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8/27/2010
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The Rare Earth Element Crisis

A Congressional Research Service report considers whether U.S. dependency on foreign sources of rare earth elements threatens the defense and technology industries.

There are 17 rare earth elements (REEs). They have names like lanthanum, europium and yttrium. And they're critical to a variety of high-tech products and manufacturing processes, including catalytic converters, petroleum refining, color TV and flat panel displays, permanent magnets, batteries for hybrid and electric vehicles, medical devices, and various defense systems like missiles, jet engines, and satellite components.

About 124,000 metric tons of REEs were produced in 2009, with worldwide demand during this period estimated to be 134,000 metric tons -- the difference have been made up from existing stockpiles. By 2012, worldwide demand is expected to reach 180,000 metric tons while mining operations are not expected to keep up with demand in the near term.

This situation is explored in a report published by the Congressional Research Service in late July and recently posted to the Federation of American Scientists' Secrecy News Web site.

Congressional representatives have taken notice of what some, like Rep. Mike Coffman (R-CO), are calling a crisis. In May,Coffman introduced a rare earth amendment to the National Defense Authorization Act for Fiscal Year 2011.

"The Department of Defense is facing a near-term shortage of key 'rare earth' materials necessary to support our defense weapon systems, and rare earth magnets are especially critical. ...," he said in a statement. "Today, the United States does not have a manufacturer of neodymium iron boron rare earth magnets, yet they are found in our precision guided munitions, ships, aircraft, and other critical weapons systems.”

Critical to the discussion is the fact that 97% of rare earth element production is currently controlled by China, where internal demand is rising and interest in exporting these materials is becoming more complicated as China's leaders look to take advantage of their country's market dominance.

The CRS report lists a variety of policy options: funding the U.S. Geological Survey to locate more viable REE deposits; supporting greater REE exploration in the U.S., Australia, Africa, and Canada; challenging Chinese export restrictions through the WTO; and establishing a stockpile of REE to mitigate potential supply interruptions.

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