businesses. I wondered what you thought
about, as we look at shortage issues, looking at recycling of
product too?
Dr. Eggert. I think recycling has an important role to
play, and its role can be enhanced.
As I indicated in my written and oral testimony, very
little recycling takes place at present of the, so-called,
miner or specialty metals that appear in small quantities and
yet, provide essential functions to modern materials.
A key challenge, part of the challenge, is technological.
Elements like indium in flat panel displays are there in very
small quantities and therefore, the economic case is not going
to be made on the basis simply of indium, but the ability to
recover several materials.
The current technologies really focus on the major, most
valuable, elements in a product and there's technical work to
be done at, what I call, the resource efficiency, optimizing
the recovery of multiple elements from a multi-element product,
like a smartphone or a television set.
And it's really a similar set of issues to recovering
multiple elements from a mineral deposit. Most mineral deposits
contain multiple elements, only a couple of which are actually
recovered for commercial reasons.
Senator Cantwell. How do you think we could proceed in this
area? I know some of our labs are doing work, and do you think
the private sector just continues to----
Dr. Eggert. Well, I think the private sector is doing work
in this area.
A number of national labs are and in fact, I'm involved in
an entity called the Critical Materials Institute which is a
Department of Energy-funded research consortium that has as its
members at universities, companies and national labs. It
carries out early stage research related to, among other
things, recycling of critical materials. Industry partners help
us identify key challenges and important problems. And so, I
think a continuation, perhaps an enhancement, of this type of
public/private partnership that forces companies and national
labs and university researchers to talk to one another, better
than maybe they have in the past.
Senator Cantwell. I personally like those models because
you are then getting the maximum out of everybody at the table.
I am very big, obviously, on collaborative efforts in general.
So anyway, we'll look forward to discussing this with you
further.
Thank you, Madam Chair.
Chairman. Thank you, Senator Cantwell.
Senator Lee.
Senator Lee. Thank you very much, Madam Chair. Thanks to
all of you for being here today.
Mr. Barrios, you mentioned a shocking number, a significant
number, that Rio Tinto has spent--some $1.3 billion on
permitting studies, on permitting, on studies and on shaping
the Resolution Copper Mine. Now, this is great. We love to see
investment in these kinds of things. I am glad that you are
able to put those resources into it and that you have access to
resources that will benefit consumers in America and throughout
the world.
My concern is that our current regulatory regime makes it
very, very difficult for anybody to do anything. It basically
prohibits mining investment from non-Fortune 500 companies.
There are very few companies out there, very few people
anywhere, who can afford this type of investment.
As if the current regulatory burden were not enough in this
area, on January 11th of this year, the Obama Administration
proposed a rule to create additional bonding requirements under
section 108 of CERCLA for hard rock mining. If the proposed
CERCLA rule were finalized, tell me, sir, what effect might
that have on the mining industry and on your ability to extract
critical minerals?
Mr. Barrios. Thank you, Senator Lee, for that question.
The CERCLA 108(b) for us is clearly a disincentive, but
furthermore, I would say in terms of investment, because of the
burden it implies, but the issue which is a concern is the
duplication in terms of financial assurance at the state level
and the federal level. This is really an area where we could
see some simplification and avoid duplicating rules and
regulations that are not adding additional value.
Senator Lee. I think everyone here agrees that mining
companies and industrial producers need to be liable, need to
be responsible for any disasters they create for superfund
sites they create, that, of course, have to be cleaned up. So
that is not in dispute. If a company goes bankrupt or if a
company walks away from a contaminated site, the American
people should not be faced with having to either foot the bill
for the cleanup or, alternatively, face the catastrophic
consequences associated with just leaving it there. What
bonding requirements and regulations, state and federal, are
currently in place to ensure that mining companies leave mining
sites in a stable condition?
Mr. Barrios. The issue that we see, and I mentioned before,
really is around the CERCLA 108(b) rule. It is an example of a
regulation which is duplicative and unnecessary. We already see
the current programs that are in place address the risk of
mining and mining processing sites and prevents these sites
from becoming a superfund liability. So for us, really, this
renders the current rule being proposed unnecessary.
Furthermore, I think we can say with certainty that the
practices that lead to contamination of groundwater, soil and
wetlands in the past, simply are not allowed today under the
many state and federal requirements that we must meet.
Senator Lee. So in your opinion those existing requirements
obviate the need for these new regulations?
Mr. Barrios. Yes.
Senator Lee. Rio Tinto Kennecott has, of course, a long
history in my state, in Utah. You have been operating in the
Salt Lake Valley for over 100 years and plan to continue
operating for a significant amount of time to come, and we are
happy about that. But mining is not always easy. In 2013 the
Kennecott mine suffered the mine slide which was very
significant, and it was difficult.
Can you describe the recovery process and also other
sustainability efforts you have in place?
Mr. Barrios. Yup.
Rio Tinto was aware of the slide potential in February
2013, and we began preparing for a safe and minimal impact
event. We had nine layers of safety in place to monitor the
material movement and safety was the number one priority at the
time and it continues always to be at Rio Tinto.
We were very happy to report that nobody was injured during
the event, and all the personnel were evacuated before the
slide occurred.
We were also very proactive in engaging with the key
external stakeholders prior to the slide, and the community was
very appreciative of knowing the information beforehand. To
this day, they still praise Rio Tinto for the transparency
around this event.
The slide was a slide of 150 million tons which took place
in the night of April 10th, 2013. The slide material would fill
enough rail cars to stretch three-quarters the way around the
world. It was quite a material slide.
The overburden we recovered very fast. The overburden was
mined three days after the slide, and production started
operating 17 days after the event. So very, very fast recovery.
And we did spend about over a billion dollars to remediate the
slide and materials. So quite a big commitment for the mine and
to continue operating the mine for years to come.
Senator Lee. Thank you very much.
I see my time has expired. Thank you, Madam Chair.
Chairman. Thank you, Senator Lee.
Mr. Hitzman, I want to ask you where we are with the USGS
budget and how much of your budget, the agency's budget,
actually goes to the minerals work each year.
I am concerned that as we talk here today and try to shine
a spotlight on things that we are not doing all that we need to
be doing from an agency perspective, from the federal
perspective, in making sure that we have the information, the
data, the analysis, the mapping. Within USGS, how much time and
how much of the budget actually goes to the minerals aspect of
the work that the agency does?
Dr. Hitzman. I actually don't know the exact percentage but
it's not the largest of the mission areas in the Survey. It's
one of the smaller mission areas.
The budget, over time, decreased for a number of years, but
in the last couple of years has had a slight uptake and
stabilized. Of course, now we're under a CR, so we're where we
were last year.
Chairman. But as you have indicated to the Committee here
one-third of the mapping that you believe that we need to have
done as a nation, only one-third has been completed, so we
obviously need to be resourcing this a little bit better. Is
that a correct statement?
Dr. Hitzman. It would be good to do that. Remember that not
all the mapping is done through my part of the Survey.
Chairman. Right.
Dr. Hitzman. As well.
Chairman. Right.
Dr. Hitzman. So it's done through other pieces of the
Survey.
Chairman. Right, okay.
You said in your testimony, in speaking about what was done
with the Alaska mapping, recognizing what it is that we have
allows us to then move out and do more. It allows those that
are looking at it from an investment position to have a greater
degree of certainty going forward. It seems to me that if we do
not have solid mapping, it just further slows our process
there.
Vice Admiral Cosgriff, as you represent those in the
manufacturing industry, are you hearing concerns from your
member organizations about the growing vulnerability that we
have as a nation and that they have as U.S. manufacturers with
the growing realization that we are relying more and more on
imports?
Again, I think it was you, Dr. Eggert, you said it is not
necessarily relying on imports so much as risky imports. But
are you hearing concerns from your members about this issue and
do you see growing pressure to see more action?
Admiral Cosgriff. I don't think they would say it in that,
sort of, global way you did about, sort of, a risk to the
United States manufacturing, per se. It would tend to be more
particular.
I can give you a good example though of how close that they
watch where their supplies are coming from. You recall a few
years ago a large-scale strike on the west coast which created
the opportunity for a major disruption in supply chains coming,
mostly, from the Far East. And so, the response to that was, as
you'd expect, with things moving on ships you now have to find
a different port for the ship to go to. You have to figure out
where your inventory stocks are, for how many days of
production you have left before that ship gets to wherever it's
going to get to. What are your alternative sources of moving
that input from, let's say, Long Beach, California, via rail to
someplace on the east coast and then by truck to your plant?
So, that was a major event, and I think it served as a
wakeup call for a lot of our companies to pay far more
attention, even more attention, than they already are paying to
the supply chain. I think, to some extent, the discussion about
NAFTA is having a similar effect. That's a material effect on a
supply chain, in this case, closer to home, a very mature
supply chain, that again, has their attention and that we have
to get right so that we don't disrupt those supplies.
The bottom line, though, it is a globally sourced supply
chain still with the few exceptions we've talked about today
that do have the attention of our company's rare earths, I put
at the very top of that.
Chairman. Yes, I can remember when the Chinese effectively
cut off all sources to Japan over a dispute with Japan. It
certainly got the attention of those in Japan and, I think,
those of us in this country as well because you realize then
the real stranglehold, the chokehold, that China has when it
comes to the rare earths.
Dr. Eggert, you have spoken a little bit in your testimony
here today, as well as in your written testimony, about
minerals research and we have discussed the mapping aspect of
it. But what research are we seeing being conducted at our
universities, at our national labs, the Critical Materials
Institute, to make the mining, the processing, and the end use
of critical minerals more economically viable? Are we seeing
the level of research that you believe is necessary?
Dr. Eggert. I'm not sure I can speak to the level of
research. I guess my bias would be, as researchers, we would
like a higher level of funding.
But I can describe what's happening using the Critical
Materials Institute, this Department of Energy-funded research
consortium that I mentioned earlier.
If you think about supply chain risks or long-term resource
availability, there are really three solutions, and technology
plays an important role in all three.
There's first of all, technology that enhances and
diversifies production, technology that enhances or reduces
waste, and technology that helps us use less. And so, it's
process engineering in the first two cases and it is material
science in engineering in the third case.
The Critical Materials Institute is carrying out research
in all three areas. As I indicated in my written testimony, I
think of the many research challenges, the two grand
challenges, or at least two of the grand challenges, are
chemical separations, which are important both for mineral
resource development and production, and the recycling of
manufacturing wastes and end of life products.
And so, these two types of research are really quite
complementary in terms of both the chemical separations and the
other one that I mentioned, resource efficiency. It's really
the same types of research and process engineering.
And the Critical Materials Institute is making progress on
more efficient methods for separating rare earth elements from
one another, from recovering lithium from domestic brines, to
recycling rare earth magnets from hard disk drives, for
example.
Chairman. I want to have Mr. MacGillivray speak
specifically to the process there at Ucore, but first, Mr.
Barrios, I understand that you are working on a project with
DOE's Critical Materials Institute to improve recovery rates
for minerals. What can you describe about this partnership that
you are working on with the Critical Materials Institute?
Mr. Barrios. In our copper deposit in Utah, copper is a
gateway material. In addition to copper, we produce olibanum,
gold, and silver. But we also extract other metals like
rhenium, which is quite critical to the U.S. national defense,
and it's one of the critical materials.
And what we've been doing in this work with the Department
of Energy and the Critical Materials Institute is to continue
exploring how we can extract more rhenium, but also look at
other potential metals that we could extract together with
copper. One of them is tellurium, which is used to increase
efficiency in solar, converting solar into electricity and it
increases the efficiency by about ten percent, exacting a key
contributor to the challenges of climate change. So we are
working very actively now to try and understand what other
minerals we can actually produce at our Kennecott Copper Mine.
Chairman. Good, good.
Mr. MacGillivray, I want to have you go into a little more
detail for the Committee about this MRT technology, the
Molecular Recognition Technology, because as you have
described, this technology, I do not know whether we describe
breakthrough as the appropriate term, but if it is a reality
that the permitting for this chemical extraction process is not
going to be allowed in this country, then much of what we are
talking about becomes moot and we just say we will rely on it
for others.
But I have had the benefit of a brief from Ucore on the
specific technology. If you can, in layman's terms for the
Committee's benefit, please explain what MRT actually does, how
it is different from the chemical extraction process, and
really why it works environmentally.
Mr. MacGillivray. Thank you for the question.
So I mentioned earlier that Ucore recognized that solvent
extraction would not be permittable in the United States, let
alone Southeast Alaska, which is very environmentally
sensitive. And when we shopped worldwide, we landed in Utah.
There's a company there by the name of IBC Advanced
Technologies, and they have been in the metals separation
business for over 20 years. They use a ligand technology. This
is a highly selective, kinetically rapid, selective method of
absorbing individual elements onto their ligand. They had not
developed ligands for rare earth elements. They were working
with other metals commercially. So Ucore invested money with
them to specifically develop a ligand specific to rare earth
elements. They conducted bench scale testing using the Bokan-
Dotson Ridge ore and individually separated all 15 of the
lanthanides that we had for that project. Since that time,
we've invested into a pilot plant and up scaled that technology
into, you know, a pilot plant scale.
The next step that we would like to pursue is the
commercialization of this technology. We're very confident that
it will work and be able to supply rare, individual rare earth
elements for the United States, whether those sources come from
recycling or heavy minerals sand by-product or ore itself from
the Dotson Ridge project.
But I think initially we're going to concentrate on by-
products where we can find concentrates of rare earths, like
Dr. Eggert mentioned, and then using that clean, green
technology, be able to permit a facility in the United States.
Chairman. If you have gotten to the point where you believe
the pilot project is successful, why do you feel that you need
federal resources to assist with commercialization?
Mr. MacGillivray. Well naturally, we would probably start
out fairly small, and we are competing in a monopoly situation
with the Chinese. So the private sector markets are somewhat
supportive but it's really taking that first leap, that little
shot, as to what kind of advantage can we provide to get that
first step. And we believe that domestic supply of individual
rare earth elements in the United States is the necessary first
step.
Chairman. Has there been any interest expressed by the
Department of Defense?
We have talked a lot about security here, security of
supply and all that entails and specific as to China and
China's role when we are talking more about rare earths. Have
you had any expressed interest from DOD?
Mr. MacGillivray. Certainly some of our experienced
consultants here in Washington, have a history with the
Department of Defense, so we're very strong in those
communications in that area.
Again, the crux of the entire situation is the viability of
the technology to actually separate out these. So we need to
have, sort of, a commercial scale plant to initiate that supply
to build that confidence and then the things start rolling.
Chairman. And then to go to a question that was raised by
Senator King and the requirements for being able to do the
separation at the site.
You mentioned the location of the project that Ucore is
looking at--Bokan--is in Southeastern Alaska.
Mr. MacGillivray. Yes.
Chairman. My hometown, where I was born and raised in that
same region, is environmentally sensitive.
If you were to go to commercialization, what assurance can
you give me to provide to Alaskans that there is a level of
environmental safety and attention to the nature of the
environment there and that it would not be at risk?
Mr. MacGillivray. Certainly.
I believe that Alaskans have great confidence in the
scrutiny that the state provides during the permitting process.
State engineers would certainly take a look at our technology,
understand the water balance that goes on within the processing
and the chemical characterization each step of the way.
The Bokan-Dotson Ridge Project is actually fairly
innovative in itself in that should we be able to get that mine
up and running, that due to x-ray ore sorting and MRT
technology, we'll be backfilling 100 percent of the milled
tailings back underground. So the project description for that
project, the mine project, is very, you know, it's something to
be proud of.
With respect, now we look more toward, well, the first
step, because we like to phase our approach to entering into
the rare-earth space. The first step would be building the
separation plant in isolation. So probably not on the project
site, but in a good location with infrastructure.
All I can say is that the permitting regime is strict and
the reviews will be thorough, and I believe that once
understood this ligand-based technology is exemplary.
Chairman. It always gets your attention when a process that
involves issues related to toxins, to toxic waste here, can be
referred to as a ``green'' technology. So there is a lot of
interest in what you are pursuing.
Mr. MacGillivray. Right.
Chairman. I look forward to talking with you more about it.
Let me turn to Senator Cortez Masto.
Senator Cortez Masto. Thank you, Madam Chair, and I
apologize for having to leave. I have a competing Banking
Committee meeting going on, but I am very interested in the
discussion today.
Dr. Eggert, you may have talked a little bit about this
while I was gone, and this is the issue of lithium mining.
In Nevada, we have lithium mining and it is important to
both a booming technology industry--we have Tesla there as well
as our geothermal companies that procure an abundant amount of
geothermal resources in my state.
I am curious. Are there technologies that help both these
industries utilize that lithium so that it is compatible and
they are not necessarily competing against one another?
Dr. Eggert. Well, within the research consortium that I'm
involved in, the Critical Materials Institute, we are working
on processes to recover lithium from geothermal brines in the
salt and sea area and then process it into a form and a purity
that allows it to be used in lithium ion batteries. We have had
some technological success and the work that we are now working
on with an industry partner is scaling that, proving that, at
larger than in a test tube or a bench top scale but also at a
larger scale as well.
Senator Cortez Masto. Thank you. I appreciate that.
Thank you, Madam Chair, I appreciate the opportunity to
have a second round of questions.
Chairman. Thank you.
Gentlemen, this has been, I think, very instructive, good
information. We have had a couple different hearings in the
Energy Committee over the past several weeks focused on
infrastructure, and those hearings will continue. Senator
Stabenow raised the question of infrastructure in view of what
we are talking about with gaining access to critical minerals
and our resources. In every infrastructure hearing that we are
talking about, it comes down to permitting and a level of
certainty. It is clear to me that we have much work that can be
done in those spaces.
I think we heard today that there are opportunities to do a
little bit better, whether it is designation of a lead agency
or firm deadlines, but all that we can be doing from the
perspective of providing some level of certainty to those who
are looking to take the risk.
We have not talked about the risk that is inherent in the
commodities market, that prices go up and prices go down. I can
recall several decades ago being at the ribbon cutting at a
Molybdenum--it is so hard to say, that is why we say Moly--at a
Moly mine outside of Ketchikan. I was there for the ribbon
cutting, and that was it. That was all she wrote. The price of
Moly went down, and I do not believe there was ever any
resource that was extracted from that mining venture.
That is a risk that is inherent within the industry. I
think, Senator Cortez Masto, coming from a mining state, that
there are years when the state's economy is good and strong and
robust and others when it is not so much. So much of it is
pricing beyond our control.
But those things that we can control, it seems to me, we
should make a better effort to, again, provide for some level
of certainty and a process that is fair and reliable.
I appreciate, Mr. MacGillivray, you saying that the
permitting in these areas needs to be rigorous. We want to
ensure that we are meeting good, strong, environmental
standards so that the land that we are charged with taking care
of is respected.
But there is a balance here that at some point you say,
when you have overlaying bureaucracies, when you have
overlaying or perhaps inconsistent regulation that causes
confusion, that that adds to costs because you have duplication
of effort. There is a rationale for streamlining, but
streamlining does not necessarily mean environmental shortcuts.
How we lay that all down, how we make it work so that
industry can operate is what, I think, we need to be doing. We
do not want to be the country with a bad environmental track
record. We will not accept that. But we also want to be the
country that has greater predictability so that investors can
look at the United States with, perhaps, a little more
enthusiasm than we might have seen.
So we have opportunities with the resources. We thank the
people at USGS for the good work that they do.
I would certainly encourage us, and I will be looking to
the budget as the Chairman of the Interior Subcommittee that
has the oversight of the USGS budget, I would like to see us
making sure that the efforts to do better by our resources and
understanding our resources are maintained.
But those of you that are in the industry, those of you
that are helping to educate those who become part of the
industry, know that we appreciate the contributions that you
bring to the table.
For those who have joined us from outside the United
States, again, we welcome your contributions and all that you
have provided here today.
With that, we stand adjourned and thank you very much.
[Whereupon, at 11:50 a.m. the hearing was adjourned.]
APPENDIX MATERIAL SUBMITTED
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