China

Business Week’s Lydia Mulvany covers the U.S. Department of Defense’s recent efforts to “crack China’s monopoly on mining the most valuable rare earths.”

In early October, we discussed the Pentagon’s studying of Canadian mining company Ucore Rare Metal Inc.’s REE-rich Bokan Mountain property in southeast Alaska, but according to a recent Business Week story, the department has since taken additional steps:

Also last month, Canadian magnet maker Great Western Minerals Group said it was chosen by the department to study the supply of yttrium oxide, which is used in jet engines, while closely held U.S. magnet maker Thomas & Skinner Inc. said the Pentagon will invest in a study of neodymium-iron-boron magnets.

Meanwhile, the Pentagon is not the only interested party attempting to challenge China’s near-total Rare Earths monopoly – Asia’s biggest carmaker Toyota Corp. is also exploring its options to develop heavy REE mines in North America.

With China consuming two-thirds of global REE supply, and demand for Dysprosium, Yttrium and Terbium expected to exceed supply, the urgency to diversify sources is clear, and as such, the Pentagon’s moves are encouraging. However, as we have pointed out in our Critical Metals Report, the needless U.S. over-reliance on foreign minerals stretches far beyond Rare Earths. One can only hope that the above-mentioned developments are manifestations of a nascent broader understanding of the national security and economic implications of resource policy. The rest of the world won’t wait for the U.S. to get off the starting block as the global race for resources is in full swing

Against the backdrop of mounting tensions in the territorial dispute between Japan and China over the Senkaku/Diaoyu Islands, Japan has recently been stepping up its efforts to diversify the sources of its mineral resource supply.

Japan-based Sumitomo Corporation will import Rare Earths from Kazakhstan, according to the website Finance GreenWatch. With the backing of the Japanese government, which will also provide financial support, the company has formed a joint venture called Summit Atom Rare Earth Company LLP (SARECO) with Kazakhstan’s National Atomic Company Kazatoprom. Established in May 2010, the joint venture completed construction and opened its first factory earlier this month.

Sources expect that roughly 1,500 tons of REEs will enter Japan per year, which accounts for 7.5 percent of annual demand, which currently is about 20,000 tons.

Heavily dependent on especially heavy REEs from China, the Japanese government started negotiations including Australia and India, after China temporarily suspended exports to the country in 2010. The flare-up of territorial tensions in the East China Sea has provided new impetus for Japan to “lessen the diplomatic pressure China is able to exert due to its possession of natural resources.”

As the East China Sea, Africa, the Arctic, and other parts of the world increasingly turn into geopolitical battlefields of the global resource wars, the big question is: What (if any) is the United States’ mineral resource strategy? Hopefully the issue will be addressed and resolved after the dust of the Presidential elections has settled – our manufacturing base depends on it.

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