Running the Gauntlet: Rare Earths, Specialty Metals and Turf Wars Inside the Beltway – Part 1

This is the first in a four-part series of articles on the current scrutiny being given to rare earths by the US Congress and US Department of Defense, in the context of national security considerations.  The full white paper can be downloaded as a PDF file from here.

Introduction

The rare earths are a group of seventeen little-known elements in the periodic table, comprised of the fifteen lanthanoid elements (from lanthanum through to lutetium, with atomic numbers 57 through 71) plus scandium and yttrium. In recent years there has been a considerable uptick in public discussions on rare earth materials and their growing importance to the US economy and those of other Western nations. This is hardly surprising, given recent developments in hybrid vehicles, electric vehicles and innovative electrical generators for wind turbines. Such technologies rely extensively on permanent magnet motors, and batteries, both of which utilize rare earth elements.

Industry experts try to make sense of sometimes-conflicting projections for future rare earth usage, while noting the lack of significant North American production of rare earths at present. It is not surprising therefore, that there is an almost daily barrage of news describing impending doom for these emerging energy-related technologies, without a change in US mindset when it comes to reliance on rare earth material imports.

There is another dimension to these materials, however, that is starting to gain greater attention, particularly as domestic sourcing of rare earth materials is thawing from its recent “Ice Age” and as new rare earth plays are investigated and begin to be developed, both in North America and beyond. We’re talking here about the criticality of rare earth materials to US national defense objectives – beyond the more obvious economic needs of the US.

There have been rumblings lately, of moves by some to look at rare earths in the same light as other materials whose procurement for US Department of Defense (DoD) contracts are subject to import restrictions – the so-called specialty metals. A closer look at this trend is warranted, since, despite growing optimism in some quarters, it will be some years before the known rare earth resources in North America can be fully brought on line. This evaluation of rare earth materials in the context of import restrictions, is in contrast to the related, but distinctly different topic of domestic stockpiling and buffer stocks.

To better understand the impact that classifying rare earth materials as strategic materials would have, in particular as specialty metals, we need to examine such a potential move in the context of existing strategic and critical materials, which are deemed to be of potential or actual national security interest to the US.

Strategic Materials and the Law

Late in June 2009, the US House of Representatives passed HR 2647, the National Defense Authorization Act (NDAA) for FY2010 [1]. In recent years, the annual Congressional NDAA bills have included language of significant consequence to the procurement of strategic materials, and this year was no exception.

Section 828 of the Act included language concerning “the availability of rare earth materials and components containing rare earth materials in the defense supply chain”. The Findings of this Section noted that it was necessary to “ensure the uninterrupted supply of strategic materials critical to national security”. “Strategic materials” in this case explicitly referred to “rare earth materials”, in addition to the specialty metals [2]. Also listed was the requirement to “support the defense supply-chain, particularly when many of those materials are supplied by primary producers in unreliable foreign nations” – presumably a reference to the People’s Republic of China. Such Findings generally describe Congressional intent only, and do not carry the force of law, since, while such comments are often included in the initial House and Senate versions of legislation, they are typically removed from the final version of the binding legislation.

The second part of Section 828 noted that “less common metals” such as the rare earths and thorium were “critical to modern technologies, including numerous defense critical technologies and these technologies cannot be built without the use of these metals and materials produced from them and therefore could qualify as strategic materials, critical to national security”. If these Findings were included in the final version of the law, the DoD’s Strategic Materials Protection Board (SMPB) would need to determine a strategy for ensuring the “domestic availability” of these materials, and to present such a strategy to the President for consideration. Given the typically non-binding nature of such Findings, however, this is perhaps unlikely.

That said, it is interesting that the House would want to go back to the well when it comes to the SMPB, despite the likely non-binding nature of the language of the Findings, given the uneasy relationship that exists between the two entities. Set up as part of the FY2007 NDAA “in order to identify items that are critical to United States national security interests” [3], the SMPB consists of representatives of the US Secretary of Defense, the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Under Secretary of Defense for Intelligence and the Secretaries of the Army, Navy and Air Force [4].

The SMPB got off to a rocky start by failing to convene and meet for the first time, ahead of the statutory deadline required by the legislation that created it. After complaints from Duncan Hunter (R-CA), Ranking Member and former Chairman of the House Armed Services Committee (HASC), the SMPB finally convened in July 2007 [5]. In its subsequent initial report to Congress, the SMPB simply noted that it had formed and met, and that it would look to focus its efforts on “determining the need to take action to ensure a long term domestic supply of specialty metals as designated in 10 USC 2533b” [6].

The SMPB’s second meeting did not take place until the end of 2008, and it further endeared itself to the HASC by publishing a highly controversial second report in early 2009, detailing the meeting’s outcome. The key finding of this report was that “[s]pecialty metals are not ‘critical materials’”, further concluding that “[t]here is no national security reason to ensure a long term domestic supply of specialty metals” [6] – an outcome that apparently took the HASC and others rather by surprise.

Prior to the 2008 meeting, the SMPB formed a Strategic and Critical Materials Working Group in order to complete other specific reports required by Congress. These included:

  • a report for the House on the National Defense Stockpile, amid concerns during the 109th Congress about “the DoD’s ability to ensure the timely availability of materials to meet the current needs of the military services” [7];
  • a similar report for the Senate of the 110th Congress on “strategic and critical materials”, with specific reference to “critical materials that may be needed by U.S. defense industries in case of a major international emergency” [8];

In addition, the SMPB commissioned a report from the Institute for Defense Analyses [9], to meet the requirement of the NDAA for FY2008 that the SMPB “perform an assessment of the extent to which domestic producers of strategic materials are investing and planning to invest on a sustained basis in the processes, infrastructure, workforce training, and facilities required for the continued domestic production of such materials to meet national defense requirements” [10].

In the course of tackling the various reports that the SMPB was mandated to complete, a number of definitions were introduced by the SMPB in order to maintain consistency of language across all reports. Two key definitions, at the heart of the subsequent controversy surrounding the report published in 2009, were:

1) Strategic Material – a material:

  • which is essential for important defense systems;
  • is unique in the function it performs;
  • for which there are no viable alternatives.

2) Critical Material (a.k.a. “material critical to national security”) – a Strategic Material for which:

  • the DoD dominates the market for the material;
  • the DoD’s full and active involvement and support are necessary to sustain and shape the strategic direction of the market;
  • there is significant and unacceptable risk of supply disruption due to vulnerable U.S. or qualified non-U.S. suppliers.

The SMPB went on to determine that “any material designated as critical will require a risk assessment and a strategy to ensure domestic availability”. The problem here was that there was already a statutory definition of the term “strategic material” included in the FY2008 NDAA language by Congress – such a material specifically being defined as:

  • a material designated as critical to national security by the SMPB in accordance with 10 USC §187; or
  • a specialty metal as defined by 10 USC §2533b.

Article continues in Running the Gauntlet: Part 2.

References

1. HR 2647, ‘National Defense Authorization Act for Fiscal Year 2010’, Sec. 828, 25 Jun 2009.

2. Public Law 109-364, ‘John Warner National Defense Authorization Act for Fiscal Year 2007’, 10 USC §2533b, 17 Oct 2006.

3. US House Armed Services Committee, ‘House and Senate Conferees Approve the Conference Report for the National Defense Authorization Act for Fiscal Year 2007’, Press Release, 26 Sep 2006.

4. Public Law 109-364, ‘John Warner National Defense Authorization Act for Fiscal Year 2007’, 10 USC §187, 17 Oct 2006.

5. John Buchanan, ‘Mission Impossible’, Forward Online, 8 Mar 2008.

6. Department of Defense Strategic Materials Protection Board, ‘Report of Meeting Held on December 12, 2008’, Office of the Deputy Undersecretary of Defense for Industrial Policy, 23 Feb 2009.

7. US House Armed Services Committee, ‘Report on HR 1815: National Defense Authorization Act for Fiscal Year 2006’, House Report 109-89, 20 May 2005.

8. US Senate Appropriations Committee, ‘Department of Defense Appropriations Bill, 2008’, Senate Report 110-155, 14 Sep 2007.

9. Scott Arnold et al, ‘Assessment of Industry Investment in U.S. Domestic Production of Strategic Materials’, Institute for Defense Analyses, Oct 2008.

10. Public Law 110-181, ‘ National Defense Authorization Act for Fiscal Year 2008’, Sec. 803, 28 Jan 2008.

Article continues in Running the Gauntlet: Part 2.

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This post was written by:

- who has written 67 posts on Terra Magnetica.

Gareth is a Founding Principal at Technology Metals Research, LLC. He has expertise in a variety of magnetic materials, devices and applications, and their associated trends and challenges, particularly for renewable energy production. For more information check out his biography page. Don't forget to check out Terra Magnetica at Twitter too.

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4 Responses to “Running the Gauntlet: Rare Earths, Specialty Metals and Turf Wars Inside the Beltway – Part 1”


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