National Security, Rare Earth Elements & The Thorium Problem
"The only operating rare earth mine in the United States sends all of their valuable resources to China for processing. Congress does not know this. They think this [mining] company is supplying the U.S. value chain, [and] is supplying the military. It is in-fact, the opposite. They are part of the Chinese monopoly. They're shipping rare earth concentrates and oxides to China, and it comes back as a magnet, or an alloy, or a bolt-on component." - Jim Kennedy
Why can't Molycorp, Lynas or any other 'western' rare earth company succeed?
China's production and market advantage in Rare Earth Elements (REE) is largely the result of NRC and IAEA "Source Material" regulations with unintended consequences.
Source Material: Materials containing any ratio or combination of Thorium and Uranium above .05%. Producing or holding these materials within the regulatory threshold (.05%) requires extensive and wide-ranging licensing, storage, transportation, remediation disposal and compliance costs, including prohibitive liability and bonding issues. Consequently any potential supplier of byproduct / co-product rare earth resources that would be designated as "source material' disposes of these valuable resources to avoid liability and compliance issues.
NRC / IAEA regulations regarding "Source Material" played a key roll in undermining the economic viability of all 'western' rare earth producers and are a critical factor in China's current 'market advantage'. Producers like Molycorp and Lynas, with low Thorium deposits, can never compete with China.
Resources are abundant and available: U.S mining companies currently mine as much as 50% of global Rare Earth Elements demand every year. But these resources are diverted in tailings lakes or are redistributed back into the host ore body, due to NRC and IAEA regulations defining Monazite and other Thorium bearing rare earth resources as "Source Material".
From the video about a previous bill that didn't pass:
We had a bill written, and then worked very diligently with House and Senate members to get the bill introduced in the NDAA, the National Defense Authorization Act. A bicameral, bipartisan congressional briefing heavily weighted with MLAs, which are military legislative assistants.
The folks on the Armed Services Committee take their job very seriously. We had a fantastic congressional briefing. We felt like we'd hit a home run. We felt like we would get unanimous support for inclusion. If we had succeeded, the rare earth bill would become law. We would've been able to solve the rare earth problem.
What happened, unfortunately, is that two or three days after the briefing, we were notified by the senator who sponsored the bill, we were notified by his office, that the Department of Defense, not a Senator, not a staff member, but the Department of Defense intervened to kill the bill, communicated to the members of the Armed Services Committee that they didn't want this bill.
This is problematic. Any estimates by our own government for organically building an alternative value chain are estimated to be 7 to 15 years.
The Department of Defense, due to the dearth of the heavy rare earths, and rare earths in general, there are a couple of particular really good rare earths, just bought their supplies from China for their F-22 fighter.
You mean the components?
Yeah, the actual components that contain the rare earths. That's absurd. That's national security. You've now told them one of your components on a very advanced machine that protects our country, you just told them what it is. You just told them how to make it. You just bought it from them. That's just one example.
It's either the defense contractors trying to maintain a cozy, or let's call it a very awkward and uncomfortable relationship with China, or someone in the defense department is hiding 25 years of failure. I don't know which it is, but by killing the bill, what they've done is they've locked us into Chinese dependence in perpetuity. If we can't break the chain now, it doesn't get easier tomorrow.
You need to demand that someone in the United States Congress enforce the law and end this practice. Anybody with a box of crayons needs to start writing op-eds.
You need to demand that someone in the United States Congress enforce the law and end this practice. Anybody with a box of crayons needs to start writing op-eds. You need to send them to your local paper and you need to send them to the national papers, because the only way we can change the decision by the Department of Defense is to call them out.
They made this decision [in closed committee] and nobody in this room's supposed to know about it. You're never supposed to know that the Department of Defense injected itself into the legislative process to hide 25 years of policy failure.
There's a very good paper you can get off my website, it came out of India, that said regardless of who develops new rare earth applications, technologies, metallurgy, all of the benefits accrue to China because they're the only place in the world that has a value system to the develop them, so what's the point of a national lab? What's the point if anybody's working here if we're dealing with advanced technologies that require any rare earths?
That's where we're at. We basically are looking for a single member of Congress who's willing to force the defense industry to follow federal law.
No one opposed to bill on the bill's merits. The DOD doesn't take a policy position on thorium because it's not the EPA, because it's not the NRC. When the Department of Defense inserts itself, it can only be enacting, or imposing, or communicating concerns related to national security.
There had to be some reason articulated to someone. When we ask who, what, or why, we were told, "You're best off finding that answer out on your own. We won't comment on it." The bottom line is there's no rationale for killing a bill that ends US dependence on China for these important materials. The bill was budget-neutral. The bill had bipartisan support. The bill had support of senior members on the energy and natural resources committee.
Federal law requires defense contractors use US or allied parts or components, so can the Defense Department object on some theoretical ground but say that we want to maintain a status quo where every defense contractor in the United States is violating federal law?
What's the next thing to do then?
Our enemy is not China. That would be unfair. Our enemy is within. Six years, 60 trips to Washington DC, 250 meetings with members of Congress or congressional staff, and intervention by the Department of Defense that assures that our dependence on China will continue.
It gives the entire defense industry a free pass on violating federal laws.
There's got to be a congressman somewhere who cares about the national security validity of our country. There has to be a member of the Senate who believes that the defense contractors need to follow federal law.
We need to find a champion who's going to stand on the floor of the Senate and say, "We're either going to pass this rare earth bill, and solve this problem, or I'm going to order, or the Senate, Congress is going to order the inspector general to do a criminal probe of every defense contractor breaking the law.