this hearing will now come to order good afternoon welcome today's hearing in titled where earth minerals and twentieth twenty first century industry before we begin we have a request from the gentleman from colorado mr  recognized for questions after all committee members have been recognized which will not be that much of a problem today does not look like we will now recognize as mr gordon is here and i understand that he has votes in another committee shortly material i do want to attend as much as i can i will be back after these after these votes last september saw an article on an issue that raised a number of questions in my mind about whether the committee this co doing enough to support american business and american jobs rare earth minerals are an essential component of a wide array of emerging industries clean energy telecommunications in our defense industry and i notice that one country  we're not here to beat up on that one country but nature made one country theme to have about ninety percent of these where it's materials and they seem to be trying to capture the rest of the large part of that other ten percent which gives me gives me paul's this is not the first time that the committee has been concerned with the competitive implications of material such as were in one thousand nine hundred thirty years ago this committee established a national minerals and materials policy one core element  in that legislation was to call to support a vigorous comprehensive and coordinated program for the materials research and development unfortunately over successive administrations the effort to keep the program going fell apart now it's time to ask whether we need to revive an coordinated effort to level the playing field for us in particular i want to learn if there is a need for increased research and development to help address this nation's rarest shortage or if we need to reorient the research we already have underway based oma review of the written submissions it appears that we could benefit from more research both in basic and applied materials the rare earths are not the only materials in which the us is largely or explosively dependent on foreign sources according to the u s geological survey there are eighteen other minerals and materials where the united states is completely dependent on foreign sources and a bit of a collateral subject that i would like for you to address is there are those minerals elements that rare or close to being rare but go through periods of time where they're being very vogue and using are crucial in making magnets and battery needed for the energy industry and the twenty first century with a little of one of those elements you can get a smaller more powerful magnet or an aircraft engine that operates at higher temperatures or a fiber optic cable that can carry your phone call much greater distances the united states not so long ago was the world leader in producing and exporting r have some different ideas about how to get the greatest benefit from this suddenly valuable commodity madi beyond simply digging it up and selling it to those who want to use it in their hot tech manufacturing china appears to view rarer us as one of the incentives they can offer a technology for farm scale scouting for a new plant location how do we compete in attracting and and retaining high tech high tech manufacturing firms that need access to rare earth elements in light of china's current near monopoly and their willingness to use their monopoly power to our disadvantage the most immediate step would be to get some competition back into the supply earths one of our witnesses mr mark smith is proposing to do just that his company owns a mine that that could produce has in the past many rare earth elements if it were to reopen he would describe today not only what it would take to restart the mine but also his intent to augment america's capability to produce a magazine different like electrical generators in with wind turbines from what he has told us in preparation for the hearing he found it hard to get help in making his vision a reality with if we intend to rebuild america's capability to supply our own needs in rare earth cereals if we intend to foster a homegrown capability to make the devices that provide when energy we cannot succeed unless mr smith and others like him succeed further we are investing enough in really are we investing enough in research as mr gordon said looking into wa could you get the same improvements in material performance using micrograms that were today you need kilograms there aren't a lot of places where people are currently working to answer those questions even if the answers could go far  helping the united states compete in the alternative energy technology industries that are springing up all over the world this is not the first time this committee has wrestled with rare earth and critical materials issues  continuing assessment of mineral immaterial markets to alert us to looming problems such as supply disruptions price spikes and the like four years later we followed up by establishing the critical materials council to assure that someone was minding the store however you won't find the critical materials council in the white house organization chart today it disappeared into the into the national science and technology council in one thousand nine hundred three and the high level attention to rare or send other materials dropped off as a priority while preparing for this hearing we have learned that the office of science and technology has recently organize a new interagency committee to respond to our rare earth problems an obvious question arises if the critical materials council had been maintained might we be and i'd bet better position nail to protect our nation's interest in a strong earths industry and how can we reverse the result of that history of neglect the subcommittee thinks the witness thanks the witnesses for helping us address these issues and i anticipate an interesting discussion  ranking member for his opening statement thank you mr chairman let me welcome out witnesses here today and i thank you all for participating the topic of today's hearing where our rare earth minerals is timely and import slated to play an increasingly important role as we seek to meet meet our future energy needs to remain competitive in the international marketplace and to continue to defend our nation  essential elements in renewable technologies such as winter about magnets compact fluorescent light bulbs and hybrid vehicle batteries they are also used in technologies critical to national security like lasers aircraft engines and fi fiber optics after the closure of the mountain pass mine in the one nine hundred ninety s united states became dependent upon foreign sources for rare earths with china currently producing roughly ninety five percent of the world's supply they've create aided a near monopoly and are active actively exploiting that advantage china recently eased its export quotas for r s over the past three years they have steadily cut export quoters saying they need additional supplies to develop their own domestic clean energy and high tech sectors of today's hearing will call attention to the current state of dependence that our nation found itself  the experience panel to provide insight into how we can ensure that we have access to rare earths in the future what industrial information is needed to guarantee continued availability of credible critical minerals what role the federal government should play and what further research and development needs to be done in the area with emmis chairman i yield back to my time so that we can hear from this is steamed panel thank  now ask unanimous consent for any additional opening statements of it among members to be included in the object in the record without objection that is so ordered it is now my pleasure to introduce our witnesses first dr steven freeman is currently a member of the natural national research council committee on critical mineral impacts on the u s economy dr steven do close is the chief scientist and manager of material state ability at general t at the ames national laboratory and mr terrence stuart is a managing partner at the law firm of stewart and stuart specializing in international trade and customs issues i would now like to recognize  crisis of rare earth of the rare earth minerals supply and manufacturing capability last year in my subsequent study on the problem i quickly learned that the greatest concentration of earth minerals now known as the mountain pass mine in california and the company working that mine is headquartered in my district in greenwood village colorado that company is molly corp minerals limited liability corporation and i have spoken about the supply chain problem with chief executive officer mark smith prior to molly corp mr smith was a president and chief executive officer of chevron mining incorporated mr smith was appointed president and chief executive officer in april two thousand  prior to this appointment mr smith was a vice president for unocal corporation where he was responsible for managing the real estate remediation in mining divisions mr smith worked for unocal for over twenty two years mr smith received his basket of science degree in agricultural engineering from colorado state university in one thousand nine hundred one and is just doctorate from western state university college of law in one thousand nine hundred he is a registered professional engineer however the u s no longer possesses the manufacturing capability to convert its raw rare earth minerals into the critical metals and magnets that power so many key technologies i hope we can work with industry through knowledgeable leaders minutes for your spoken testimony or oral testimony your written testimony will be included in the record for the hearing when all have completed your spoken testimony we will begin with questions and each member will have five minutes to  any of you have any objection to taking an oath the records reflect that all nodded in the negative they had no objection you also have the right to be represented by counsel do any of you have counsel here and the record should reflect that all not in the negative that with the exception mr smith you said no and we ask you these questions to put you at ease if you would now please stand and raise your right hand you swear to tell the truth and nothing but the truth are about that i retired as deputy director of the materials science engineering laboratory at the national institute of standards of technology to start a small consulting business i served on the committee on critical merrill mineral impacts on the u s economy of the national research council and i'm testifying in place of the committee chairman dr roderick eggert who could not be present today as you've observed mineral based materials are ubiquitous aluminum in jet aircraft steel and bridges and buildings and lead in batteries to name but a few examples the slide that you see illustrates the expanded use of new minerals over the years in important technologies such as computer chips the emergence of new technologies and engineered materials creates the prospect of rapid increases in demand for some minerals previously used in relatively small quantities and a small number of applications such as lithium and automotive batteries rares elements in permanent magnets and compact fluorescent light bulbs and india at the same time the supplies of some enrolled seemingly are becoming increasingly fragile due to more fragmented supply chains increase u s import dependence export restrictions by some nations on primary raw materials and increased industry concentration it was in this light that the standing committee on earth resources of the national research council initiated a study and establish an ad hoc committee to examine the range of issues important in understanding the evolving role of nonfuel minerals in the u s economy and the potential impediments to the response of these minerals to domestic viewers users the u s geological survey and the national mining association sponsored the study and the findings of which appear in the volume minerals critical minerals in the u s economy in my testimony today i highlight two parts of the report its analytical framework and empirical fine and its recommendations the analytical framework begins by defining critical minerals as those that are both essential in use that is difficult to substitute away from and subject to supply risk the idea is illustrated in the slide that you see a critic ality matrix the horizontal axis represents a degree of supply risk associated with a particular mineral which increases from left to right supplier risk is higher the greater the concentration of production in a small number of companies mines etc the smaller the existing market the greater the reliance on by product production of a mineral and the smaller the reliance on post consumer scrap as a source of supply import dependence by itself is a poor indicator of supply risk rather it is import dependence combined with concentrated production and perhaps geopolitical risk the first of the four factors above that lead to supply rist in the next sli the hypothetical like the hypothetical mineral a is subject to greater supply than mineral be so the overall risk of critic ality increases as one moves from the lower left to the upper right corner of the diagram implementing the framework requires specifying a perspective time frame the perspective of a minor mineral using company for example will likely be different than that of a national government the degree of criticality in the short to medium term one to a few years up to a decade depends on existing technologies and production facilities substituting one material for another in a product typically is difficult in the short term due to constraints imposed by existing product designs and production equipment in contrast over the longer term the degree of critic much more importantly on technological innovation and investments in new technology and equipment on both the demand side and the supply side taking the perspective of the us economy overall and in the short to medium term the committee of value at all eleven  mineral families it did not says the critic ality of all important nonfuel minerals the limits on time and resources slide three summarizes the committee's evaluations and i'm sure you have trouble seeing it but of the eleven minerals those the most of new sources of supply are developed conversely less critical minerals today may become more critical in the future because of a new user change in supply risks should such could be the case with lithium which committee did not evaluate as one of the more non critical minerals it should be recognised however that this analysis tool can be no better than the quality and timeliness of the data used to create an interest of time the committee had several recommendations which you have on your written document and i i don't think i need to read them to you i would just say however that my personal opinion that research and development of topics such as recycling especially materials used in small quantities in emerging uses as well as enhanced coordination of research efforts between departments and agencies close chairman miller ranking member brown and members of the committee it's my privilege to share with you g e s thoughts on how we manage shortages of materials critical to our manufacturing and what steps the government can take to help industry minimize the risk associated associated with these shortages this hearing addresses an issue that is critical to the future well being of u s manufacturing without development of new supplies in focused research in materials and manufacturing such supply challenges could undermine efforts to need since future needs in defense energy health care and transportation and like to share with you g e is a strategy to address its material needs as well as outline a series of recommendations for how the government can strengthen its support of industry in this area g e uses seventy of the first eighty three elements on the periodic table as chief scientist and manager mitchell sustainability at g global research it's my job to understand the latest trends in materials and to work with our businesses to manage our materials needs in a sustainable way to evaluate risks associated with materials shortages g e uses a modification of the assessment tool developed by the national research council in two thousand and eight risser quantified by element two categories price and supply risk and impact of restricted supply to g e those elements deemed to have high risk in both categories identified as materials needing further study and a detailed plan to mitigate supply risks for this assessment we  extensively use data from the u s geological survey's mineral information team as well as in house knowledge of supply dynamics there's a broad spectrum of strategies that can be implemented to minimize the risk of these elements those  identified as being at high risk these include number one improvements in global supply chain including the development of alternate sources long term supply agreements in development of inventory of materials number two improvements in material utilization in manufacturing in reduction of manufacturing waste number three development of recycling technologies that extract ak risk elements from both end of life products in manufacturing yield loss this includes the design of products that are more easily recycled and serviced which improves the material service life number for development of materials and systems technologies that either greatly reduce or even eliminate the need for the element all together several examples of these are leveraged past research programs supported by darpa the air force the navy and nasa and finally number five reassessment of the entire system often more than one technology can address a customer's need and each will use a different subset  periodic table the solution to the materials constraint can involve using a newer alternate technology an example of the development of energy efficient l e d lighting technologies as supported by the department of energy that offer a seventy times reduction in the use of rare earth elements for lighting attention needs to be paid to all five of these solutions outlined above the shorter term sourcing and manufacturing solutions are critical to buy time so the more optimal recycling in mitchell substitution solutions that tend to be longer term higher risk in require risk mitigation strategies involving parallel paths the government can help by and enabling public private collaboration's that provide both materials understanding and resources that enable these materials substitution approaches anticipate d growth in the use of rare earths for an efficient energy and transportation technologies mandates that we develop the full range of five solutions outlined above we make the following recommendations for the government to strengthen its support of efforts to minimize the increasing risk associated with material shortages number one a point to lead agency with ownership of early risk assessment in authority to fund the five solutions the government needs to enhance its ability to monitor assess in coordinate a response to identif issues number to sustain funding for research focusing on material substitutions to lay the foundation upon which solutions are developed collaborative efforts between academia government laboratories and industry will help ensure that manufacturing compatible solutions are available to industry in time to avert disruptions in u s manufacturing number three global economic growth resulting in increased pressure on the chill stocks it is imperative that there be a sustained effort sustained support of the government to develop the full set of solutions outlined in this testimony new material sources recycling technologies manufacturing efficiency alternate materials and new system solutions in closing we believe a more coordinated approach and sustained investment from the government in materials and manufacturing technologies is needed to provide industry with the flexibility that makes u s manufacturing less vulnerable to materials shortages thank you for a time when i look forward to answering your questions thank you dr to close  r snyder good afternoon mr chairman members of the subcommittee ladies and gentlemen i am pleased at this opportunity to present my views on the earth crisis and work can be done to alleviate this situation my responses to your questions are as follows more detailed information before my written statement the first question was how has rare earth research at the aids laboratory changed over time where of science and technology things laboratory the u s department of energy had its beginning in world war two when i was state college assistant the war effort by supplying one third of the uranium metal to terms necessary to make the first nuclear reactor go critical at the university of chicago in one thousand nine hundred two bright and in a war two million pounds of uranium and six thousand pounds of for him were produced for the manhattan project work on the rare earth was a natural our growth of the war effort initially there was a wide spectrum of research being carried out this includes separation analytical solidstate chemistry process physical and mechanical metallurgy ceramics and condensed metaphysics many successes were achieved and technology was turned over to industry but as science matured programmatic changes occurred in a number of research areas were phased out this includes separation  chemistry process mechanical metallurgy and ceramics there were many errors are still strong but the power person levels have diminished however the establishment of materials preparation center gear we basic energy sciences specialized research center has furthermore it is a very green technology with no bright products compared to conventional processes which have byproducts which need to be stores off and environmentally safe manner i have in my hand the second now faces a shortage of trained scientists engineers technicians and a lack of innovations in the high tech area which are critical to our country's future needs a research center which alleviates both of these problems is the best way to solve the sphere of crisis an educational institute which has a long and strong tradition of carry out research on all aspects of rare materials with a stronger educational component would be an ideal situation a national research center on verisign energy should be established with federal and state support supplemented by u s industry as a rare earth industry revitalize the center would employ about thirty full time employees this research center would be a national resource for science technology and applications and will provide support research activities to other tracks complementing the activities of the center the major emphasis of the center would be directed basic research for proprietary research paid by the organizations that requested would also be part of the center's mand the center would have an advisory board made up of visitors from the university government industry and the general public to oversee guide and refocus as needed the research being conducted i would like to suggest it is house committee to consider a second national center on research on the net a cooling cooling ball room temperature counts for fifteen percent of the total energy consumed in the u s magnetic refrigerator and his new advanced highly technical energy efficient green technology for cooling a climate control for refrigerat various energy the question is are we going to give up our need position and be a second rate country or what we need the rest of the world i hope and pray that our answer is we're going to show the world that we're number one question three how can  domestic companies knowledge is export it from research institutes universities to industry to transfer of intellectual property and no research finding a disseminated is published articles and journals presentations at conferences and electronic media and i filed one could disseminate the results to companies that might be interested by contacting them to see one if they're interested too if they would sign then disclosure agreement and if they answer s to both one and two then you information could be disclosed to them a second highly effective route is to transfer the skills and knowledge gained by university students to the industrial lawyers after graduation the fourth and last question is how active the us scientists research in extraction processing substitution recycling and how is this compared to other countries earth research in usa and general extraction very separation processing of oxides into metal metallic alloys and other useful forms substitution recycling is virtually su today some work is carried out a very steely laboratories on rare earth and actinides separation directed towards treating waste nuclear products and environmental cleanup of radioactive minerals and a sort of this research may be beneficial to improving the rare separation prophecies on the commercial scale some research a variation of verses might be considered to be useful in finding substitutes for a given arithmetic in a high tech application but generally the particular of properties is so unique is difficult to find another substitute finally the chinese have two large research laboratories which has a significant research and development activities devoted to the above topics they are the general research institute for non ferrous metals in beijing the bottle research institute of r i'd like to thank you for the opportunity to be here today this is the first committee to hold a hearing specifically on this issue and i want to commend you for your leadership in this regard it's been remarkable in my twenty five years in this business to see the use of earths literally explode in front of our hours in front of our eyes however while rare earth based technologies have become more and more essential and more and more a part of our everyday lives the u s as well as the rest of the world has become almost completely dependent on china for access to the rare earth resources and the metals alloys and magnets that derive from them a combination of three factors should make this situation one of urgent concern to policymakers first the indispensability of rare earth in clean energy and defense technologies to the almost complete dominance of rare earth production by china and three china's accelerating consumption of their own rare earth resources on a screen in front of you is a slide that just touches the surface of some of the uses of rare or soon the world today on the clean energy side rare earths are used in the advanced nickel metal hydride batteries for hybrid cars as well as the rare earth permanent magnets that power the highly efficient next generation of win turbans and the electric and hybrid vehicle motors and generators rare earth fosters are what eliminate compact fluorescent light bulbs which are currently mandated in the european union on the defense side missile guidance systems electronics communications and surface surveillance equipment just to name a few applications all require rare earth none let me repeat none of these technologies will work without and yet each is tied directly to some of the nation's highest national priorities today on the screen in front of you now it provided a simplified version of when turbaned supply chain from a rare earth perspective with the exception of our historic rare earth mineral production at the very start none of the capabilities in the green box really exist in the u s today the result is a supply chain capability gap in the us that has the potential to become a very serious strategic and economic disadvantage today china actually produces over ninety seven percent of the world's rarest oxides they produce almost one hundred percent of the associated metals and eighty percent of the rare earth magnets for the last fifteen years china has china's production has been able to satisfy their own internal needs as well as those of the rest of the world however it is predicted that rapid chinese demand gro coupled with lower and lower chinese government controlled export quotas will continue to decrease the amount of rare earths available to the rest of the world thereby creating a serious supply gaps forecasts conclude that the shortage could occur by two thousand and twelve and with china's recently announced commitment to be the world's largest producer of wind energy and electric vehicles this will certainly not help that time frame in order to truly break our near total dependence on china molycorp has developed its mining to magnet strategy molycorp is fifty seven years of experience in the rare earth industry and has a world class or deposit at its rare earth facility in mountain pass we have invested over twenty million dollars in process technology improvements in advance of our research a restart project and the resulting efficiencies will drastically improve our overall cost competitiveness as well as our environmental stewardship we also believe that our matic magnets project could create an estimated nine hundred new direct jobs as well as seven hundred temporary construction jobs in the united states not to mention the multiplier effect this will have in both the green and defense technologies  technological industries in this country molycorp is the only rare earth company outside of china that stands shovel ready we are uniquely well positioned to rebuild the rare supply chain from mining to magnets and we can do it in the shortest timeframe possible the federal government clearly has a role to play as you consider legislation there are four areas i think you can have the greatest impact on the first is federal loan guarantees we applied for the d o e's loan guarantee program in the fall of two thousand and nine and our application was recently rejected as ineligible the deal we contend that this project goes too far upstream and that their program was not intended to cover projects that go all the way back to mining congress will need to provide legislative direction or new legislative language clarifying the use of loan guarantees for strategically vital supply chain product projects second the federal government and this committee in particular can play a pivotal role in restaff reestablishing our world class where knowledge and expertise the way it used to be number three as noted earlier the white house or s t p is working with the departments of commerce defense and state to lead a collaborative interagency effort on this issue we are very encouraged by this effort but the eminent global supply and demand challenge clearly necessitates more urgency by the administration right now and finally federal funding support for competitive grants specifically directed at the rare earth research and technology industry including recycling will certainly help to further expand the united states capabilities in the rare earth world thank you mr chairman for this time everything ninety seven point three to be precise mr stewart for five minutes chairman members of the subcommittee good afternoon china's policy on arithmetic roles is similar to that nation's actions on a large number of raw materials the general goals seem to be reducing availability of supply for global customers as well as making foreign purchases more expensive through the imposition of export duties export licenses and other trade impeding measures china's policy encourages foreign investors to move production and investment to china and ensures low price supplies for targeted rapid growth sectors within china last year the united states founded the b t o case against china's export restraints on numerous raw materials critical u s manufacturers and workers raw material subject export restraints are used in some of the key industries identified in china's industrial policies such as steel aluminum and chemicals china's most recent five year plan which goes through two thousand and ten continues to focus development and certain strategic sectors and to ensure a leading role for state  enterprises in many of the sectors recently the european chamber and china reviewed the massive problems of overcapacity in a number of important industries in china including steel aluminum cement chemicals oil refining wind power equipment ship building flat glass forward takes this overcapacity coupled with export restraints on key raw materials effectively shifts the burden of adjusting global excess capacity from china to trading partners by limiting access to affordably priced key raw materials moreover limiting access to key raw materials can be used to forced investment within china according to the two thousand and nine us china economic and security review commission annual report to congress china is targeting where are thought dependent components of key strategic industries for production within china including many of the green technologies reviewed earlier china is attempting to make significant cuts to rare earth exports through a combination of export duties and export quotas these actions are intended to raise prices outside of china and in a indication that china's export restraints have understandably caused concern in many countries including our own so what can be done first and foremost the u s and its trading partner should bring a second trade action against china on the range of export restraints  earth minerals such restraints are in clear violation of obligations that china undertook to become a member of the world trade organization in two thousand and one at that time china agreed to limit the use of export taxes to eighty four product categories none of which included rare earth minerals in two thousand and ten china's imposing export taxes not on eighty four products but on three hundred twenty nine product categories including twenty three rare earth mineral categories a plane violation of their commitments on the domestic front by understanding both the government and private sector taking actions to understand the nature of the potential problems as well as looking for alternative sources of supply for example a national defen authorization act for fiscal year two thousand and ten requires a control of general to deliver a report by this april first on rare earth materials in the defense supply chain obviously understanding the national security implications of chinese our policies is critical the chairman the members of the subcommittee might want to advocate creation of a similar report for this villian sector to help members of congress understand the challenges facing the american economy from the current reliance on china supply and what legislative approaches might be pursued to safeguard our commercial as well as our military interests a positive trend in recent years has been renewed interest in developing where earth mineral resources outside of china including in north america obviously mali core example being one of the key elements reports are encouraging although cost structures with environmental needs versus china remain important challenges the government through the committee on foreign investment in the united states must help ensure that mines in the u s are not purchased by foreign interests whose governments have limited supply to us users and that any new mines receive priority attention in terms of various government licenses and reviews finally the u s g s indicates said for most rare earth minerals are our substitute products available although known substitutes are less effective currently than there are thinner minerals themselves  government can support efforts to develop alternative solutions to current needs but through publicly financed research and through tax policies and other actions to support private sector research thank you very much thank you mr steward this point will begin for a friendly questions typically i would recognize myself that i would be happy to recognize look well i will do what is typical then i will recognize myself for four five minutes the questions are probably somewhat redundant to your oral testimony but we did pass a law thirty years ago that called upon the present to the stablish early warning systems for material supply problems that didn't work that's why we're having this hearing today what would have been needed to warn us about the problems that we have with rare with the chinese controlling ninety three ninety five ninety seven why too much of the earth's supply of oil is commercially available rare wearers and how do we keep everyone interested in the materials issues when there ceases to be a crisis that's sort of a problem with congress there's either complete inactivity or frenzy with little in between how can we keep our  rests in the ability to look at things from a full supply chain concept it's very very difficult to talk to people about rare earths in the world today we go and talk to defense contractors that work for the department of defense and sometimes we have to go down nine different two years before we find a party that actually purchases the rarer so that i don't think that anybody has done anything intentionally here but these things are very ubiquitous the only use very very small quantities and i think we have to continue to look at things on a full supply chain basis not on an element by element basis mr dr freeman we argued in the report that i spoke to that one of the things that was needed and i spoke to it when you saw the diagram that what is needed is up to date data that we can rely on as you hear technology moves quickly and changes in availability move quickly as well and we felt that what was needed was an agency which had the autonomy and the authority to collect the necessary data rapidly and to disperse that to the people who need it so that you could keep up to date on what was really the situation respect not just but in our many of the critical minerals dr close i would certainly agree with that and as i said in my verbal testimony you know appointing a lead agency that that is able to do that assessment is absolutely critical but recognize that the assessment itself is just a very start and represents a relatively small part of actually solving the problem which which one how bringing in n agency assessing this these things quantitatively over time you won't see these gradual gradual increases and in the crisis level unless you do that you know else  said well we won't move the factory out of anderson and for five years well when the fifth year kid came up right at the end of the time they moved everything rock stock and barrel out of granderson indiana and so we lost lots of jobs in the reason why i know that is a number for some of my advantage is being in a subsidy war the only response that we have to the way china plays absolutely not mr chairman i think our best attack is actually technology molycorp sat for about ten years when the chinese came in and flooded the united states where as markets with lots of product and low prices we sat there for about ten years and winding cried about the low wages that the chinese had to pay etc etc we finally got over that and we used our own american ingenuity to figure out process technologies that drastically cut our costs in producing these materials and we feel that with these new technologies we can in fact be the lowest cost producer in the world but we do need help in that regard i have seventeen scientists and engineers that are competing with over six thousand chinese scientists and i can't find any students from any university in the united states that have any  research and development we've heard about the need to reconstitute a nation's rare earth knowledge base and infrastructure witnesses have highlighted the need to find new applications and uses for errors as well as  focus on eliminating the need for product that his company has invested hundreds of millions of dollars in developing understanding that you may disagree how would you prioritize these topics and are there any additional areas of focus you would suggest do in helping not just rare but other critical minerals is as i mentioned earlier is to know well in advance what the change in the availability will be and i think that's a critical point we also emphasize the need for more research and development and more coordination between agencies in what is going on so we understand what each other is doing as most of you know there was this coordination present certainly i know in the materials area for many years and it sort of disappeared at the level and putting that back together again and developing that kind of agency coordination in research in development certainly in rare earth and we hear that that's starting to go on now but in other critical minerals i think is an important factor but i'd like to point out that there are seventeen rare earths in the path of table and each one of its applications is different and the solution will be different for each one of the seventeen and with that in mind that is why we recommend the five solutions going from should certainly developing new sources all the way to developing technologies that eliminate the use it will be different and the  and we've seen within g e on materials not necessarily dealing with merits but other rarer elements that you have to take a number of the solutions in order to make it make it all work so i don't think there's a single answer to the to the question drew close i think that we have to balance the many needs of the rare earth world and we are not adverse to finding substitutes for seether contrary to what may seem quite obvious but on the other hand i can use the rare magnets as an example the permanent rare earth magnets the need in a mind boron type had been around for well over twenty close to thirty years now we've been researching for this entire time for a substitute for those magnets and we haven't found one yet but that doesn't mean that we should stop the problem we have in between is it we've got about a two or three year window here before a major supply gap occurs between what china can supply to the rest of the world and what the rest of the world needs for their own needs and we need to prioritize that right now is an immediate need that we have to address because that research will take a lot of time but we certainly advocate research on all aspects including replacement so quickly about run out of t honor the twelve months that they have made as well i thank you so much doc freeman point out his testimony that federal government should enhance the types of data and information it collects disseminates and analyzes all minerals and all mineral products his committee also suggested the energy information administration is a model what ages our office should be tasked with that responsibility on train i would chose not to select an agency we didn't feel that was our business no recommendation will kno that we pointed out that whoever was chosen they need to have enough authority to be able to demand that they collect the kind of data and information they need in a timely manner nobody else home suggest an agency i would suggest to the united states  geological service they've done an outstanding job for the last twenty years of pointing out this problem with errors in particular i think what we need to do is to figure out how to communicate their results better amongst all the parties thank you committee for being here as mr smith pointed out this is the first of these type of hearings and hopefully this will pull back the curtain now we in this committee we don't have to stiction on debbie to go into some tax benefits and that sort of thing so i want to try to bring  this discussion back to what we what we can do here and listening to you it seems that we should point or  we need to have some type of research although you didn't say it i would say also workforce in terms of opportunities to the national science foundation having fellowships and grants for those students that would go into the r research is a research center adequate do you have more than one more different elements or do we parcel this around to various universities how should we approach that and i'll open it up for the one area that this this agency could could do is actually collect sensitive information i think you can imagine for us for a corporation that has challenges in these areas it's not exactly something that that we talk about whole publicly and therefore the data collection can be done for example by by an agency in confidence and and then can use that data to help prioritize the materials that need immediate attention and so long as that can then lead to as i said the assessing of the situation not just the first part  not yet what if you're collecting data now and trying to determine what is the immediate need you're ten years behind you know and what you can do is in that in fact this is what we do we we we use this criticality diagram matrix that dr friedman discussed to quantify where the elements are in this table and then we do that anyway ok so we can see them moving around we can we can tell generally which direction elements are are  do we need to make this university based and what is private you know public sector partnerships what should there be there i'd like to address that question first of all i places and so forth and i think the university is a is a good place to start because you can be training students which will go into the industry eventually and help them out and i think one thing you don't want to do is divide are seventeen elements of the seventeen research center even though they may be somewhat different there's a lot of commonality in there which you can be can be used i mentioned earlier today that we've made this medium go on magnet here using a new process which is very energy efficient green technology we've also just made last week made the measurements on a lanthanum nickel hydride battery material which is a very competitive with what you can get industry so what we learned there applies to the other  this but there's really no i mean we're the most coherent laboratory you mean devoted to rare earth materials but there's a lot of research being carried out and also they from the number of universities but it's usually one or two groups at a university it's very small it's adequate for what we need to do in terms of energy you know and can you give me any idea by how much more we would need to give any i think our research centers something like i mentioned here of about thirty people full time equivalent  probably should be funded that center alone by about five million dollars per year from to make this with a five year lead time to show that they can produce what the what they claim they want to do you know what's been done and therefore what could be done now or in the future in this area again having a center lead a jinsei that can collect all that data and bring that together doctor to close if you want to yeah i just wanted to give you an idea of the sort of funding that it takes to to solve some of these are very challenging problems but generally in our experience and we've been through a number of challenges here in terms of materials you're probably talking something five hundred fifty million dollars per element per application for a solution and obviously we have huge budget concerns here what would be the ramifications if we were not able to fund at the level you think we need to find well what you do is you as you go through those five solutions you take the shorter term ones the quicker the quicker ones and then you know basically challenge yourself to  ensure that you have a supply and what the best you can without doing the longer term more expensive work that's a cleaner solution mr smith's question for you mountain pass mine if you go back and if you have nestor production i can you get all seventeen rare earth minerals out of your location that you have and how soon we can supply the american you know the u s needs understood that you we we have all fifteen of the lance and i had the rare years in our or body we can recover nine of those economically at today's prices and we can start doing that as early as two thousand and twelve and the others will have to go up before the their economic to recover and then there's two that you did not have supplies right it three m and scandium ok and those are only found in there found in various places china being one canada has some ok so there are there are found in other countries besides china correct although not in the quantities in the concentrations that they are found in china ok i did want to ask you just one more question i have just a few seconds left here but if i'm back talking to students in my district because you talked about having as an issue with not being able to find the educated people that you need to work in your industry what should i tell them to do tell them to go into reverse and that we would like to hire them as in turns as soon as possible we can use all the people we can get that have the experience we found none when we went out to hire and we we went ahead and took a risk hired people was zero experience and about three and a half years later dependent on foreign rare earth products i think you mentioned there too that we still would be depended on it for human scandium yes and we would still be dependent on other countries like china for portions of our supply needs for instance dysprosium is a very critical where it's element needed for need any more and more on magnets as part of the alloying it allows a magnet to be used in a higher temperature application mountain pass can produce a quantity of that material but it will likely not be enough to suit full needs of the united states relative to the hybrid vehicle industry as i read it analysis where it full production the year mine could produce twenty thousand tonnes rare earth metals or elements is that is that figure correct that is correct that is our design capacity right now and we can with existing permits in hand we can actually double that production to forty thousand tons per year ok that's h long would it take you to get the full production we think it will take us to about the middle of two thousand and twelve to reach our full twenty thousand ton to design capacity right now ok but i understand if i hear some of the testimony  today is that china will meet its it's it's its demand will meet its supply and in the vicinity of two thousand and twelve and they will have to drastically curb exports am i correct in that that is that is very products up so i mean as far as i'm concerned maybe canadians will like it there almost another state of the us but i mean actually there's no there's no problem with getting materials from them australia has some mines we have a representative  here from from the australian group an a they have some several good mines with materials and they're probably about a year or two behind mali corporate and some of the these materials are coming scandium is a little bit rare they come from but a lot of it comes from russia so i concern about the the the other levels of the supply chain in terms of the processing and it seems that we have a real deficit in that area and i think doctor ocean i think you had mentioned that the thank you congressman kaufman to my knowledge there are not a whole lot of activities in that regard other than molly corbis mining the magnets strategy where we will put in the conversion capabilities to go from oxides to metals we will have the capability of taking the metals and alloying them ok and we will have the capability of producing need anymore and boron magnets here in the united states that's great yes well as i told you we were preparing as the a to myron boren mag material and that was one of things we've come up this will help the supply train down down the road but again you know it takes four years to get a ph d or two years for a master so it's it's it's not you know you just can't switch a light switch button and have a pop up so but there are people out there reasonably well sophisticated weapons systems that may need rare earth minerals but i'm also concerned about manufacturing jobs or an electron has seen the loss of a great many manufacturing jobs that were less skill cut and so jobs parallel industry but our hope is been replace those jobs of highly skilled jobs in very sophisticated innovative industries china seems to be using the leverage of their rare earth to say if you want well it is unusual for a country that has joined the w t o to take on specific obligations in the export arena because most countries do not maintain these types of restrictions or impediments and so just as the u s has brought the first case dealing with i think eight or nine roma tiriel is that are used in steel and take two years to resolve but the resolution of that should be a very clear finding that china is not is not permitted to close its market it is doing this in a whole range of products there was an article in the new york times yesterday talking about how china is taking advantage of the rules in the w t o in the rules and the i m f to maximize or advantage well that's what countries should do they should be looking after their own interest as a commercial power we should be looking after our interest which is to see that china is not allowed to violate the commitments they've made without there being without there being a cost to the cost is to bring them in line which would require them to take the taxes off take photos off and in fact make the products available to the highest bidders globally as most raw materials are  the industries need seem to be short more of a short term solution to how to get production started again government seems to be more focused on what the long term risk is of not having these minerals available industry's interest is both short and long term to the to the point earlier i think the the answer is technology technology in developing systems and materials technologies that we do see the use of the and it depends little bit rare earth by rare earth but if even if we develop all the sources of rare earths that we we see around the world today we're still not going to have enough in the sort of five in your time frame the solution is to minimize the use of these materials and develop those technologies that's the long term short term solution is certainly develop the sources which we absolutely need and also what the long term is to do that technology way calculated to rare earth metals that is different then any other commodity that china seeks to control for its own industrial base in your view is yes mister well it is similar to some of the strategies they have employed on other products where they have a dominant share of global supply but there are specific documents that have come out at the provincial  central government level both laying out their strategy to be dominant players in these products and the downstream use of those products and to force investment through these kinds of strategies so  similar to what they've been trying to do and some others because these are perceived as high growth high growth sectors obviously is the reason that it's of such great concern to us and many other countries for anybody else and mrs smith i guess it wouldn't be for rare earth hearing if we didn't hear this quote but there was a chinese premier back in the one nine hundred eighty s that said the middle east has oil and china has where anybody else thank you i'll now recognize myself for five minutes although i will not use five minutes  so we're talking full production of in your california mind by twenty twelve correct middle of two thousand and twelve and obviously you seem to be the only game in down in the united thing that would in fact inhibit you or delay that capability of bringing that mine on line and at that twenty thousand ton capability there's only one thing that the company needs right now congressman kaufman and that is the capital to put the project into place and that is what we're working on very hard as we speak you know how hard it is i mean is that in your view is  that i think that how hard will be challenges just because of the current climate in the banking industry where project financing is a very difficult way to finance things right now with very if you can get the money at all it's going to be at very high interest rates and it's going to be a very short terms and that's where the deal we loan guarantee program comes in to help the problem because i do offer lower interest rates and longer payback periods and that's a much more attractive form of capital to use so if you do so in your view that would seal the deal in terms of your ability to go forward there's no doubt in my mind ok and give me a timeframe because it seems to me that we have a problem here in the sense that if in know these timeframes are right where china its demand catches up with the supply in two thousand and twelve and i've heard that from a variety of sources your mind needs to come online in the vicinity of two thousand and twelve and you think you could have full production of twenty thousand tons which is means to u s demand for the rare earth elements that that you would produce at your mine i mean we if in fact those things don't occur it would seem to me that there would be an extraordinary escalation of price in these rare earth elements because where in fact would we get them from at that time there would only be one one place although there are other there are other mines that are certainly to open right now in other countries but we are the only game in the united states right now it is absolutely imperative that we get this operation up and running by two thousand twelve so one thing i have learned in my twenty years in this business is that forecasters are never accurate in what they are forecast so is it precisely two thousand and twelve or two thousand and thirteen two thousand and fourteen is it two thousand i don't know but i think that we can we can meet the window given the trends that we see today but we do need to get going on our project and get going on it immediately this is according to your business plan we do you have to have your financing in place in order to be in full production in the vicinity of two thousand and twelve it would have to be in place this summer in order to have the full production online and running by the middle of two thousand and twelve every day we do not have it on the financing in place it will role for government in the economy and before we bring the hearing to a close i want to thank our witnesses for testifying before the committee today and the rules committee the record will remain open for two weeks for additional statements from the members and for answers to any follow up questions the subcommittee may have for the witnesses and for the submission of extraneous materials the witnesses are excuse and the hearing is now a