U.S. Spends $120M USD to Set up Rare Earth Research Center to Counter China

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

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

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

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

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

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

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

II. Attacking the Problem From All Angles

Among the research projects will be:

    Improve rare earth recycling/reuse
    Improve extraction processes
    Develop rapid deployment mining techniques
    Develop rare earth material substitutes
    Study and optimize supply chains to minimize waste

Top targets for domestic rare earth production include neodymium -- used in neodymium iron boron (NeFeB) hard drive magnets and cell phone components -- and samarium -- used in samarium cobalt (SmCo) drive magnets.  Currently the U.S. has no domestic neodymium producers and only one domestic samarium producer.

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

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

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