Ann: Nolans Rare Earth Project Update , page-120

http://www.raremetalblog.com/2012/08/dependency-on-foreign-rare-earths-leaves-us-military-defenseless-.htm


Dependency on Foreign Rare Earths Leaves US Military Defenceless:

The trade in rare earths has been one of the most contentious international issues of 2012, drawing the United States, European Union and Japan in a silent but intense confrontation with China. The World Trade Organization (WTO) has been asked to intervene and address the problem under the guise of international commerce regulations; however, the issue is loaded with geopolitical, security and economic implications. The Chinese government has deemed the issue important enough to have published a white paper outlining its policies governing the rare earth industry. Rare earths comprise 17 elements, which have become essential for the advancement of technology especially in such sectors as ‘green technology’ and defense.
Rare earths, or rare metals, are not actually all that rare; they are, however, difficult to extract because of the chemical processes needed to separate the individual metals from the ores and because of the environmental implications of these processes. The current trade dispute between the geopolitical West (including Japan) and China is not due to the natural geophysical distribution of rare earths (REE). China does not have a geological monopoly - though it does have anywhere from a quarter to a half of all known deposits (the rest being distributed primarily in North America, Australia and Africa) – over REE’s but it has been allowed to develop a production monopoly. As in many other economic sectors, China’s dominance in REE production and export has been facilitated by comparably shoddy environmental mining standards, which have allowed it to dominate in the upstream REE market. This extractive capacity has been gradually translating to a budding downstream REE domination as more industries relying on these elements move to China in order to reduce costs and ensure reliable supplies.
This leaves industry in the United States, the EU and Japan exposed; indeed, Japan, whose car companies have invested many resources in the development of hybrid and electric vehicles, is especially concerned; the EU is not far behind. Yet is the United States that ends up being excessively exposed to REE supply risk. Rare Earth mining is complex and the development of new resources to offset Chinese trade restrictions is timely and inadequate in addressing the need for fresh production sources in the short term. Far stricter environmental regulations in many OECD countries, de-facto and de-jure, require considerable care to launch or revive REE mining operations.
China’s recent REE white paper, for that matter, mandates the need for a revised environmental framework in REE mining, adding to its already announced production and export limits. This has created a situation that it would be exaggerated to describe as an REE embargo. As an illustration of the kind of economic imbalance this situation has generated, it is instructive to imagine what disastrous consequences there would have been for Western economies if Saudi Arabia had been a technological and manufacturing giant at the time of the 1973 oil embargo; it would have controlled the energy supply as well as world technological development. Consider also that for as much as the United States imports Saudi crude oil, Saudi Arabia has always relied on American military might, affording the US diplomatic leverage in the oil rich Gulf region.
China, however, is militarily independent and engaging in a foreign policy that more often than not conflicts with US and western interests, even as it holds the largest US Dollar reserves, which gives it additional economic and financial influence. While short of a pure energy source in the way that crude oil is, rare earths are an important component of both energy generation and economic progress. Their importance, and the importance of ensuring a reliable domestic supply, cannot be underestimated. If the ‘green technology’ and economic stranglehold that China’s REE dominance affords it angle fails to excite the authorities, perhaps the defense and security implications will. The current situation is geo-politically and economically unsustainable. From the defense technology standpoint alone, REE have been essential to the advancement of aerospace technology, which happens to absorb the vast majority of the US defense budget. REE are used in stealth radar evading technology, in targeting mechanisms and temperature resistant magnets and materials used in jet engines and aerofoil components in manned aircraft and increasingly in unmanned drone aircraft, which are playing an ever more important role in special operations.
Missiles use samarium-cobalt (Sm-Co) magnets as do the ion plasma propulsion engines of future spacecraft. Neodymium-iron-boron magnets are able to withstand extremely high temperatures and are used in special munitions. Cerium and other REE are used to produce phosphors in lighting, radars and night vision equipment; even the ’humble’ smart-phone can become an invaluable piece of defense equipment, facilitating communication. While not a rare metal in the chemical sense, rhenium is a highly temperature resistant element that is needed to produce the Joint Strike Fighter (JSF) aircraft to be supplied to the US and many of its NATO partners. China produces rhenium as do Kazakhstan and Chile but it would be better if the US did not have to depend on outsiders for securing strategically important resources. For that matter, China has already unveiled its very own stealth fighter, the Chengdu J-20; a 70 ft long SR 71 Blackbird lookalike prototype that has already begun its test program to prepare for mass production. The Pentagon dismissed concerns from NATO partners (one can only imagine the number of countries that will be able to buy this aircraft at half the price of a US equivalent) even as some high ranking officers conceded that Washington has been caught off-guard by the speed and extent of China’s military technological capability.
China, of course, does not have to worry too much about sourcing for rare earths. The Pentagon has rightly expressed concern that the US defense industry is vulnerable to the current logic of Chinese dominance in the REE market. The fact that many current civilian technologies share components and engineering with civilian ones also creates logistical issues that are hard to manage. Sub-contractors supply many essential components that are dual use, making it more difficult to manage the sourcing process. Ultimately, the biggest vulnerability for the defense sector is that if the raw material suppliers are not selling the REE’s, it is not just a matter of looking up the next supplier in the roster; the REE industry has become extremely lopsided in China’s favor and the time and investment needed to get a dependable domestic REE supply is considerable. The government should identify the strategic REE minerals that are needed and set out to facilitate the re-emergence of a domestic REE industry; it is not enough to follow the logic that China is producing these elements and that it can deal with the environmental consequences has reached the end of the line.
A new approach is needed. Short of devolving tax dollars to developing alternative materials to REE, diversifying supplies while easing the mining regulatory framework to facilitate more domestic REE production is essential. Finally, the history of the development of the jet engine offers some valuable insights as to the importance of developing a domestic strategic mineral resource industry. The modern jet engine began development in the late 1930’s after some experiments with gas and piston powered turbine motors that began as early as 1910. Germany’s Junkers aircraft introduced the axial-flow compressor, jet engine, the Jumo, in a working prototype aircraft by 1939, before Great Britain’s entry into WWII. The engine was compact and aerodynamic, and while not as powerful as later jets, it was much more powerful than the piston engines propelling Spitfires and Messerschmitt 109’s. The engine entered mass production in 1944 and was used in the world’s first jet fighter and jet bomber aircraft, the Me. 262 and Arado Ar. 234 respectively. The five years’ delay between the first Jumo prototype and the launch of the Me 262 were due to development problems and lack of crucial metals needed to produce these new revolutionary engines. Had the Me. 262, far more advanced than anything available to the Allies, entered service sooner, it could have given the Third Reich an advantage in aerial combat that could have turned the war around, prolonging it, or even winning it.
Great Britain had also been developing jet engines; however, the first British prototype made its debut in 1943. It was more complex and ultimately saw its development delayed until after the War. Moreover, Britain had far easier and more reliable access to such rare metals as titanium, tungsten and chromium (among others) that were essential to produce high-stress components from special bearings to turbine and compressor blades. The greater availability of these metals also ensured that British jet engine prototypes set the world standard after the War. Today, aerospace manufacturers are experimenting with hypersonic aircraft, which need materials able to withstand extreme temperatures and stress such as ceramic composites and borides and zirconium for the leading edges of wings. Rare earths today represent what titanium and tungsten were in the 1930’s and 40’s, decades of war and decades of very rapid technological advancement. It is essential that reliable supplies of these materials be available.