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China Rules Rare Earths

Here’s one renewable energy story involving a global trading partner in which there is no dispute: the renewable energy sector is almost entirely dependent on China for critical materials.

Maybe one of the more underreported stories is the virtual stranglehold the Chinese have on strategic metals extraction worldwide, necessary in the production of wind turbines, solar panels and batteries for electric vehicles.

And it’s not just renewable energy that’s involved, but your held-held devices, laptops and PCs.

The U.S. Department of Energy (DOE) Critical Materials Strategy Report was recently released, the second time in a bit over a year in which the issue was addressed.

I spoke with Daniel McGroarty, president at U.S. Rare Earths, one of four rare earth companies referenced in the report, which has claims throughout the Mountain West. McGroarty, who served at senior levels in the U.S. Government, as Special Assistant to the President in the White House and as presidential appointee to two Secretaries of Defense.

“The question is what are the private sector and public policy together going to do about this,” he said.

Currently, China is producing up to 97 percent of the worldwide supply.

One intent of the study is to determine where the global supplies are. Another is to study which public policies are needed to empower the private sector to bring these resources to market.

“In the U.S. you need to look at the public policy dimension on how to bring these mines into production responsibly in some decent time frame,” McGroarty said.

Although there is a wide range of permitting considerations to consider, and not just for rare earths, but final reviews can take from seven to 10 years before resources are extracted.
There are practical reasons for determining not only the inventory of metals, but their particular uses. “As we start to focus specifically on others are used for which green energy sources, that will be helpful for the market and for policymakers knowing both of those categories to say which particular mine should be running in a timely fashion,” McGroarty said.

The special magnetic properties create efficiencies that drastically reduce the weight of electronic devices that are ubiquitous in modern life. Think of how your first hand-held phone looked like a shoebox and what you use today.

That demand is only expected to increase substantially. Currently, 110,000 to 120,000 metric tons are extracted yearly. Even at a modest growth rate of 7percent per year, that puts the annual figures at about 170,000 metric tons in five years. Others have projected annual demand at 240,000 metric tons by 2016.

The DOE report indicates that five rare earths -- neodymium, dysprosium, europium, terbium and yttrium -- are under critical supply constraints in both the near-term (now until 2015) and medium-term (2015 to 2025).  The report underscores the risks of continued U.S. dependency on foreign sources of metals and minerals and the adverse impact on green energy development.

The 2011 DOE study follows the Department's 2010 report.

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