US Dangerously Dependent on Foreign Sources of Rare Earth Supply, House Testimony Shows

Last week in the rare earth metals sphere, Daniel McGroarty (who recently spoke at MetalMiner’s International Trade Policy Breaking Point Conference as the President of the American Resource Policy Network) provided testimony to the House Committee on Natural Resources, making the case that current US policy around many rare earth metals, and perhaps many common industrial metals, particularly copper, could lead to severe dependency on foreign sources of supply. McGroarty’s testimony urges Congress to pass Rep. Mike Coffman’s RESTART Act, which would expedite the US mining permit process, currently ranked “dead last”among 25 mining nations in the length of its permitting process, while doing so in an “environmentally friendly manner.

Although by now everyone knows the dependency US companies have on global supply of rare earth minerals, as well as a severe dependency on China-based rare earth metals, McGroarty juxtaposes the rare earth supply situation with that of copper. He quotes MIT’s Dr. Elisa Alonso: “¦the risk of copper disruption is significantly greater than for other major metals (e.g. iron and aluminum) and is at or near to a historical high. What kind of copper disruption could occur? According to the testimony, in 1993, “US mines produced 1.8 m metric tons of copper, placing the US total copper import dependency to 7%, vs. 30% today. Moreover, he goes on to say, copper reserves have more than doubled since 1993. And though copper comes from US-friendly political regimes (e.g. Chile, Peru and Mexico), copper also comes from DRC, Angola, Russia and China, potentially less palatable origins.

The same case can be made for rhenium. At 52 tons of annual production globally, the fact that it gets processed only as a by-product of copper and molybdenum forces the US to rely on countries such as Chile and Kazakhstan for 86 percent of its demand. (Rhenium is used to process lead-free gas, and used in jet engines, small rocket thrusters, and many other high tech applications.) More domestic mining of copper and moly, the argument goes, the less dependence upon foreign sources.

How does the US wean itself from these dependencies? Currently three solutions have received recent attention. The first involves “reviving the National Defense Stockpile, and for which MetalMiner has provided some commentary previously. The second involves additional loan guarantees similar to what DOE Secretary Chu has administered as part of the government’s stimulus packages. A third solution involves the expediting of the mining permitting process.

Environmentalists often claim that any examination of permitting processes potentially introduces the risk of watering down environmental requirements. But we’d argue that the US maintains a higher relative environmentally sustainable approach to mining vs. most other countries. NIMBY (Not In My BackYard) politics should not serve as justification for creating so many supply dependencies.

The rare earth dependency story certainly garners all of the headlines. Oil, after all, “only (ed note: sarcasm intended) represents a 57-percent import dependency (and makes up 65% of our trade deficit). If we don’t begin thinking about how our pseudo-green/tree-hugging/climate change/environmentally-friendly NIMBY policies force mining and production to countries with far poorer environmental records, have we really done any good? I doubt it.

–Lisa Reisman

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