Rare Earths MMI: DoD and GAO Squabble Over RE Supply

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Remember back in 2010 and 2011 when the federal government lamented that China controls nearly 100% of rare earths production in the world and said the US needs to develop its own rare earths production?

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Back then it was now-bankrupt Molycorp, Inc., that the feds were trying to prop up.


Well, dust off your Ke$ha “Tik Tok” single because 2010 is back in the Rare Earths MMI! Just last month the Government Accountability Office scolded the Pentagon in a wide-ranging report to Congress that both faulted the Defense Department for not coming up with a better approach to RE supply chains and lamented that we’re still dependent on China and others for the critical minerals used in defense applications.

Take That, DoD!

The GAO even dispensed with bureaucrat-ese and got all snippy with DoD, saying the Pentagon had been “generally directed by law since at least 2011 to take actions concerning supply chain vulnerabilities for materials, such as rare earths” and faulting it for, well, not doing anything.

Returning fire, a Pentagon spokesman told Breaking Defense “DoD disagrees with the GAO characterization that DoD has no department-wide approach for critical materials, but in the spirit of continuous improvement, the Department agrees with the recommendations in the GAO report.”

The GAO even said that it had to take it upon itself to define what “critical minerals” are since DoD hadn’t yet done so.

It’s hard to fault DoD, though, for dragging its feet on Rare Earths as the market remains oversupplied and even the most in-demand elements are cruising along with low prices. The Rare Earths MMI fell from a 17 in February to a 16 this month, par for the course for its low price range since 2011.

Why a New Sourcing Strategy?

It’s hard to see GAO’s complaints as anything more than bureaucratic infighting unless, of course, supply becomes seriously disrupted and identified critical elements such as scandium are no longer available for bombers, radar shielding and other military uses.

The candidates who would reap a windfall from new Pentagon supply chains include Texas Rare Earths and other domestic companies that have both supply and a process to extract the tricky minerals. There’d also likely be government funding available for further research into extracting REs from existing coal mines used for energy production. Penn State researchers have said they’ve perfected a process to get dysprosium and other elements out of coal.

Free Download: Compare Prices With The February 2016 MMI Report

But, with REs still in abundant supply out of China and prices low, don’t expect any of these initiatives to take off and ramp up demand with them. REs, it seems, are still waiting for that perfect crisis moment to spur necessity and, eventually, invention and innovation. Right now prices are just too comfortable to get DoD, or other users, to make a new sourcing strategy a priority.

Actual Rare Earths Prices

Chinese yttrium fell to $35.86 a kilogram from $36.30 per kg in February a fall of 1.2%. Chinese europium oxide fell to $83.93 per kg from $90.75 a kg last month, a drop of 7.5%. Chinese neodymium increased to $48,830.58 a metric ton from $48,401.98 per mt in February, a .9% price increase.

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