The Rare Earth Debate Continues in Congress

By Michael Montgomery—Exclusive to Rare Earth Investing News

In January, the USGS reported that in 2010, the US is 100 percent reliant on foreign sources for 18 metals, and more than 50 percent reliant for 43 other metals. Testifying at a House Subcommittee hearing Hal Quinn, CEO of the National Mining Association stated, “America’s drift away from greater self-sufficiency for the basic building blocks of our economy compromises our economic and national security.” The lack of a secure supply chain for metals vital to economic and national security has worried many on Capitol Hill into action.

Recognizing this problem, multiple US representatives have put fourth legislation in the US congress aimed at the creation of a domestic critical metals supply chain. The various bills, ‘H.R. 2011’ sponsored by Doug Lamborn (R-CO), ‘S.1113’ sponsored by Lisa Murkowski (R-AK), and ‘S.383‘ sponsored by Mark Udall (D-CO), aim to fill the supply shortage of rare earth elements and other metals deemed critical to maintaining economic and national security.

Policy Directives

The policy directives of the bills call upon the government to assess critical metal resources in the United States, while forecasting supply chain trends. Senator Murkowski’s bill, ‘S.1113: Critical Mineral Policy Act of 2011,’ requires that the government “identifies and quantifies known critical mineral resources, using all available public and private information… provides a quantitative and qualitative assessment of undiscovered critical mineral resources throughout the United States.”

The main obstacle to mining firms in the US is a long and complex permitting process that often takes ten years to accomplish. The ability of the mining companies to react to shifts in the commodity cycle and demands from new technology is hampered by the permitting process.

Murkowski’s bill addresses the need to change permitting regulations, “to encourage Federal agencies to facilitate the availability, development, and environmentally responsible production of domestic resources to meet national critical minerals needs; to minimize duplication, needless paperwork, and delays in the administration of applicable laws (including regulations) and the issuance of permits.”

The permitting process often puts US mining projects at a serious disadvantage. “If commodity cycles are historically 20 years in duration, the 10 years it takes to obtain permits leaves U.S. mining still in the starting blocks with the race half way over,” stated Hal Quinn, CEO of the National Mining Association.

The permitting process is underscored by the inability of firms to gain access to federally protected lands. Representative Lamborn’s ‘H.R. 2011’ requires the Secretary of the Interior to assess lands open to development and the supply and demand of the nation’s critical metal needs.

“We don’t know which federal lands are open for mineral development. We also lack a decent assessment of the permitting timelines for projects on federal lands,” stated Lamborn, Chairman of the House Subcommittee on Energy and Mineral Resources.

Rare Earth Metals Recycling

The other main policy objective of the legislations deals with the recycling of critical metals, including rare earth elements. This follows a trend towards finding economically viable methods to recycle rare earth worldwide. Until the recent price eruption, the high cost of recycling the metals was a prohibitive factor.

Testifying before congress, Mark Caffferty, Executive VP of Umicore USA Inc. stated the importance of recycling rare earth metals and how the bills “call upon the Department of Energy to launch programs in the recycling of critical materials… The focus on research and development […] will be especially important in the subset of critical materials known as the “rare earths.”

There is a potential for recycling to fill part of the supply gap of rare earths. Many companies are working to develop the technology to achieve economically viable recycling methods. Umicore recently announced their partnership with Rhodia, a French rare earth processor. The companies have developed a way to separate rare earth from common batteries as well as those used on the Toyota Prius. “This is the first industrial process that closes the loop of the rare earths contained in NiMH batteries,” stated Sybolt Brouwer, General Manager Battery Recycling and Recycling Development for Umicore.

The bills that are in front of congress are still in the beginning of the legislative process. They do, however, represent a first step for the creation of a domestic rare earth and critical metal supply chain. If passed, the bills will provide federal assistance through regulation changes and loan guarantees that will give US rare earth companies a leg up on the competition.