Rare Earth Elements in National Defense
One U.S. company, Electron Energy Corporation (EEC) in Landisville, PA, produces SmCo permanent magnets. EEC, in its production of SmCo permanent magnets, uses predominately samarium metal and significant amounts of gadolinium, rare earths for which there is no U.S. production. Additional rare earth elements needed to produce rare earth magnets such as NeFeB include small amounts of dysprosium and possibly terbium. Currently, dysprosium and terbium are only available from China. EEC also imports metals for its magnet production from China through North American distributors and processes them into alloys in the United States before further processing into sintered SmCo magnets. 28
Supply Chain Issues29
The supply chain for rare earth elements generally consists of mining, separation, refining, alloying, and manufacturing (devices and component parts). A major issue for REE development in the United States is the lack of refining, alloying, and fabricating capacity that could process any future rare earth production. One U.S. company, Electron Energy Corporation (EEC) in Landisville, PA, produces samarium cobalt (SmCo) permanent magnets, and Hitachi Metals, Ltd. of Japan is producing small amounts of the more desirable neodymium iron-boron (NdFeB) magnets (needed for numerous consumer electronics, energy, and defense applications) at its China Grove, North Carolina facility. EEC, in its production of its SmCo permanent magnet, uses small amounts of gadolinium—an REE of which there is no U.S. production. Even the REEs needed for these magnets that operate at the highest temperatures include small amounts of dysprosium and terbium, both available only from China at the moment. EEC imports magnet alloys used for its magnet production from China.
Prior to multimillion dollar investments in mining, separation, and alloying facilities by Molycorp, and other exploration and development projects in the United States, there was a significant underinvestment in U.S. supply chain capacity (including processing, workforce development, and research and development (R&D) which has left the United States nearly 100% import dependent on all aspects of the REE supply chain and dependent on a sole source for much of the material. An April 2010 GAO report illustrates the lack of U.S. presence in the REE global supply chain at each of the five stages - mining, separation, refining oxides into metal, fabrication of alloys and the manufacturing of magnets and other components. According to the GAO report, China produces about 95% of the REE raw materials, about 97% of rare earth oxides, and is the only exporter of commercial quantities of rare earth metals (Japan produces some metal for its own use for alloys and magnet production). About 90% of the metal alloys are produced in China (small production in the United States) and China manufactures 75% of the NeFeB magnets and 60% of the SmCo magnets. Thus, even if U.S. rare earth production ramps up, much of the processing/alloying and metal fabrication would occur in China.
private sector investment in rare earth projects in the United States, totaling approximately $895 million, by Molycorp alone.”
28 Confirmed on March 17, 2011, by Peter C. Dent, Vice President for Business Development, Electron Energy Corporation.
29 Marc Humphries, CRS Specialist in Energy Policy, is the author of this section. For further discussion on recent supply chain developments, see CRS Report R41347, Rare Earth Elements: The Global Supply Chain, by Marc Humphries.
Congressional Research Service