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Rare Earth Elements in National Defense

by critics of this deal is that some of these highly valued materials could potentially become subject to Chinese export restrictions. Molycorp plans to ship some of its production capacity to its Neo Materials facility in China. Molycorp also entered a joint venture with Daido Steel and Mitsubishi Corporation of Japan and currently manufactures sintered permanent rare earth (NdFeB) magnets in Japan and sold on the world market.

Selected Recent Supply Chain Developments

Lynas and Siemens have entered into a joint venture for the manufacturing of magnets used in wind turbine generators. Lynas (45% stake) will provide raw material to Siemens (55% stake) from their Mt. Weld mine in Australia, which began production in 2012. Lynas is processing the concentrate at its Malaysian processing facility, which commenced operations in November 2012, after a long and contentious approval process with the Malaysian government. There are ongoing concerns in Malaysia over the proper disposal of thorium, which is contained in the mineral deposit and produced alongside the rare earth elements.

The Great Western Mineral Group (GWMG) will form a joint venture with China’s Ganzhau Qiandong Rare Earth Group to build an oxide separation facility in South Africa. The raw material for the separation facility will be produced at GWMG’s SKK mine in South Africa. A feasibility study of the project is underway.

Frontier Rare Earths, based in Luxemburg, along with Korea Resources Corp. formed a joint venture to build a separation facility also in South Africa. Frontier Rare Earths owns the nonproducing rare earth Zondkopsdrift mine in South Africa.

A Historical Perspective on the Potential Impact of Chinese Policies on Rare Earth Materials35

China’s near monopoly of rare earth production and efforts over the past few years to restrict rare earth exports have raised concerns among U.S. policymakers.36 For example, in July 2010, China announced that it would reduce its export quota of rare earth elements by 70% during the second half of 2010 over the previous year’s level (or a 40% drop for the full year over 2009 levels).37 In December 2010, China announced its export quota allocations for the first half of 2011, which, reportedly, were 35% less than the quota allocation level in the first half of 2010.38 In July 2011, China announced that the quota level for the second half of 2011 (at 15,738 metric tons) would make the overall quota for 2011 roughly equal to 2010 levels. However, U.S. officials complained that China’s second half 2011 quota levels included ferroalloys containing more than 10% rare earths, which had not been previously included in its rare earth quota levels, and hence, the new

35 This section of the report was written by Wayne Morrison, CRS Specialist in Trade and Finance. For the most current information on the potential impact of Chinese policies on rare earth materials, see CRS Report R42510, China’s Rare Earth Industry and Export Regime: Economic and Trade Implications for the United States, by Wayne M. Morrison and Rachel Y. Tang.

36 In 2010, China produced more than 120,000 tons of rare earths, with 87,000 tons for domestic use and 34,600 tons for export 2010 (Source: the Chinese Ministry of Commerce press release, July 29, 2011.)

37 According to the U.S. Department of Energy, China’s overall export quotas declined from 65,609 in 2005 to 30,258 in 2010.


Technology Metals Research, “How The H1-2011 Rare-Earth Export Quotas Were Allocated,” December 28, 2010.

Congressional Research Service


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