Shifting Perspective on Procuring Scarce Earth Elements
In the wake of the COVID-19 pandemic and subsequent supply chain disruptions, the United States has found itself heavily reliant on foreign countries, primarily China, for critical materials like Rare Earth Elements (REEs). This dependence has raised alarms, leading nations to rethink their supply chain strategies.
The pandemic exposure of China's manufacturing dominance and supply of critical medical equipment and materials has led to an acute shortage and dependence on China's resources. Coupled with reports of flawed medical tests, concerns over remediation began to surface.
Questions about this reliance and potential solutions revolve around decades-old geopolitical and economic decisions. However, with times changing, technologies evolving, and national imperatives transformed by the Coronavirus experience, a shift in priorities is imminent.
One such priority is access to REEs, 17 elements in the third group of the periodic table integral to our future technologies, including hybrid car batteries, computer touch screens, and specialized magnets used in defense systems. The United States' cessation of REE mining and processing is contributing to this reliance on foreign sources.
Understanding Rare Earth Elements
Rare Earth Elements (REE) are a selection of 17 elements in the third group of the periodic table. Some difficult-to-pronounce names, such as scandium and lanthanides, might grab attention, but their true importance lies in their applications. These precious elements are key to producing our next-generation hybrid car batteries, computer touch screens, and specialized magnets used in defense systems.
Ironically, from the mid-1960s to the mid-1980s, the United States was a significant supplier of rare earths. However, safety and regulatory concerns led to a drastic reduction in rare earth mining, resulting in the near halt of mining in the U.S. Molycorp, a key producer in the 1980s, and other companies exported their oxides to China for refining and value-added production into metals, alloys, and magnets. Since then, China has aggressively pursued dominance in this sector, with methodical success.
Strategies for Overcoming Dependence
In an attempt to reconsider the national strategy, the U.S. has proposed several measures to address the REE problem:
- Mining as a byproduct: REEs could be produced as byproduct materials from other mining activities, such as phosphates and iron ore. The US Geological Survey has conducted extensive chemical analysis of phosphate deposits, demonstrating enriched REEs in these ores.[1] This suggests potential for co-operatives focused on REE production as a national security and economic policy initiative.
- Electronic buy-sell exchanges: These exchanges should be established between members and non-members, similar to Health Information Exchanges. This will create the ability to track supply and demand while balancing against national needs during crises.
- Innovation and substitution: A national initiative should focus on exploring possibilities for material and technology substitutions for REEs. This would position the United States as a world leader in next-generation substitutes, reaping the benefits of its findings.
- National stockpile program: As with the national petroleum stockpile, the U.S. should develop a national REE stockpile program. This stockpile network could be established within the co-operative and exchange framework.
Conclusion
The unprecedented impacts of COVID-19 have revealed the importance of self-reliance and the ability to stand on one's own two feet. With the U.S. having to negotiate with foreign nations for essential materials, the urgency to produce technology domestically has become evident.
Though complete isolationism is not the solution, critical examinations of our most critical dependencies are necessary. From the perspective of Rare Earth Elements, independence has become a national imperative.
The U.S. is taking measures to address this crisis, focusing on domestic mining, technological innovation, federal funding, policy support, and recycling and recovery efforts. International cooperation, finance strategies, and investment in rare earth stocks also play a pivotal role in this mission. Ultimately, the objective is to secure our critical mineral supply chains, ensuring independence and success in the face of future crises.
About the Authors
Shubho Chatterjee, Ph.D. P.E.
Dr. Chatterjee is a Digital Transformation, Strategy, Technology, and Operations executive with experience at Independence Blue Cross, Tiffany & Co., Miami Jewish Health Systems, and IKS Health. He holds Bachelor's, Master's, and Ph.D. degrees in Engineering, is a registered Professional Engineer, and is a certified Six Sigma practitioner.
Joe Carson, CEO, Spend Strategies, LLC.
Mr. Carson has held key roles at Lucent Technologies, Micron Technologies, and other companies as a Chief Procurement Officer, Vice-President Supply Chain Management, Operational Excellence Executive, and Chief Strategy Officer. He earned his Bachelor's in Electrical Engineering from the Georgia Institute of Technology and MBA from Duke's Fuqua School of Business.
References
[1] Permission to publish granted by Joe Carson and Shubho Chatterjee. Originally published on their platform on June 17, 2020.
In the realm of Rare Earth Elements (REEs), a critical shift in priorities is occurring due to changing times, evolving technology, and the US's experience with the Coronavirus pandemic. The authors propose that feasible solutions to reduce dependence on foreign REE sources include mining as a byproduct, creating electronic buy-sell exchanges, fostering innovation and substitution, and establishing a national stockpile program.
The proposed strategies revolve around co-operatives focused on REE production, national stockpile programs for storage and distribution, electronic platforms to balance supply and demand, and investments in technological advancements for material and technology substitutions. With these measures, the US aims to regain its independence in REE supply, ensuring self-reliance and success in the face of future crises.
