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[Senate Hearing 113-192]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 113-192
 
                      CRITICAL MINERALS POLICY ACT 

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                                   TO

 RECEIVE TESTIMONY ON S. 1600, THE CRITICAL MINERALS POLICY ACT OF 2013

                               __________

                            JANUARY 28, 2014

                       Printed for the use of the
               Committee on Energy and Natural Resources

                               ----------

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                      RON WYDEN, Oregon, Chairman

TIM JOHNSON, South Dakota            LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana          JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont             MIKE LEE, Utah
DEBBIE STABENOW, Michigan            DEAN HELLER, Nevada
MARK UDALL, Colorado                 JEFF FLAKE, Arizona
AL FRANKEN, Minnesota                TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia      LAMAR ALEXANDER, Tennessee
BRIAN SCHATZ, Hawaii                 ROB PORTMAN, Ohio
MARTIN HEINRICH, New Mexico          JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin

                    Joshua Sheinkman, Staff Director
                      Sam E. Fowler, Chief Counsel
              Karen K. Billups, Republican Staff Director
           Patrick J. McCormick III, Republican Chief Counsel

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Conrad, Gregory, Executive Director, Interstate Mining Compact 
  Commission, and on Behalf of Alaska Department of Natural 
  Resources, Anchorage, AK.......................................    41
Danielson, David, Ph.D., Assistant Secretary, Office of Energy 
  Efficiency and Renewable Energy, Department of Energy..........     7
Eggert, Roderick, Professor And Director of The Division of 
  Economics and Business, Colorado School of Mines, Golden, CO...    51
Heller, Hon. Dean, U.S. Senator From Nevada......................     3
Isaacs, David, Vice President of Government Affairs, 
  Semiconductor Industry Association.............................    36
Latiff, Maj. Gen. Robert H., (Retired), Ph.D, Research Professor 
  and Director for Intelligence Community Programs School of 
  Engineering, George Mason University...........................    25
Meinert, Lawrence D., Mineral Resources Program Coordinator, U.S. 
  Geological Survey, Department of the Interior..................    13
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     4
Sims, Jim, Vice President, Corporate Communications, Molycorp, 
  Inc., Greenwood Village, CO....................................    29
Thomas, Jennifer, Director. Federal Affairs, The Alliance of 
  Automobile Manufacturers.......................................    48
Udall, Hon. Mark, U.S. Senator From Colorado.....................     6
Wyden, Hon. Ron, U.S. Senator From Oregon........................     1

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    65

                              Appendix II

Additional material submitted for the record.....................    73

                      CRITICAL MINERALS POLICY ACT

                              ----------                              

                       TUESDAY, JANUARY 28, 2014

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:09 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden, 
chairman, presiding.

 OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON

    The Chairman. The committee will come to order.
    Today the committee will turn its attention to S. 1600, the 
Critical Minerals Policy Act of 2013.
    It has been a pleasure to join Senator Murkowski in 
negotiating a truly bipartisan bill as evidenced by the 9 
Democratic and 8 Republican cosponsors.
    We've been joined by 17 of our Senate colleagues, including 
committee members--Senators Udall, Franken, Risch, Hoeven, 
Landrieu, and Manchin.
    It seems to me, Senator Murkowski, this is a testament to 
the bipartisan effort to reach agreement and I want to tell you 
again how much I've enjoyed being part of this bipartisan 
effort through the negotiations that were held.
    As the committee learned in passing the Helium Stewardship 
Act, our country depends on materials that are not burned or 
consumed for energy, but are key to many energy technologies, 
from wind turbines, to batteries, to oil refineries, as well as 
a host of other technologies. Our country is increasingly 
dependent on these minerals, to increase efficiency, lower 
costs, and improve performance of manufactured products in 
these industries. Without them, many of our essential U.S. 
industries would struggle to survive.
    Critical minerals are minerals which are essential to 
American industries and may be at risk for supply disruption 
such as by a small global market or geopolitical complexities.
    This legislation tackles these issues head on and most 
importantly it ensures a steady supply of the materials that 
are crucial to thousands of good paying American jobs. One of 
the keys to help putting Americans back to work and to help our 
businesses in a tough global economy is to get it right with 
respect to our essential, domestic policies.
    If I was going to sum it up in a sentence, I would say our 
premier challenge is to grow things in America, make things in 
America, add value to them in America, and then ship them 
somewhere. To do that American businesses need access to raw 
materials in especially, in a high technology area, that means 
access to what is known as the critical mineral field.
    Critical minerals are the key to stronger permanent magnets 
for wind turbines, for cleaner energy, and electric drive 
vehicles. They're vital to phosphors which give us more 
efficient lighting and flat panel displays and also give our 
military night vision goggles and heads up displays.
    Critical minerals are key to rechargeable batteries in 
hybrid and electric vehicles and the high efficiency motors 
that power them. They serve as catalysts for fuel cells and for 
refining automobile fuel. We also know that they're essential 
for many of our advanced weapon systems, MRI machines, and many 
other technologies that are vital to America's national and 
economic security.
    Yet for as critical as these minerals are, our country has 
been dangerously depending on imports from foreign suppliers. 
The United States imports all, all our rare earth oxides, a 
special class of critical minerals. In fact, American imports 
the vast majority of them from a single supplier. Ninety-one 
percent of our rare earths come solely from China, and our 
country has seen how dangerous this dependence can be.
    In 2009, China choked off the supply of these materials to 
the rest of the world, restricting exports by 72 percent, 
causing the prices of rare earths to skyrocket here at home.
    Although China currently enjoys near monopoly in the global 
production of critical materials, we're talking now about both 
mining and processing, the truth is it didn't used to be this 
way. I think it's our view, of our bipartisan coalition, that 
it doesn't have to be this way in the future.
    Fifteen years ago the United States was self-reliant for 
our rare earths. Today China holds only 50 percent of the 
worlds natural reserves while our country holds about 13 
percent according to a recent study by the U.S. Geological 
Survey.
    In fact, a large part of the critical mineral supply shock 
in 2009 was due to uncertainty about the global distribution of 
critical minerals. When China began to restrict supply, the 
rest of the world was in the dark about what the alternative 
sources of the supply were, and were they even available.
    Finally, a crucial but too often neglected part of this 
supply conversation is minerals processing. Although mining is 
an important part of the supply equation and S. 1600 encourages 
Federal agencies to expedite the permitting for new critical 
minerals extraction, it is the lack of processing capacity 
transforming the raw materials we pull out of the ground into 
the high-purity compounds needed for manufacturing. It is that 
challenge that is my concern and the concern of many experts. 
In a sense, it is our Achilles heel.
    Mining more ore in the United States is not going to reduce 
our dependence on foreign suppliers if the United States does 
not develop the processing and refining technologies and 
infrastructure needed to turn the ore into useful products and 
then recycle them at the end of their useful lives.
    S. 1600 expands the U.S supply of critical minerals by 
looking comprehensively at the entire domestic supply chain of 
critical minerals. The bill starts with the identification of 
which minerals and elements are truly in need of special 
attention. It then requires the Interior Department to conduct 
assessments of where those minerals are located and expands 
research to find more efficient ways of extracting and 
processing the minerals.
    The bill also requires the 2 lead agencies, the Department 
of the Interior and the Department of Agriculture, to take a 
fresh look at the permitting process. We ought to make sure, 
with respect to hard rock minerals, that we're looking at every 
possible way to reduce delays for mining projects that would 
extract critical minerals.
    The legislation also includes important training programs 
for our future scientists and the bill includes research 
programs to extract critical minerals from unconventional 
sources.
    Our witnesses today also represent the entire supply chain 
from research and education, to mining and processing, to 
manufacturing the final end products our people use every day. 
We thank them for testifying.
    Two of my colleagues have spent an inordinate amount of 
time working with the committee trying to deal with both the 
substance and the politics of putting together a bipartisan 
bill when sometimes people wonder if the U.S. Senate can order 
a Coca-Cola, let alone do an important piece of legislation.
    I want to commend Senator Murkowski and Senator Udall. 
We'll recognize Senator Murkowski now, then we want to 
recognize Senator Udall who also has toiled hard and 
effectively on this issue.
    Senator Murkowski.
    [The prepared statement of Senator Dean Heller follows:]
    Prepared Statement of Hon. Dean Heller, U.S. Senator From Nevada
    Chairman Wyden and Ranking Member Murkowski, thank you for holding 
today's hearing. Mining is integral to Nevada's economy, and we have a 
proud tradition of leading the nation on mining and mineral research. 
The legislation we are considering today would go a long way towards 
bringing federal mineral policy into the 21st Century, and I am proud 
to be an original co-sponsor of this important legislation.
    I would like to also thank Mr. Jim Sims, Vice President of 
Corporate Communications at Molycorp for being here. The company's 
Mountain Pass rare earth facility is only about seventy miles south of 
Las Vegas. The project has been an important economic driver in the 
region, employing hundreds of Nevadans, during a time where my state 
continues to lead the nation in unemployment. I have had the pleasure 
of working with Molycorp while it went through the site expansion 
permitting process, and I am proud that Nevadans are playing such a 
leading role in our nation's only rare earth oxide producing facility.
    In Nevada and across the country, we have an abundance of critical 
and strategic minerals that play a vital role in our everyday lives, as 
well as our nation's economic success and national security. The mining 
industry is one of the central pillars of Nevada's economy, directly 
employing thousands of Nevadans. But as many people familiar with 
mining communities know, the jobs directly at the project sites are 
just one aspect of their economic impact. The influx of hundreds of 
mining jobs into local communities ultimately facilitates additional 
economic growth supporting the mine and the people who work there. 
Those mine workers need restaurants to eat at, convenience stores to 
shop at, and places to live. A recent economic study showed that mining 
provides more than 60,000 direct and indirect jobs in the State 
producing over $200 million in tax revenue and nearly $10 billion of 
economic activity annually. That is why, even though Nevada currently 
has one of the highest unemployment rates in the country, the areas in 
my state that rely on mining, such as Elko County, have an unemployment 
rate that is nearly half of the State's average.
    I am pleased to join this diverse bipartisan group of senators 
working to enact the Critical Minerals Policy Act. These reforms can 
reduce our nation's reliance on other countries for the resources we 
need to power our economy.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you Mr. Chairman.
    I do appreciate the fact that you have scheduled up this 
hearing today and very pleased that we are at this point.
    You have noted the bipartisanship that went into 
constructing this bill and you've mentioned several members of 
the committee, I appreciate your leadership on it as Chairman, 
but I particularly want to recognize my friend and colleague 
Senator Udall who had his own bill in the last session and our 
folks got together and worked through some of the issues. I 
think what we have built is a legislative proposal that is good 
and sound and rational and exactly what should happen in a 
committee likes this.
    So I thank you for the opportunity to hear this this 
morning and again to Senator Udall my thanks to you for your 
great cooperation in building what I think is a good bill here.
    I think it is somewhat, I suppose serendipitous, maybe it's 
a little bit presumptuous the bill was numbered S. 1600 and 
when I think of 1600 I think about the white place down the 
road here. It is my hope that because our bill really does 
address such significant issues this critical supply chain it 
already has 19 members on board in a bipartisan sense I really 
do think that we can send this down the road this year. That 
would be a great win for this country, and so I will continue 
to keep working on this with of my colleagues.
    Mr. Chairman you've outlined the contents of the bill very 
well in your opening remarks. I appreciate particularly your 
recognition that if we don't have the processing capacity and 
ability, we are still left in a very, very vulnerable state.
    I think we recognize that well we don't have the lion's 
share of critical minerals here in this country, we do have 
very good supplies, we certainly have very strong supplies in 
my home State and an opportunity to gain access to them we're 
looking at it very critically.
    The problem though then the concern is we would have to 
ship it to China to be processed. So, once again they have the 
leverage that I think we're trying to get around here. So I 
appreciate again you highlighting that aspect of what we need 
to do when we're talking about the supply chain.
    I mentioned that we have reintroduced this bill with the 
proposals that I had outlined in my legislation along with 
Senator Udall's. A little over 2 years ago at a hearing very 
similar to what we're having today I asserted that the problem 
that we have on our hands is very real. Today I would assert 
that that problem has not diminished.
    Our mineral related policies remain outdated, our 
dependence on foreign minerals is reportedly deepening as you 
had mentioned. Our agencies are not as coordinated and focused 
on this issue as I believe they need to be, and when it comes 
to permitting delays for mines, our Nation is tied for last. In 
other words we're the worst in the world when it comes to 
permitting delays.
    All along the supply chain our mineral related capabilities 
have slipped. Unless we take meaningful action, and soon, I 
think our economy and our security can be jeopardized. Our 
recent experience with helium shows how dire a shortage of a 
critical mineral would be for many different industries. We 
need to realize that unless we do more to ensure our own 
domestic supply, we may have no way to present--prevent a 
crisis next time around.
    Now our colleagues over in the house have presented ideas 
to fix this problem and I think that we should consider them 
fairly just as we expect that they will consider ours. The fact 
to the matter is that we've taken different approaches between 
the 2 bodies.
    Here in the Senate we focus on the entire supply chain by 
establishing a process through which minerals can be designated 
as critical; by adding accountability to the permitting 
process; by returning agencies to the important work of 
geological surveying; by seeking alternatives and encouraging 
recycling; and by promoting a work force that can rise to the 
challenges that undoubtedly lie ahead.
    Now I know that we're all focused here today on the big 
speech that's going to be delivered in the Capital later this 
evening. While I would love it, as we are sitting there 
listening to the President, if he would look at us, Senator 
Udall, the chairman here, myself and other members of the 
Energy Committee, and say the State of the Union would be 
better if we improved our mineral policies.
    Now I'm not going to hold my breath for that. Maybe we 
should try to send some mental telepathy between here and now 
and then, but I somehow doubt that that's made it into his 
final text. But it is the truth and these are issues that 
deserve our attention.
    Minerals are the building blocks of our economy, critical 
to our prosperity, our standard of living and our 
competitiveness. We need a steady, affordable, and domestic 
supply of them and as you have pointed out Mr. Chairman, 
minerals that are mined here, refined here, and processed here, 
and made into products here.
    So again I'm pleased because we've got a good bipartisan 
bill, it's practical, it's physically responsible, it takes a 
comprehensive approach to an increasingly complex set of 
challenges. I think it's worthy of our committee's support and 
I would hope that we will reach that point very soon.
    I'll look forward to the testimony from both panelists and 
thank you all for agreeing to be here this morning.
    The Chairman. Senator Murkowski thank you for an excellent 
statement.
    I also note that I hope that the bipartisanship of the 
Senate bill will infiltrate into the other body because their 
bill was not largely bipartisan. I think it was overwhelmingly 
a partisan vote. So the good work that you have helped to make 
possible I hope is going to set off a little bit of a push for 
some bipartisanship in the house and I thank you for it.
    Senator Udall, as Senator Murkowski has said--has put an 
exceptional amount of time into this and understands this issue 
inside out, inside and out.
    Senator Udall, we welcome you----
    Senator Udall. Thank----
    The Chairman. Please go ahead.

          STATEMENT OF HON. MARK UDALL, U.S. SENATOR 
                         FROM COLORADO

    Senator Udall. Thank you Mr. Chairman, thank you Senator 
Murkowski for the kind words and we have been involved in this 
together. It's been a labor of love, I'm really pleased with 
the point that we're at and I think we've learned a lot in the 
process.
    One of the things I've learned is that rare earth materials 
and minerals aren't actually rare they're just rare in 
concentrated forms. It's very--it's time consuming, it's 
technologically challenging, although we're going to hear about 
some of the real advances today to concentrate those minerals 
and metals.
    I think this new term we're using which is critical 
materials really does the job and sets up the agenda for us and 
the challenge but also the opportunity. So I want to associate 
myself with your remarks, both of your remarks and thank you 
for the kind words.
    I have 2 Coloradans I'm going to introduce to you in a 
minute, but I did want to add a couple of other comments. The 
reason I got involved in this, this is a very important issue 
for Colorado and it fits with 2 of my priorities which have 
been national security and clean energy, that doesn't mean that 
traditional energy actually needs to use these kinds of 
materials as well. We ought to be leaders in this area not 
followers, we can partner with some of the other countries, but 
we can lead and this is what this legislation really gives us 
an opportunity to do.
    You all mentioned the legislative vehicles you've used, in 
2011, I introduced the Critical Minerals and Materials 
Promotion Act and it focused on the very challenge and 
opportunity we're talking about here today. My focus was on 
research and development which would then develop a -or 
strengthen I should say our domestic supply chain and then 
would have the result of further developing in more robust 
critical minerals industry work force.
    We want people to know how to do this and I'm really 
pleased that our revised version, the Critical Minerals Policy 
Act of 2013, includes these ideas and many more from my 
legislation as well as from what you all did.
    I can't stay for the entire hearing, I hope you'll 
understand that, but I did want to introduce these 2 Coloradans 
I mentioned.
    I want to start with Dr. Rod Eggert, he's a professor and 
director of the Division of Economics and Business at the 
Colorado School of Mines. We're very proud of the Colorado 
School of Mines.
    I don't know, Dr. Eggert, maybe you can speak to this in 
your comments, But I don't know if there's any other 
institution in any other state that equals mines, but of course 
I'm a hometown boy and I care about Mines, it's a wonderful 
school. As well as our Denver Broncos we're going to win on 
Sunday, but anyway that--I shouldn't.
    [Laughter.]
    Senator Udall. Dr. Eggert you're known as a leading expert 
on rare earth minerals and you chair the National Research 
Council and you helped literally to write the book on why 
critical minerals are so vital to our economy. You're also the 
deputy director of the Critical Minerals Institute. The 
Institute is a DOE energy innovation hub and I believe you 
focus there on research to more efficiently use current 
materials, reduce waste during manufacturing, diversify our 
supply and many other important areas of research occur at the 
institute.
    So thank you for that great work and I know the committee 
will benefit from your expertise.
    Sitting just behind you is Jim Sims and he's the Vice 
President of Corporate Communications for Molycorp. Molycorp is 
a Colorado based company, it's a world leader in rare earths 
and rare metals. They have a facility in California, Mountain 
Pass facility and there--and I just got an update from Jim, 
Molycorp is creating one of the most energy efficient 
environmentally friendly rare earth production facilities in 
the world.
    Mr. Chairman, Ranking Member we also have a third witness 
with us who has a connection with the great State of Colorado 
and that's Major General Robert Latiff. He was the commander of 
NORAD, outside Colorado Springs and I'm glad that he's here and 
able to share some of his insights with the committee today 
from a national security perspective.
    So again thank you all for taking your valuable time. This 
is a crucial hearing and again I extend my gratitude to the 
ranking member and the chairman for having this important 
hearing today. We'll, whip the House of Representatives into 
shape on this, I have no doubt.
    The Chairman. There you are. Thank you again for the good 
work you've done, let's just make sure the record is clear, if 
Senator Cantwell of Washington comes in we are going to give 
her equal time----
    [Laughter.]
    The Chairman [continuing]. To address the gridiron front.
    Senator Udall. That's true.
    The Chairman. Let's go right to our witnesses, we've got 
Dr. David Danielson the Assistant Secretary for the Office of 
Energy Efficiency and Renewable Energy at the Department. They 
house the Critical Minerals Institute and the advanced 
manufacturing office.
    Dr. Larry Meinert, he is the mineral resources program 
coordinator for the USGS at the Department of the Interior.
    Gentleman we will make your prepared remarks a part of the 
record in their entirety. I've come to feel that there's almost 
a physiological need at these sessions to read every bit of 
what we'll put into the record. If you can just kind of 
summarize your key views, that'll leave plenty of time for 
questions.
    Why don't we start with you Dr. Danielson?

   STATEMENT OF DAVID DANIELSON, PH.D., ASSISTANT SECRETARY, 
OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, DEPARTMENT OF 
                             ENERGY

    Mr. Danielson. Great, thank you.
    Chairman Wyden, Ranking Member Murkowski, and members of 
the committee, thank you for the opportunity to testify today 
on the important role that critical minerals play in moving the 
U.S. toward a clean energy economy and the Department of 
Energy's ongoing work related to this topic.
    The Department is currently reviewing S. 1600, the Critical 
Minerals Policy Act of 2013 and has no specific comments on 
legislation at this time. However DOE strongly believes in the 
importance of ensuring a stable sustainable domestic supply of 
critical minerals and has already begun to take significant 
actions to address this challenge.
    I represent DOE's Office of Energy Efficiency and Renewable 
Energy, EERE, which leads DOE's efforts to help build a strong 
American clean energy economy.
    Critical materials are used in many traditional new and 
emerging energy applications including in lighting, solar 
photovoltaics, batteries, and wind turbines, and are expected 
to play an increasingly important role in meeting our national 
energy environmental and economic goals going forward.
    DOE has been moving swiftly on multiple fronts to address 
critical materials challenges and issued critical materials 
strategy reports in 2010 and 2011 that formally identified 5 
rare earth materials, dysprosium, neodymium, europium, terbium, 
and yttrium as critical materials for clean energy applications 
and identified 2 additional elements lithium and tellurium as 
near critical materials.
    DOE's Critical Materials Strategy Report identified 3 key 
pillars to address critical materials challenges.
    One, diversifying the supply of critical materials, 2, 
developing substitutes for critical materials, and 3, driving 
recycling, reuse, and more efficient use of critical materials.
    Several entities within DOE contribute to our critical 
materials R&D effort including the Office of Science, the 
Advanced Research Projects Agency-Energy, and our applied 
technology offices including my office EERE.
    EERE's R&D investments including its Critical Materials 
Institute are directly aligned with the aforementioned 3 
pillars of DOE's critical materials strategy and are closely 
coordinated with other efforts across all of DOE.
    Regarding the first pillar diversifying supply, EERE has 
invested in technologies to improve domestic lithium production 
to supply the domestic battery industry as well as in 
technologies to recycle lithium batteries. We've also funded 
the development of technologies to cost effectively extract 
minerals such as lithium from geothermal brines to improve 
domestic production of geothermal energy at reduced cost. This 
year EERE intends to expand this work to develop technologies 
to cost effectively extract rare earth elements from geothermal 
brines as well.
    In the second pillar the area of critical materials 
substitutes. DOE has made significant research investments in 
alternative motor and generator topologies which contain no 
rare earth permanent magnets at all. EERE has also invested in 
magnetic materials research to develop magnets with lower rare 
earth content and to develop completely rare earth free 
permanent magnets as well. EERE also supports research on next 
generation wind turbine drive train technologies that could 
help reduce the use of rare earth elements while continuing to 
drive down the cost of wind energy.
    Improving the recycling and reuse of critical materials in 
the third pillar has had limited R&D investment at DOE until we 
recently stood up our Critical Materials Institute, or CMI, in 
the middle of last year in 2013. Led by Ames National 
Laboratory, the Critical Materials Institute which is one of 
DOE's energy innovation hubs brings together leading 
researchers from academia national laboratories in the private 
sector to develop solutions to the domestic shortages of rare 
earth metals and other materials critical for U.S. energy 
security.
    This institute has focused its R&D efforts around the 3 
pillars of the DOE critical materials strategy. For example CMI 
researchers are studying new lower cost ways to extract, 
separate, and process rare earth metals from both ores and 
recycled materials, searching for substitutes for rare earth 
phosphors for efficient lighting, and developing new high 
strength, high temperature magnetic materials with low or no 
rare earth content.
    If successful the technologies being developed by CMI could 
reduce the rare earth content of permanent magnets by more than 
50 percent, reduce the amount of critical elements going to 
domestic landfills in the U.S. by up to 35 percent, and reduce 
the loss of critical rare earths within domestic manufacturing 
facilities by up to 50 percent.
    Finally DOE would like to underscore the importance of 
continued interagency coordination and collaboration on the 
topic of critical materials. DOE co-chairs an interagency 
subcommittee on critical and strategic mineral supply chains 
that facilitates coordination across Federal agencies to 
identify and address important issues related to critical 
minerals supply issues across all government.
    In conclusion the development and implementation of its 
critical materials strategy including the creation of the 
Critical Materials Institute, the DOE is taking strong initial 
steps forward to address the critical materials challenges 
faced by American manufacturers in the clean energy industry. 
We look very forward to working with Congress going forward to 
address the Nation's critical materials challenges.
    Thank you.
    [The prepared statement of Mr. Danielson follows:]

  Prepared Statement of David Danielson, Ph.D., Assistant Secretary, 
 Office of Energy Efficiency and Renewable Energy, Department of Energy
Introduction
    Chairman Wyden, Ranking Member Murkowski, and Members of the 
Committee, thank you for the opportunity to testify today on the 
important role that critical minerals play in moving the U.S. towards a 
clean energy economy and the U.S. Department of Energy's (DOE) ongoing 
work related to this topic.
    Many domestically-manufactured products rely on critical materials, 
or materials that are important in their use and subject to supply 
restrictions. The energy industry is heavily reliant on critical 
materials and could be significantly affected by supply disruptions and 
resulting price increases and fluctuations. These critical materials 
are found in many traditional, new, and emerging energy applications, 
as well as key ingredients in lighting, solar photovoltaics and 
batteries, and many other applications. Technologies using critical 
materials are poised to make even more significant contributions to 
national energy, environmental, and economic goals.
    The Department is currently reviewing S. 1600, the Critical 
Minerals Policy Act of 2013, and has no specific comments on the 
legislation at this time. However, the Department believes in the 
importance of ensuring a stable, sustainable, domestic supply of 
critical minerals. We look forward to continuing our discussions with 
Congress on ways to: monitor and identify critical materials as they 
potentially impact the energy economy; address the production, use, and 
recycling of critical minerals throughout the supply chain; as well as 
develop alternatives to critical minerals moving forward.
    The Department has been moving swiftly on multiple fronts to 
address challenges across the lifecycle of critical elements, while 
also exploring alternatives to those that are hardest to obtain. These 
efforts are informed by the Department's Critical Materials Strategy 
developed in 2010 and 2011, which I will be happy to discuss with you 
today. I will also describe the Critical Materials Institute, an Energy 
Innovation Hub established by my office last year, and devoted to 
finding solutions in response to the scarcity of these elements that 
are critical to U.S. manufacturing and the expansion of clean energy 
technologies.
    DOE is pursuing an all-of-the-above approach to developing every 
source of American energy. I represent the Office of Energy Efficiency 
and Renewable Energy (EERE), which leads DOE's efforts to help build a 
strong clean energy economy, a strategy that is aimed at reducing our 
reliance on foreign oil, saving families and businesses money, creating 
jobs, and reducing pollution. We support some of America's best 
innovators and businesses to research, develop, and demonstrate 
cutting-edge technologies, and work to break down market barriers in 
the EERE portfolio's three sectors: 1) sustainable transportation 
(vehicles, biofuels, hydrogen and fuel cells); 2) energy efficiency 
(energy-saving homes, buildings, and manufacturing); and 3) renewable 
electricity generation (solar, geothermal, hydrogen and fuel cells, 
wind and water).
    Our nation stands at a critical point in time regarding the 
competitive opportunity for clean energy. In 2013, $254 billion was 
invested globally in clean energy, just over 360 percent increase since 
2004; trillions more will be invested in the years ahead.\1\ In the 
decades-long transition to a clean energy economy, the United States 
faces a stark choice: the clean energy technologies of today and 
tomorrow can be invented and manufactured in America, or we can 
surrender global leadership and import these technologies from other 
countries.
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    \1\ See: Bloomberg, ``Global Trends in Renewable Energy Investment, 
Fact Pack as of Q4 2013'' (Jan. 2014): http://about.bnef.com/files/
2014/01/BNEF__PR__FactPack__Q4__CleanEnergyInvestment__2014-01-15.pdf
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DOE's Critical Materials Strategy
    Many of today's clean energy technologies rely on the use of 
materials with certain essential properties, such as efficient light 
emission or strong magnetism. Many of those critical materials are 
essential to producing products that EERE is also investing in, and in 
order to address this reliance, in both 2010 and 2011, DOE issued 
Critical Materials Strategy reports that defined and assessed critical 
materials by analyzing two dimensions: importance to the clean energy 
industry, and supply risk. The Department's 2010 and 2011 Critical 
Materials Strategy reports identified five rare earth materials--
neodymium, europium, terbium, dysprosium, and yttrium--as critical 
materials currently essential for America's transition to cost-
competitive clean energy technologies, like wind turbines, electric 
vehicles, and energy efficient lighting. The Strategy reports also 
identified two additional elements, lithium and tellurium, as ``near-
critical'' materials. Identifying and addressing near-critical element 
challenges is crucial as both the clean energy industry and critical 
materials market dynamics change. These particular non-rare earth 
materials play, at this time, an indispensable role in batteries for 
hybrid and electric vehicles and commercial photovoltaic thin films, 
and represent the next-highest criticality in terms of importance to 
the clean energy industry and risk of supply disruption.
    The Department's Critical Materials Strategy reports identified 
three pillars to address critical materials challenges: 1) diversifying 
supply of critical materials, 2) developing alternatives to critical 
materials, and 3) driving recycling, reuse, and more efficient use of 
critical materials. I will address these in turn: First, diversified 
global supply chains are essential. To manage supply risk, multiple 
sources of materials are required. This means taking steps to 
facilitate the extraction, processing, and manufacturing of critical 
materials here in the United States, as well as encouraging other 
nations to expedite alternative supplies. In all cases, extraction, 
separation, processing, and manufacturing must be done in an 
environmentally sound manner. Second, substitutes must be developed. 
Research leading to material and technology substitutes will improve 
flexibility, decrease demand for critical materials, and help meet the 
materials needs of the clean energy economy. Third, recycling, reuse 
and more efficient use of critical materials could significantly lower 
world demand for newly extracted materials. Research into recycling 
processes coupled with well-designed policies will help make recycling 
economically viable over time. Addressing these three pillars is a 
moving target, as critical materials challenges change over time. 
Ongoing assessments are necessary to identify the status of current and 
emerging critical materials; as new technology develops and markets 
respond to supply risk, the criticality of materials will also shift.
DOE R&D Organizations
    Several entities within the Department contribute to the critical 
materials research and development (R&D) effort. The Basic Energy 
Sciences program in the Office of Science supports broad-based, 
fundamental materials research. The Advanced Research Projects Agency--
Energy (ARPA-E) invests in high-potential, high-impact energy 
technologies that are likely too early for private-sector investment. 
Within EERE, investment in research related to critical materials 
occurs within the Vehicle Technologies Office (VTO), the Wind Power 
Technologies Office, the Solar Energy Technologies Office (SETO), the 
Geothermal Technologies Office (GTO), and the Advanced Manufacturing 
Office (AMO).
    DOE national laboratories are also integral to this R&D effort. The 
national laboratory system includes the nation's historic leader in 
rare earth materials research, the Ames Laboratory in Ames, Iowa. While 
Ames Laboratory has a core-competency in rare earth materials, many 
other national laboratories also contribute significantly to R&D aimed 
at reducing the criticality of critical materials. For example, Argonne 
National Laboratory, Brookhaven National Laboratory, Pacific Northwest 
National Laboratory, Sandia National Laboratories, and Lawrence 
Berkeley National Laboratory have complementary efforts spanning from 
basic and applied research to development and demonstration.
    In response to the Critical Materials Strategy reports, the 
Department of Energy launched a national competition for an Energy 
Innovation Hub. Early in 2013, DOE announced the Critical Materials 
Institute (CMI), led by Ames National Laboratory. CMI is the nation's 
premier research, development and analysis institute dedicated to 
finding innovative solutions and developing creative, transformational 
paths to eliminating the criticality of rare earth and other materials. 
CMI began operations in June of 2013. CMI has brought together leading 
researchers from academia, four Department of Energy national 
laboratories, as well as the private sector to develop solutions to the 
domestic shortages of rare earth metals and other materials critical 
for U.S. energy security. CMI addresses materials criticality problems 
by developing technologies spanning the supply chain for the rare earth 
(plus lithium and tellurium) elements, as well as providing research 
infrastructure to address any emergent challenges related to materials 
criticality.
    CMI faces a formidable task: developing solutions to potential 
supply chain risks across the lifecycle of several different materials. 
The solutions will not be the same for different kinds of materials or 
applications. For example, technologies to improve separation and 
processing of rare earth elements from domestic deposits may increase 
the supply of neodymium (for magnets) but not europium (for lighting) 
due to the ore composition.
    The Institute has focused its efforts around the three pillars of 
the Critical Materials Strategy. For example, to diversify supply, 
researchers are studying new, lower cost ways to extract, separate and 
process rare earth metals from ores and recycled materials. To develop 
substitutes, Institute researchers, in partnership with private sector 
partners, are searching for substitutes for rare earth phosphors. 
Energy-efficient lighting phosphors currently need europium, terbium, 
and yttrium, and this group is searching for alternatives using 
materials such as manganese. To improve reuse and recycling, CMI's R&D 
in this area is focused on two major areas: first, improving the cost- 
and energy-efficiency of separating the rare earth containing 
components from end-of-life products like light bulbs, hard drives and 
motors; and second, developing new technologies to extract rare earth 
elements from these end-of-life components to produce new materials. If 
successful, the technologies proposed by CMI could reduce loss of 
critical rare earths within domestic manufacturing by 50 percent and 
reduce critical rare earths elements going to domestic landfills by 35 
percent.
    In its first year of operations, the team is off to a fast start. 
Key start-up and management operations have been put in place. About 35 
projects across the Institute are up and running. All of these projects 
involve multiple partners, often three or four partners collaborating 
to achieve the best solutions under CMI's mission. EERE is pleased to 
report that CMI researchers filed seven intellectual property invention 
disclosures. While there is tremendous work still to be done by the 
Institute, that is a great sign of things to come.
R&D Progress by DOE Programs
    In my office and across the Department, we have an obligation to 
research issues relevant to supporting manufacturing as it relates to 
energy. Increasing U.S. manufacturing competiveness relies on thinking 
broadly about addressing challenges across the supply chain and across 
various industrial applications in our R&D investments. By stepping up 
research related to critical materials, DOE will help ensure clean 
energy technologies will be invented and manufactured in America. 
EERE's R&D investments are directly aligned with the aforementioned 
three pillars of the Critical Materials Strategy and coordinated among 
the program offices across the Department.
    Regarding the first pillar--diversifying supply--some of the key 
research challenges in separations and processing of rare earth 
elements have been addressed historically at a small scale within the 
research portfolios of the Basic Energy Sciences program in the Office 
of Science, Laboratory Directed Research and Development, Small 
Business Innovation Research, and Small Business Technology Transfer. 
EERE has also invested in technologies to improve domestic lithium 
production. Through the American Recovery and Reinvestment Act of 2009, 
VTO supported a project to expand lithium carbonate and lithium 
hydroxide production to supply the domestic battery industry as well as 
a project to recycle lithium batteries for resale of lithium carbonate. 
The EERE Geothermal Technologies Office has funded the development of 
technologies to cost effectively extract minerals such as lithium, 
manganese and zinc from geothermal brines--to improve domestic 
production at reduced costs and to increase the overall value of 
geothermal electricity generation.
    For substitutes, DOE has made significant investments, specifically 
toward rare earth permanent magnets for motors and generators. For 
instance, both EERE (through VTO and the Wind Power Technologies 
Office) and ARPA-E have significant efforts related to addressing rare 
earth materials criticality in these areas through the development of 
alternative motor and generator topologies which do not require rare 
earth permanent magnets. VTO has also invested in optimizing the use of 
rare earth materials in permanent magnets--focusing on magnet 
processing, composition, and improving high temperature performance 
with reduced rare earth content. In addition, VTO supported researchers 
are working to develop rare earth-free permanent magnets for advanced 
traction motors. For example, they are modifying aluminum, nickel and 
cobalt (alnico) magnets for improved performance in these new motors 
and developing new iron-cobalt based alloys to replace rare earth 
permanent magnets. ARPA-E's ``Rare Earth Alternatives in Critical 
Technologies'' program focuses on early-stage alternative technologies 
that reduce or eliminate the need for rare earths by developing 
substitutes in two key areas: electric vehicle motors and wind 
generators. Technological advances that utilize low-cost and abundant 
alternatives such as manganese and nickel will become increasingly 
vital to our national economic and energy security. The projects funded 
by ARPA-E must aim to meet or exceed the performance of their rare 
earth predecessors while remaining cost-competitive.
    EERE's Wind Power Technologies Office supports several next-
generation drive train technology projects. One of the key goals for 
these projects is reduction in the cost of wind energy. Although not a 
stated requirement for the program, many of these innovative 
technologies would also reduce or eliminate the use of permanent 
magnets containing rare earth materials, particularly for next-
generation direct-drive wind turbines. For example, innovative 
superconducting direct-drive generators and new processes to make these 
materials on a cost-competitive basis for large wind turbines are being 
investigated.
    The Department is also addressing substitutes for near-critical 
materials. DOE's 2011 Critical Materials Strategy classified lithium as 
``near-critical.'' R&D efforts continue across the Department to 
develop alternatives to this material. In December 2012, the Joint 
Center for Energy Storage Research (JCESR), which is the Energy 
Innovation Hub for Battery and Energy Storage, began operations. JCESR 
is managed out of DOE's Office of Science and is led by Argonne 
National Laboratory. The mission of JCESR is to develop new battery 
chemistries beyond lithium-ion, and its goal is to deliver electrical 
energy storage with less or no lithium, five times the energy density, 
and at one-fifth the cost of today's commercial batteries within five 
years.
    Additionally, in the 2011 Critical Materials Strategy, tellurium 
was also assessed as near-critical. It is a material used in solar 
cells being deployed in the United States today. EERE's Solar Energy 
Technologies Office has supported a large number of projects to develop 
new technologies that focus on earth abundant materials as alternate, 
inexpensive materials in solar photovoltaics. For example, in September 
2011, DOE awarded funding to 23 projects ($24.5 million) through the 
Next Generation Photovoltaics II solicitation, many of which 
incorporated earth-abundant materials such as copper, iron, and tin. 
Improving the recycling and reuse of critical materials--the third 
pillar--has, until recently, had limited DOE R&D investment. However, 
with the startup of the Critical Materials Institute and its work in 
this area, DOE is primed to make strides in this arena of R&D.
Interagency Coordination
    Finally, the Department would also like to underscore the 
importance of continued interagency coordination and collaboration on 
the topic of critical materials. Issues related to critical materials 
and minerals touch on the missions of many federal agencies, and the 
full interagency perspective can help us proactively address critical 
materials issues. DOE co-chairs the National Science and Technology 
Council's Subcommittee on Critical and Strategic Mineral Supply Chains, 
which was established in December 2010. This Subcommittee facilitates a 
strong, coordinated effort across federal agencies to identify and 
address important policy implications arising from strategic minerals 
supply issues. Areas of focus for the Subcommittee include identifying 
emerging critical materials, improving depth of information, and 
identifying R&D priorities. The Subcommittee also informally reviews 
and examines domestic and global policies that affect the supply of 
critical materials, such as permitting, export restrictions, recycling, 
and stockpiling.
Conclusion
    The work being done across the Department, including at the 
Critical Materials Institute, shows that DOE is taking steps to address 
the global demand for critical materials that underpin clean energy 
technologies. The United States intends to be a world leader in clean 
energy technologies. To this end, we must ensure a sustainable domestic 
supply chain for our clean energy economy. We look forward to working 
with Congress on addressing critical materials challenges.

    The Chairman. Thank you.
    Mr. Meinert.

  STATEMENT OF LAWRENCE D. MEINERT, MINERAL RESOURCES PROGRAM 
COORDINATOR, U.S. GEOLOGICAL SURVEY, DEPARTMENT OF THE INTERIOR

    Mr. Meinert. Good morning Chairman Wyden, ranking member--
Good morning Chairman Wyden, Ranking Member Murkowski and 
members of the committee, and thank you for the opportunity to 
discuss the Critical Minerals Policy Act of 2013, I'm joined 
today by Karen Mouritsen, deputy assistant director energy 
minerals and realty management for the Bureau of Land 
Management.
    The Department of the Interior supports the goal of 
facilitating the development of critical minerals in an 
environmentally responsible manner. As background the U.S. 
Geological Survey is responsible for conducting research and 
collecting data on a wide variety of mineral resources. Studies 
include how and where deposits are formed, the interactions of 
minerals with the environment, and information to document 
current production and consumption of about 100 mineral 
commodities within the United States and around the world.
    This full spectrum of mineral resource science allows for 
comprehensive understanding of the complete life cycle of 
mineral resources and materials including resource formation, 
discovery, production, consumption, use, recycling, and reuse, 
and allows for understanding of environmental issues of concern 
throughout the lifecycle.
    The Bureau of Land Management administers over 245 million 
surface acres of public land located in the 12 Western States 
including Alaska, as well as 700 million acres of subsurface 
mineral estate throughout the Nation. The BLM manages mineral 
development under a number of different authorities. Each of 
these authorities along with the BLM regulations and guidance 
provides a legal framework for the development of minerals 
including critical minerals on Federal and Indian lands.
    Global demand for critical mineral commodity is on the rise 
with increasing applications of consumer products, computers, 
automobiles, aircraft, and other advanced technology products. 
To better understand potential sources of critical mineral 
commodities the USGS has completed studies of known domestic 
and global rare earth reserves, resources, and uses, which 
summarize basic geologic facts and materials flow issues 
related to rare earth element resources one type of critical 
materials.
    Other USGS studies analyze worldwide trade and supply 
chains for other critical minerals including lithium, platinum 
group metals, and tantalum.
    In 2012 the United States was 100 percent dependent on 
foreign suppliers for 17 mineral commodities and more than 50 
percent dependent on mineral sources for an additional 24 
mineral commodities.
    In 2008 a National Research Council Committee funded 
largely by the USGS, developed a criticality matrix that 
combines supply risk with importance of use as a first step 
toward determining which mineral commodities are essential to 
the Nation's economic and national security.
    This has been updated by subsequent studies and ongoing 
work by the Critical and Strategic Mineral Supply Chain 
Interagency Subcommittee of the National Science and Technology 
Council. As David mentioned that is co-chaired by DOE and the 
USGS representing the Department of the Interior.
    For S. 1600 it directs the Secretary of the Interior 
through the Director of the USGS to perform a number of actions 
that build on current USGS activities and capabilities, 
including the recent rare earth element inventory that I 
mentioned. It also describes the BLM -directs the BLM to 
improve the quality and timeliness of decisions regarding the 
environmentally responsible development of critical minerals on 
Federal lands. The BLM supports the responsible development of 
minerals on Federal lands and is working to improve 
efficiencies while ensuring protection of other resources.
    In conclusion the Department maintains a work force of 
geoscientists including geologist, geochemist, geophysicists, 
and resource specialists with expertise on critical minerals 
and materials. The Department continuously collects, analyzes 
and disseminates dated information on domestic and global rare 
earth and other critical mineral reserves and resources, 
production, consumption, and use.
    The Department through the USGS stands ready to fulfill its 
role as the Federal provider of unbiased research on known 
mineral resources, assessment of undiscovered mineral 
resources, and information on domestic and global production 
and consumption of mineral resources for use in global critical 
mineral supply chain analysis.
    The BLM is committed to implementing efficiencies for the 
environmentally responsible development of critical minerals on 
Federal lands.
    Thank you for the opportunity to present the views of the 
Department on S. 1600, I'll be happy to answer any questions.
    [The prepared statement of Mr. Meinert follows:]

 Prepared Statement of Lawrence D. Meinert, Mineral Resources Program 
    Coordinator, U.S. Geological Survey, Department of the Interior
    Good morning Chairman Wyden, Ranking Member Murkowski, and Members 
of the Committee, and thank you for the opportunity to discuss S. 1600, 
the Critical Minerals Policy Act of 2013. The bill directs the 
Secretaries of the Interior and Energy to perform a large number of 
activities intended to support and enhance the Nation's critical 
mineral supply chain, beginning with developing a methodology to 
determine which minerals are critical to the Nation's economy. In this 
statement, I will address the provisions relevant to the Department of 
the Interior.
    The Department of the Interior supports the goal of facilitating 
the development of critical minerals in an environmentally responsible 
manner. We note that many of the activities called for in S. 1600 are 
within the scope of existing Department of the Interior authorities.
Background
    The U.S. Geological Survey (USGS) is responsible for conducting 
research and collecting data on a wide variety of mineral resources. 
Research is conducted to understand the geologic processes that have 
concentrated known mineral resources at specific localities in the 
Earth's crust and to estimate (or assess) quantities, qualities, and 
areas of undiscovered mineral resources, or potential future supply. 
USGS scientists also conduct research on the interactions of mineral 
resources with the environment, both natural and as a result of 
resource extraction, to better predict the degree of impact that 
resource development may have on human and ecosystem health. USGS 
mineral commodity specialists collect, analyze, and disseminate data 
and information that document current production and consumption for 
about 100 mineral commodities, both domestically and internationally 
for 180 countries. This full spectrum of mineral resource science 
allows for a comprehensive understanding of the complete life cycle of 
mineral resources and materials-resource formation, discovery, 
production, consumption, use, recycling, and reuse-and allows for an 
understanding of environmental issues of concern throughout the life 
cycle.
    Global demand for critical mineral commodities is on the rise with 
increasing applications in consumer products, computers, automobiles, 
aircraft, and other advanced technology products. Much of this demand 
growth is driven by new technologies that increase energy efficiency 
and decrease reliance on fossil fuels. To better understand potential 
sources of critical mineral commodities, the USGS has completed studies 
of known domestic and global rare-earth reserves, resources, and uses 
(Long and others, 2010; Tse, 2011; Wilburn, 2012). These studies 
summarize basic geologic facts and materials flow issues related to 
rare earth element resources, which are a type of critical mineral. 
Other USGS studies analyze world trade and supply chains for other 
critical minerals including lithium, platinum-group metals, and 
tantalum (Goonan, 2012; Yager and others, 2012; Soto-Viruet and others, 
2013).
    The Bureau of Land Management (BLM) administers over 245 million 
surface acres of public land located in the 12 Western states, 
including Alaska, as well as 700 million acres of sub-surface mineral 
estate throughout the nation. The BLM manages mineral development under 
a number of different authorities, including the Federal Land Policy 
and Management Act, the Mineral Leasing Act of 1920, the Materials Act 
of 1947, and the Mining Law of 1872. Each of these authorities, along 
with BLM regulations and guidance, provides a legal framework for the 
development of minerals, including critical minerals, on Federal and 
Indian lands.
    Though rare earth elements are currently of most concern to many 
stakeholders, including the Department of Defense which funded some of 
the studies, it should be noted that in 2012 the United States was 100 
percent dependent on foreign suppliers for 17 mineral commodities and 
more than 50 percent dependent on foreign sources for an additional 24 
mineral commodities. Import partners include Brazil, Canada, China, 
France, Germany, Japan, Mexico, Russia, and Venezuela. In 2008, a 
National Research Council committee, funded largely by the USGS, 
developed a ``criticality matrix'' that combines supply risk with 
importance of use as a first step toward determining which mineral 
commodities are essential to the Nation's economic and national 
security (National Research Council, 2008). This has been updated by 
subsequent studies and ongoing work by the Critical and Strategic 
Mineral Supply Chain Interagency sub-committee of the National Science 
and Technology Council, which is co-chaired by the USGS on behalf of 
the Department of the Interior.
S. 1600
    S. 1600, the Critical Minerals Policy Act of 2013, directs the 
Secretary of the Interior, through the Director of the USGS, to perform 
a number of actions that build on current USGS activities and 
capabilities, including the recent rare earths inventory. The bill in 
Section 101 directs the USGS to develop a rigorous methodology for 
determining which minerals are critical and then to use that 
methodology to designate critical minerals. Section 103 calls for a 
comprehensive national mineral resource assessment within four years of 
the bill's enactment for each mineral designated as critical under Sec. 
101, and it authorizes field work for the assessment, as well as 
technical and financial assistance for States and Indian tribes. The 
bill establishes in Section 108 a collaborative effort between USGS, 
academic institutions, and the U.S. Energy Information Administration 
for annual reviews of domestic critical mineral trends as well as 
forward-looking analyses of critical mineral production, consumption, 
and recycling patterns. Section 301 of the bill repeals the National 
Critical Minerals Act of 1984.
    S. 1600, Section 102, amends the National Materials and Minerals 
Policy, Research and Development Act of 1980 to encourage Federal 
agencies to facilitate the availability, development and 
environmentally-responsible production of critical minerals. Section 
105 directs the BLM to improve the quality and timeliness of decisions 
regarding the environmentally responsible development of critical 
minerals on Federal lands. The BLM supports the responsible development 
of minerals on Federal lands and is working to improve efficiencies 
while ensuring protection of other resources. Section 105 also directs 
the BLM to annually report on the implementation of these measures and 
on critical and hardrock mineral production on Federal land. We note 
that under the Mining Law of 1872, the BLM does not collect the 
quantity, type, and estimated value of minerals produced on Federal 
land.
Conclusion
    The Department maintains a workforce of geoscientists (geologists, 
geochemists, geophysicists, and resource specialists) with expertise in 
critical minerals and materials. The Department continuously collects, 
analyzes, and disseminates data and information on domestic and global 
rare-earth and other critical mineral reserves and resources, 
production, consumption, and use. This information is published 
annually in the USGS Mineral Commodity Summaries (USGS, 2013) and 
includes a description of current events, trends, and issues related to 
supply and demand.
    The Department, through the USGS, stands ready to fulfill its role 
as the federal provider of unbiased research on known mineral 
resources, assessment of undiscovered mineral resources, and 
information on domestic and global production and consumption of 
mineral resources for use in global critical mineral supply chain 
analysis. The BLM is committed to implementing efficiencies for the 
environmentally-responsible development of critical minerals on Federal 
lands.
    We note, however, that many of the activities called for in S. 1600 
are already authorized by existing authorities. Any activities 
conducted to fulfill the objectives of the bill would require 
substantial resources and would need to compete for funding with other 
priorities.
    Thank you for the opportunity to present the views of the 
Department on S. 1600. I will be happy to answer any questions.

    The Chairman. Alright gentlemen, thank you very much.
    Dr. Danielson let me start with you.
    We've talked about how the supply of critical minerals is 
essential for a whole host of things; let's start with say--
electric vehicles. It seems to me this is also an opportunity 
though to significantly improve the economics of a number of 
other energy technologies. So for example minerals like lithium 
can be recovered from battery packs now one of the major costs 
of electric vehicles. So we tried to capture as many of these 
opportunities as we could.
    You have a background in materials science, what additional 
recommendations might you have so that we can continue with our 
work on minerals to recapture as much economic value as we 
possibly can? That's why I cited the example of the lithium 
recovery from the battery pack. Are there are other areas where 
we can recapture value?
    Mr. Danielson. Thank you for that question Mr. Chairman.
    You know DOE performed these--the Critical Materials 
Strategy Reports in 2010 and updated it in 2011 and our 
approach was really based on the 3 pillars I mentioned. You 
know the first being diversifying supply, the second being 
about developing substitutes that don't have criticality, and 
the third is really focused on reuse and recycling and more 
efficient use of critical materials. The third pillar is really 
the area that you're touching upon.
    I think we've seen tremendous opportunities on the 
recycling side in a number of critical technologies as you 
mentioned. For DOE's work we've identified 4 specific 
technologies that are especially vulnerable to critical 
materials, electric vehicles both for motors, permanent magnets 
for motors and lithium for batteries, efficient phosphors for 
lighting where europium, terbium, yttrium are critical there. 
Wind turbines, which is an area where permanent magnets are a 
big part of the road map going forward which contain critical 
materials.
    One of the areas where we see great opportunity and we're 
attacking this head on with the Critical Materials Institute is 
in the area of recycling rare earth phosphors from fluorescent 
light bulbs. This is an area where europium, terbium, yttrium, 
they're--these are critical elements that we've identified, 3 
of 5 critical elements at DOE. We're already collecting about 
30 percent of fluorescent light bulbs to remove the mercury 
from these light bulbs.
    So we already have a supply chain to collect those 
materials, but we don't have the cost effective technology to 
separate out the rare earths from those phosphors. So one of 
the major focus areas of our institute is in developing new 
separations technologies which is an area where we haven't made 
a lot of investment in the past but I already see a lot of 
opportunity to cost effectively recycle those rare earth 
elements in phosphors.
    The Chairman. Good let me ask you one other question.
    One of the things I was struck by with respect to this 
issue, when I talked to Senator Murkowski and Senator Udall who 
have spent so much time on it, is that the programs that the 
Department-that the Federal Government really runs were just 
sort of strewn all over the country side. There are a lot of 
different programs and just because you have a lot of people in 
the kitchen doesn't necessarily mean you produce a good meal.
    [Laughter.]
    The Chairman. You've worked in materials science for quite 
some time. Is it your view that making sure that we have a more 
organized effort here, which is right at the heart of the bill, 
is a valuable contribution that this legislation makes?
    Mr. Danielson. Yes, without commenting directly on the bill 
itself I would point out that----
    The Chairman. We know the people at OMB are listening, I 
just want to make sure that the emphasis of the sponsors, which 
is to have a more organized effort that the value of that is 
something that you and other experts realize.
    Mr. Danielson. Yes, I and my colleagues, we see tremendous 
value in having coherent efforts around this, and within the 
Department as well as across all of government we have seen 
that within the DOE universe it was tremendously valuable to 
have our energy policy and strategic analysis office take the 
lead in organizing all of us. As my colleague mentioned we have 
an interagency subcommittee on critical and strategic mineral 
supply chains where we are all pulling together and so we--I 
see tremendous value in interagency----
    The Chairman. Let me use----
    Mr. Danielson [continuing]. Coordination.
    The Chairman. Let me use my last 20 seconds on something 
that's important for folks at home, at Oregon State.
    On December 20th a senior official in your office informed 
the directors of the Northwest National Marine Renewable Energy 
Center, which has collaboration between Oregon State University 
and University of Washington, that it would not be receiving 
any more funding to operate. It's our view that this is a 
critical area. We're falling behind our international 
competitors.
    It's my understanding that the Senators funding agreement 
with DOE runs through the first half of fiscal 2015 so you're 
not only cutting them off, but you are cutting them off in mid 
stream. Also that was a decision made a full month before 
Congress passed the Appropriations Bill, which provided the 
funding that we thought was needed to continue the program.
    Before the end of the week, I want to hear back from you on 
why this decision was made and in light of the fact that the 
Congress has passed and the President has now signed this new 
bill whether or not continued funding is going to be provided 
to the center. Will you get back to me on this by the close of 
business Friday?
    Mr. Danielson. Absolutely.
    The Chairman. Very good, alright.
    Senator Murkowski. Thank you Mr. Chairman and gentleman, I 
do appreciate you being here, but I have to admit I am a little 
bit disappointed in the written testimony that you have 
provided and your comments indirect support or opposition of 
the bill are very--they're so nuanced I can't tell, which is 
not usually a good sign.
    But--and we've got a second panel here that I think speaks 
very clearly to some of the issues that have been raised in S. 
1600, so I'd like Dr. Danielson for you to give me a little bit 
more of your comments in--both in writing and what you have 
affirmed here is the Department is currently reviewing it, 
you've got no specific comments on the legislation at this 
time.
    We introduced the bill back in late October, we certainly 
gave plenty of notice to the Department that we were planning 
this hearing and asking for folks to come in and testify. It's 
not a lengthy bill it's only 40 pages long. Are you saying that 
nobody within the Department has really had an opportunity to 
review and to be able to then provide comment?
    Mr. Danielson. Critical materials is an area that the 
Department and our interagency task force takes very seriously. 
I think we've evidenced that at DOE by publishing these 
critical materials reports that allow----
    Senator Murkowski. Yes, but what about this bill that has 
been out there now for 3 months, this 40 page bill. If critical 
minerals are so important why have you not formed an opinion 
one way or another that you would like to relay publicly?
    Mr. Danielson. At this point the DOE is reviewing it. We 
don't have any formal administration comments on the bill 
itself. I would welcome a request if desired for technical 
assistance related to this bill to the Department of Energy.
    Senator Murkowski. I don't know that there's any technical 
assistance. I think you guy's just need to read the bill and 
let us know whether it's something that you can support or not 
support. Everything that you have conveyed here in the hearing 
about the significance, the importance of critical minerals in 
our supply chain is certainly all fine well and good and we're 
talking about what you're doing within the Department to ensure 
that we're focusing on recycling, reuse, the other priorities. 
But we need to move a bill in order to advance some of this so 
we would greatly appreciate DOE weighing in.
    Dr. Meinert your testimony begins by stating that the 
Department supports the goal of facilitating the development of 
critical minerals in an environmentally responsible manner, you 
repeated that a couple of times, do you think that enactment of 
this bill would further enhance that goal?
    Mr. Meinert. Yes, we have read the bill in detail and we 
are thrilled and delighted at a bill that focuses on mineral 
resources. I as the head of the mineral resources program am 
particularly thrilled and delighted that the bill focuses on 
this critical need for the Nation. So as I stated very clearly 
here the Department is supportive of the goals of this bill and 
we are glad to see it introduced.
    Senator Murkowski. I'm thrilled and delighted, thank you.
    Let me ask both of you in the bill itself we--where we 
establish a process to designate which minerals are critical. 
We require that the list not exceed 20 in total, and I have to 
confess that that's a somewhat arbitrary number. The question 
to both of you is whether or not you think we have the right 
number? Should we be higher, should we be lower, does it make a 
difference? Your input here, Dr. Meinert you can go first.
    Mr. Meinert. This is a subject that we spent a lot of time 
on so we are the Nation's chief compiler of this type of 
information and so we've given a lot of thought to it. As you 
have pointed out there is no specific number that is absolutely 
correct.
    If you look at the various estimates that have been made 
around the world, so the European Union has looked at this and 
came up with a list of 14 elements in their study in 2011 and 
then they have redone that study and now expanded it beyond 20. 
So it's very clear that reasonable people could come up with 
lists of different lengths and I think the actual length of the 
list is less important than focusing the Nation and the world's 
attention upon minerals resources as a subject.
    So we are comfortable with the number that you have put 
forward and we recognize that it's not an absolute number and 
we understand the reasoning behind it.
    Senator Murkowski. OK, good, good.
    Mr. Meinert. I'll add that in our DOE--you know detailed 
DOE critical materials assessment strategy we looked at 16 
separate materials that were identified by our stakeholders and 
narrowed that down to 5 to 7 just within the Department of 
Energy space. So if we look at our interagency level a number 
in the--on the order of 20 plus or minus seems like a 
reasonable number.
    Senator Murkowski. OK, thank you Mr. Chairman.
    The Chairman. Thank you Senator Murkowski.
    In order of arrival we have Senator Baldwin, Senator Risch, 
and then Senator Franken.
    Senator Baldwin. Thank you Mr. Chairman, Ranking Member 
Murkowski.
    I'm delighted that we're having this hearing and I wanted 
to just start off with a couple of points that are slightly off 
topic for the bill but related. One is that the bill obviously 
focuses on critical materials critical minerals and you were 
drilling down on the critical aspect of it. Right now the State 
of Wisconsin is facing a very severe propane shortage.
    Now I'm not pretending that's the subject matter of the 
bill before us, but it gives a really stark illustration of 
what happens when there are disruptions, how dangerous it can 
be when resources that we absolutely rely on for, in this case 
warmth of our constituents homes are disrupted and we need a 
stable supply of our critical resources.
    The other issue that I wanted to bring up where Wisconsin I 
think is playing a proud leadership role is also slightly off 
topic, but pretty closely related and that's the supply of, and 
I can never pronounce this very accurately, but Molybdenum-99. 
We nickname it Moly-99, which is used in a lot of health 
diagnostic applications.
    Currently our country is reliant on nondomestic sources for 
this in reactors in Canada, in the Netherlands, and elsewhere 
in the world. Because of maintenance and other shutdowns of 
these reactors we've been in short supply. I think its 55 
thousand Americans use or have tests in any given day that use 
Moly-99 and our domestic production of it is going to be 
important in the future and Wisconsin is taking a real lead in 
that in coming up with nonreactor based ways of producing Moly-
99.
    While not the subject of this legislation it is related 
closely and an area in which my state is very concerned. I--
this bill is important to my state not because we are the home 
to large or even any perhaps supply or stocks of critical 
minerals, but we are home to manufacturers that rely on these 
critical minerals in their products and also as a manufacturing 
state have long been the home to companies that build the 
mining machines that extract these minerals.
    So this legislation and these policies at the national 
level are really critical to my State's economy too and I am 
very appreciative that we're spending some time on this today.
    Dr. Danielson, I took particular notice in your written 
testimony and your testimony provided here today about the 
value of one of your pillars the recycling and reuse programs 
for critical minerals and how research into recycling processes 
could make these more economically viable over time. Wisconsin 
is home to recycling businesses like Veolia Environmental 
Services as an example which utilizes innovative ways to remove 
hazardous materials like mercury from our waste stream.
    But recycling programs not only reduce the amount of 
unwanted waste products they also and crucially can reduce 
demand for newly extracted critical minerals. So based on the 
testimony that we've heard today indicating a demand for 
critical minerals that continues to outpace our domestic 
supply, recycling programs can be ever more important.
    I'm interested in knowing in more detail the strategies 
that the Department is utilizing to improve the recycling of 
critical materials and what you view as the greatest 
opportunities for recycling and reuse in your sphere and 
energy?
    Mr. Danielson. Thank you very much Senator for that 
question.
    Recycling is one of the 3 pillars that we really are 
driving our strategy around, and the Critical Materials 
Institute being at the center of our strategy. We're looking at 
a wide array of activities across the whole supply chain, which 
I think, is one of the key important elements of the approach 
the bill is taking. All the way from you know separations, 
processes that can actually remove the small amounts of these 
rare earths from magnets or phosphors that need to be recycled.
    All the way going back to analyzing--designing these motors 
or batteries or lighting fixtures so that they're easy to 
disassemble and perform recycling processes on. One of the 
elements that is particularly critical when it comes to the 
clean energy applications is dysprosium, which is very 
important for magnets that can perform at high temperature 
required, especially, for motors for electric vehicles.
    So that element in particular is one that we are targeting 
in a serious way as we go forward with our work related to 
recycling of critical materials.
    The Chairman. Thank you Senator Baldwin.
    I'm going to recognize Senator Risch, but just note that 
I'm very pleased that you brought up this propane issue and I 
know Senator Franken cares a lot about this as well because the 
Midwest has been hit very hard. Senator Murkowski and I have 
always tried to make sure that the committee and those who are 
following these issues can get briefed.
    So this afternoon at 3:30 in this room the Energy 
Information Administration will be putting on a briefing at the 
request of Senator Murkowski and I--and this is going to be 
important and I think actually quite fitting this week. Not 
only are people really getting clobbered with these high 
propane prices, but it also gets into the issue that we're 
going to have to debate and that's the question of exports. 
Senator Murkowski and I have agreed that Thursday we're going 
to have a hearing on the whole oil export issues.
    So we'll have a good briefing this afternoon and on 
Thursday all who are interested in that issue and I think it's 
very timely that we have the debate and start talking about the 
pros and cons and Heaven forbid have a civilized conversation 
about the merits of an important issue.
    We're very glad Senator Risch is here, he's got a lot of 
expertise in this area.
    Senator Risch. Thank you Mr. Chairman.
    Senator Baldwin I was delighted to hear you talk about the 
issues with Moly-99, there's a lot of us been beating the drum 
for many years on this. There's absolutely no reason why the 
United States of America should be reliant on other countries 
to provide this.
    Most Americans have no idea how important it is in the 
diagnostic aspects of medicine and obviously at the Idaho 
National Laboratory there's been work done on this and we've 
been a player in this for a long time, so welcome to the fight 
and I hope you'll join us.
    I think that Moly-99 and all these others are--is 
underscoring a situation we have in America where as we do more 
and more of these high tech things we're going to be more 
reliant on some very rare commodities and last year we went 
through the helium fight, which again most Americans weren't 
aware of how critical it is.
    We have a very large high tech operation in Idaho called 
Micron Technology and they are incredibly reliant as is 
virtually all--are virtually all IT manufacturers on helium and 
so we got right to the edge I think, but in a bipartisan manner 
we got the job done and we're going to be hitting more and more 
of these walls I think as we go forward. So this hearing is 
particularly important.
    Again most people don't realize how many of these critical 
commodities there are and how reliant we are on countries like 
China where political stability in the long term certainly is 
not something that can be counted on and so we need to continue 
that.
    I want to thank the chairman and co-chairman for sending 
bill S. 1600, I'm proud to be a co-sponsor with many other 
people. It is very simple, it simply directs the USGS to 
establish a list of these critical minerals that we need and 
then set out a comprehensive set of policies, and I'm assuming 
they would give these policies to us because this is going to 
be a matter of debate and I think that we should all have or 
get our 2 cents worth it.
    The question I have for the 2 witnesses briefly is these 2 
things that were being--were asked the USGS to do is to 
establish a list of minerals and to set out a comprehensive set 
of policies. It's something that I'm sure there's been a lot 
work done on over the years so the question I have for you is 
how much of this work is already done, that is what kind of an 
effort is this bill going to take and how quickly can we expect 
to get some results from this?
    Dr. Meinert maybe we could start with you?
    Mr. Meinert. Thank you for that question.
    We have indeed done a lot of work on this over the years, 
some of this is continuing and ongoing work so the inventory of 
materials, the collection of materials flow, studies of the 
global trade tracking that--that's something we do on a 
continuous basis and every year we put out the minerals 
commodities summary that describes for the Nation and for the 
world what's the resources are and their availability. So 
that's one part of the whole criticality analysis is having the 
data that you would then base those analysis on.
    Relative----
    Senator Risch. I'm glad to hear that you've done that much 
work already I mean that--and that--obviously that's a 
foundational point that's very critical if we're going to 
answer these questions so thank you for that.
    Mr. Meinert. We appreciate your support for that because 
this requires a huge amount of work if you can imagine 
anybody's who's collected this sort of data. The other part of 
the bill directs is the assessment of critical materials in the 
United States and that would be a major, major undertaking. We 
have done assessments of many different areas we just completed 
the first global assessment for copper which is the assessment 
of the entire world for copper.
    So we have the expertise, we have the methodology for doing 
this and we have done a lot of work in development and 
anticipation of doing these sort of assessments and we try to 
maintain the scientific capability to perform that service for 
the Nation.
    Senator Risch. Thanks very much.
    Mr. Danielson. Thank you, Mr. Senator.
    I would just add or reiterate you know that we've done a 
lot of work to date with the leadership of the Department of 
the Interior and USGS in particular in establishing methodology 
that works in terms of criticality assessment and we've applied 
that to the Department of Energy through our critical materials 
strategy report and that's been the basis for our work.
    I think we are ahead of the curve in terms of we are 
collaborating across the agencies through this interagency 
working group on critical and strategic mineral supply chains 
out of the National Science and Technology Council. But I do 
believe that there is more work to be done, but I do think 
we're setup to work together well under the leadership of 
whatever entity would take the lead going forward.
    Senator Risch. Thank you Mr. Danielson.
    Thank you, Mr. Chairman.
    The Chairman. Senator Franken.
    Senator Franken. Thank you Mr. Chairman.
    I have to run so I'm going to submit my questions for the 
record.
    I would like to say thank you for having this 3:30 meeting 
on propane. We in Minnesota have had very cold winter, we've 
had our corn came in kind of wet and we used the propane to dry 
that, so thank you for having that meeting at 3:30.
    One of the things I just want to say is that you know so 
many of these critical minerals are needed for things like 
electric cars and for--just for winter binds and lighting and 
that this--I know that so many folks want to make sure that we 
are able to do those technologies to lower our carbon footprint 
and the tradeoff in terms of making sure that we--Mr. Meinert 
at the Bureau of Land Management you're looking at the 
environmental aspects of the processes by we--which we get 
these things. I want to keep a lot of people to understand that 
these are essential in these clean energy technologies and 
that's why I'm proud to be a sponsor of the Chairman and 
Ranking Member's bill.
    So I'll submit those questions for the record and thank you 
gentleman for your testimony, thank you Secretary Danielson for 
coming to Minnesota so recently.
    Thanks.
    The Chairman. Thank you Senator Franken.
    I don't have any other questions for this panel, Senator 
Murkowski any additional questions?
    Senator Murkowski. I have just one very quick one for Dr. 
Meinert and you mentioned the assessment going forward and what 
I am curious about and would like to understand better is, 
what's our analytical capacity here in assessing future supply 
and demand?
    As we kind of forecast out and we've got a section in this 
bill that relates to forecasting, can you tell us whether USGS 
supports a joint effort with EIA to bolster our analytical and 
forecasting capabilities for these minerals?
    You talked a lot in your--both of you in your opening 
statements particularly Mr. Danielson here in terms of how we 
diversify supply, how we look for substitutes, how we recycle, 
reuse. We know that we're going to continue to do good things 
in Senator Baldwin's state in terms of manufacturing so we're 
going to need more, but given the effort that is underway with 
substitution or reuse, how do we forecast with any degree of 
reliability?
    Mr. Meinert the question is for you, but I think it also 
goes to what you're doing in DOE as well.
    Mr. Meinert. Forecasting is a complex science and the 
foundation is always built upon the data that you have and so 
you are looking at the history, the current uses, the current 
supplies and then modeling that forward. So we have some 
experience with that, our main expertise is in the collection 
of the data, the assessment of the resources.
    You mentioned EIA, they certainly have done much more in 
the modeling realm than we have. But we have a long history of 
working with other Federal agencies, both DOE, BOM with an 
Interior, EPA, and a lot of agencies to try to work toward a 
common goal.
    Senator Murkowski. Do you think it makes sense to bring in 
EIA or others that may have that assessment or forecasting 
perspective?
    Mr. Meinert. As we move in that direction we would 
certainly attempt to learn from anybody who has----
    Senator Murkowski. Yes.
    Mr. Meinert [continuing]. Been further out in the curve 
than we are.
    Senator Murkowski. Dr. Danielson.
    Mr. Danielson. I will point out that, although it's not 
under my purview, I know that the EIA would welcome any 
partnership that would be beneficial to the USGS to share best 
practices that have been established at the EIA and have worked 
out well in terms of forecasting.
    Senator Murkowski. OK, thank you Mr. Chairman and I would 
hope that as we move forward, not only with this legislation, 
but just in the efforts that are out there, that when we talk 
about the interagency coordination that that is more than just 
good buzz words, it's--we all talk about interagency working, 
but it really is going to be necessary in this area to know and 
understand what we have and how cross department we can be 
working to be more effective in all these areas.
    With that I thank both of the witnesses and look forward to 
second panel.
    The Chairman. Alright we'll excuse you, thank you 
gentlemen.
    Our next panel retired Major General Robert Latiff a 
research professor and director in the Intelligence and 
National Security Research Center at George Mason University 
and an adjunct professor at Notre Dame. He previously served as 
vice commander for the U.S. Air Force Electronics System Center 
and as commander of the NORAD Cheyenne Mountain Operation 
Center in Colorado.
    Mr. David Isaacs, the vice president of Government Affairs 
for the Semiconductor Industry Association. Semiconductors are 
of enormous importance in my home state so we're glad that 
they're here.
    Jennifer Thomas is the director of Federal Government 
Affairs for the Auto Alliance, a leading advocacy group for the 
automobile sector and we're very glad that Senator Stabenow 
felt that it was important to have Mr. Thomas.
    Mr. Jim Sims is the vice president of Corporate 
Communications for Molycorp, Inc. Molycorp is one of the 
world's leading producers of custom engineered rare earth and 
rare metal products.
    Mr. Gregory Conrad is the executive director for the 
Interstate Mining Commission. Senator Murkowski thought it was 
important to have Mr. Conrad and we're glad to have him.
    Professor Rod Eggert, who Senator Udall requested, is the 
director of the Division of Economics and Business at the 
Colorado School of Mines and we're very glad that Professor 
Eggert is here as well.
    As I say to our witnesses, we will put your prepared 
statements into the record in their entirety and it's going to 
start getting hectic here in a little bit. So if you could just 
summarize your principal concerns, that would be very helpful 
and I want everyone to know that every single word in your 
prepared statement will be part of the record.
    OK, Professor Latiff.

   STATEMENT OF MAJ. GEN. (RETIRED) ROBERT H. LATIFF, PH.D, 
  RESEARCH PROFESSOR AND DIRECTOR FOR INTELLIGENCE COMMUNITY 
    PROGRAMS SCHOOL OF ENGINEERING, GEORGE MASON UNIVERSITY

    Mr. Latiff. Yes sir, I will try to be brief.
    Good morning Chairman Wyden, Ranking Member Murkowski and 
distinguished members of the committee.
    I'm honored to be able to testify to this committee on a 
subject of great importance. My name is Robert Latiff, I'm 
currently a private consultant, I'm a retired Air Force Major 
General serving 32 years active duty mostly in research and 
development in weapons acquisition.
    As was noted I'm also an academic with appointment at 
George Mason University and at the University of Notre Dame. I 
hold a doctorate in metallurgical engineering and materials 
science.
    Pertinent to the interests of this committee, I'm also the 
former chairman of the National Materials and Manufacturing 
Board of the National Academies. I serve as a member of the 
Minerals, Metals, and Materials Society, a major professional 
society of materials, engineers, and scientists.
    At a Strategic Materials Advisory Group, a group of former 
defense and government officials concerned about critical 
minerals and metals.
    I'm here to speak in strong support of S. 1600. For several 
years I followed the attempts in both the House and the Senate 
to pass legislation on this important topic. It remains 
critical to national security in my opinion that this 
bipartisan piece of legislation be acted--enacted into law.
    While the rare earth crisis of the last few years appears 
to have somewhat abated, we should not become complacent. The 
fundamental risks that result from not having a secure supply 
of critical materials has not gone away.
    S. 1600 would require the U.S. Government to define 
criticality as it relates to materials, identify those 
materials that deems critical, and establish policies to ensure 
their availability. It would authorize funding for research and 
development and would advance work force development in areas 
important to materials.
    In all of these actions I believe we'll have positive 
effects on national security and national defense. To the first 
point I note that the European Union published a report in 2010 
that identified 14 materials and now I understand 20 that they 
deemed critical and recommended policies to the member Nations 
for their supply conservation and potential substitution. The 
U.S. has no such policy, nor do we have a single definition. S. 
1600 is an important step in correcting that issue and 
establishing a coherent policy.
    I've been following these issues since 2007 when I chaired 
a committee concerned with the national defense stockpile of 
the Defense Logistics Agency. Our committee was very concerned 
over what we felt to be DOD's continued inaction on the topic
    Subsequently in a report to Congress, DOD reported that 
there had in fact been cases in which materials issues had 
impacted weapons acquisition programs in some way. However, 
even in the face of these materials impacts and by the then 
well known issues surrounding rare earth materials, DOD policy 
continued to be silent on the topic and insisted that market 
forces would be sufficient to satisfy DOD needs.
    It has only been in the last year that DOD has finally 
agreed that the market might not be sufficiently robust to 
supply needs for several materials. That recognition was a 
positive result. However, while they may choose to stockpile 
materials like yttrium and dysprosium, there is still not a 
domestic supply of some key rare earth metals or oxides, thus 
it becomes essentially affixed to the supply chain.
    What is needed is not just a near term fix, but also a long 
term solution and my hope is that S. 1600 might better inform 
DOD policy which could in turn lead to better availability and 
availability of key weapon systems.
    On the subject of materials research a highlighted June 
2013 report by the U.S. Air Force Chief Scientist entitled, 
``Global Horizons''. In that report the Chief Scientist lists 
materials science as the first of 5 enabling technologies 
important to the Air Force from FY13 to FY27. The subsequent 
chart lists declining domestic availability of raw materials as 
an important key trend.
    Policy makers should take note of this, clearly the 
services in executing their Title 10 training equip 
responsibilities recognizing -recognized the criticality of 
these issues as they are forced to deal with availability and 
material scarcity.
    The National Materials Advisory Board and paneled a 
committee in 2005 on the globalization of materials research 
and development, which it is important to note was funded by 
the Department of Defense. The report of that committee quite 
accurately predicted an increase in the importance of materials 
research in other countries, along with a decreased dominance 
by the United States in the materials research field.
    More recently a 2011 report by Thompson Reuters verified 
this result and concluded that while materials research 
publications have been on the rise worldwide, the U.S. has in 
fact been in decline.
    I would point out to many that past DOD weapon systems from 
satellites to submarines, from missiles to manned aircraft have 
pushed the state-of-the-art in material science and the DOD 
historically has been a funding source and a beneficiary. The 
Chairman: General I apologize I just think we're going to have 
to have you wrap up so we can move on.
    Mr. Latiff. I am happy to wrap up and take your questions 
Senator.
    [The prepared statement of Mr. Latiff follows:]

Prepared Statement of Maj. Gen. (Ret) Robert H. Latiff, Ph.D., Research 
  Profesor and Director for Intelligence Community Programs School of 
                  Engineering, George Mason University
    Good morning Chairman Wyden, Ranking Member Murkowski and 
distinguished members of the Committee. I am honored to be able to 
testify to this Committee on a subject of great importance and about 
which I have written and spoken frequently.
    My name is Robert H. Latiff. I am currently a private consultant, 
providing technology and management advice to FFRDCs, universities, and 
private industry. I am a retired Air Force Major General, having served 
32 years of active duty, largely in research and development and 
weapons system acquisition. I am also an academic, with appointments at 
George Mason University, where I teach systems acquisition and 
intelligence technologies, and at the University of Notre Dame where I 
am an adjunct professor in the Department of Philosophy. I hold a 
doctorate in metallurgical engineering and materials science.
    Pertinent to the interests of this Committee, I am the former 
Chairman of the National Materials and Manufacturing Board and am a 
member of the Air Force Studies Board of the National Academies. I am 
also a member of The Minerals, Metals, and Materials Society (TMS), a 
major professional society of metals, minerals, and materials engineers 
and scientists, and of the Strategic Materials Advisory Council, a 
group of former senior U.S. government defense and materials officials 
and industry experts concerned about critical minerals and metals.
    I am here to speak in strong support of S1600. For several years I 
have followed the attempts in both the House and Senate to pass 
legislation on this exceptionally important topic. For reasons I will 
discuss, it remains critical to national security, in my opinion, that 
this bi-partisan bill be enacted into law. While the rare earth crisis 
of the last few years appears to have somewhat abated, we should not 
become complacent. The fundamental risks that result from not having a 
secure supply of critical materials have not gone away.
    S1600 would require the U.S. government to define criticality as it 
relates to materials, identify those materials it deems critical and 
establish policies to enhance the their domestic availability. It would 
authorize funding for research and development on those materials and 
would advance education and workforce development in areas important to 
materials. All of these actions will, I believe, have positive effects 
on national security and national defense. To the first point I note 
that the European Union published a report in 2010 that identified 
fourteen materials they deemed critical and recommended to the member 
nations broad policies for their development, recycling, conservation, 
and potential substitution. The U.S. has no such policy document. Nor 
do we have a single definition of what constitutes critical materials. 
S.1600 is an important step in correcting this issue and establishing a 
coherent national policy.
    I have been following these issues since 2007 when, as a member of 
the National Materials Advisory Board, I chaired a committee concerned 
with Defense Logistics Agency's National Defense Stockpile. Our 
committee was very concerned over what we felt to be Department of 
Defense's continued inaction on the topic. Subsequently, in a report to 
Congress, DOD reported that there had, in fact, been cases in which 
materials issues had impacted weapons acquisition programs in some way. 
However, even in the face of these materials impacts and the by then 
well-known issues surrounding rare earth materials, DOD policy 
continued to be silent on the topic and insisted that market forces 
would be sufficient to satisfy DOD needs. It has only been in the last 
year that DOD has finally publicly agreed that the market might not be 
sufficiently robust to supply needs for several materials deemed 
extremely important to current weapon systems. That recognition was a 
positive result. However, while they may now choose to stockpile 
materials like Yttrium and Dysprosium, there still is not a domestic 
supply of some key rare earth metals or oxides; thus it essentially 
becomes a fix to the supply-chain. What is needed is not just a near-
term fix, but also a long-term solution to the underlying and systemic 
problems. My hope would be that a national policy, such as that 
engendered by S1600 might better inform DOD policy, which could in turn 
lead to better materials security, and availability of key weapon 
systems. The end result of the activities required by this legislation 
will likely mean that the DOD would not have to depend on extraordinary 
measures to insure access to important materials for its weapon systems
    On the subject of materials research, I highlight a June 2013 
report by the USAF Chief Scientist entitled ``Global Horizons''. In 
that report, the Chief Scientist lists materials science as the first 
of five enabling technologies of importance to the USAF from FY13 to FY 
27. A subsequent chart lists declining domestic availability of raw 
materials as an important key trend. Policy makers should take note of 
this. Clearly, the services, in executing their Title 10 ``train and 
equip'' responsibilities, recognize the criticality of these issues as 
they are forced to deal with availability issues and materials 
scarcity.
    Turning again to the work of the National Academies, as early as 
2005 The National Materials Advisory Board impaneled a Committee on the 
``Globalization of Materials Research and Development'' which, it is 
important to note, was funded by the Department of Defense. The report 
of that committee quite accurately predicted an increase in importance 
of materials research in other countries, along with a decreasing 
dominance by the United States in the materials research field. More 
recently, a 2011 report by Thomson Reuters, verified this result and 
concluded that while materials research publications have been on the 
rise world-wide, the U.S. has in fact been in decline in regard to 
materials R&D. I would point out that many past DOD weapon systems, 
from satellites to submarines, from missiles to manned aircraft, have 
pushed the state of the art in materials science and that DOD 
historically was a significant funding source and beneficiary of 
advanced materials research.
    On the topic of education and workforce development, I note with 
some dismay the decline in the number of university materials science 
departments in the U.S. and the steep decline in the number of 
materials science and engineering degrees conferred. While some of this 
decline can be attributed to and explained by the concomitant increase 
in degrees in associated fields, it remains true that knowledge of 
basic materials science, materials design, mining, extractive 
technologies, materials processing, etc. has been on the decline. While 
admittedly dated, a 2004 American Association for the Advancement of 
Science article advised graduates not to seek a job in the metals 
industry unless they intended to work overseas. At that time, in the 
previous 30 years the number of jobs for scientists working in metals 
had declined from more than 13,000 to fewer than 2000. This is 
consistent with the more recently expressed views of Dr. Karl 
Gschneidner of Ames Laboratory, considered to be the leading U.S. 
expert in rare earth materials. Policies and the requirements of S1600 
to enhance education and workforce development in theses areas will 
have important national security as well as economic implications. A 
reinvigoration of materials education writ-large will also benefit DOD 
and its industrial base as they seek to retain or regain technical 
superiority in weapon systems performance.
    In summary, I feel this is an extremely important piece of 
legislation in placing a long needed emphasis on domestic security of 
critical minerals. The national defense implications are, in my 
opinion, profound. I reiterate my support for S1600 and my hope that 
this bi-partisan legislation will be successful.

    The Chairman. Very good.
    Mr. Sims.

       STATEMENT OF JIM SIMS, VICE PRESIDENT, CORPORATE 
     COMMUNICATIONS, MOLYCORP, INC., GREENWOOD VILLAGE, CO

    Mr. Sims. Thank you Mr. Chairman, Ranking Member Murkowski.
    I'm Jim Sims I work with Molycorp, I'm glad to be here 
today.
    S. 1600 is a solid step forward in the effort to revitalize 
domestic supply chains for critical materials. As many of us 
know the words permitting reform are often a type of third rail 
of politics in natural resource discussions and that's why I 
think this bipartisan compromise is so important and I thank 
the chairman, the ranking member and the other members of the 
committee who have put this forward. It's a good step forward 
if it were to be enacted.
    Molycorp is a U.S. company. We recently complete 
construction and--of our $1.55 billion rare earth processing 
facility in Mountain Pass, California. We spent all private 
capital in building that facility, now as a result the U.S. is 
back in business in both mining, processing, and doing value 
added manufacturing of rare earth materials.
    Moreover, we've worked on assembling a relatively robust 
vertically integrated rare supply chain that can now produce a 
wide range of materials from all 15 rare earths and from 5 rare 
metals: niobium, tantalum, rhenium, gallium, and indium. We 
sell these materials to U.S. and other manufacturers all around 
the world.
    As part of our downstream supply chain we also produce a 
very important value added rare earth material, rare earth 
magnetic powders. Those are used in the construction of rare 
earth permanent magnets, and those magnets are increasingly 
vital to a wide range of technologies.
    I know both of you know a lot of these technologies, but 
things such as direct drive wind turbines, high efficiency 
owned home appliances, and HVAC systems, MRI's, medical imaging 
devices, national defense systems, hybrids, plug in electrics, 
electric veal--vehicles, etc., many things, too numerous to 
list. The list continues to grow, by the way as new uses for 
these rare earth materials are found every year.
    Our company walked a regulatory pathway to bring U.S. back 
in rare earth production for about 15 years. It took us just 
over 500 individual permits in order to get Mountain Pass back 
online, so with that back drought let me make just a couple of 
observations quickly.
    No. 1 the fact that the U.S. is back online is important, 
but it's also important I think to note how the U.S. through 
Mountain Pass, now produces these rare earth materials. Once 
our facility is fully operational at full scale commercial 
rates and all of our chemical plants that comprise that 
facility are optimized, we will be able to produce rare earths 
with the environmental footprint that is smaller than has ever 
been done before and is smaller than it's done anywhere in the 
world.
    Moreover the very technologies that we invested in, a lot 
of early stage capital, to shrink the environmental footprint 
of that production with precisely the technologies that also 
help to drive down our cost to production. So what we've found 
at Mountain Pass is that improving our environmental 
performance is also going to help us prove our--is also going 
to help us improve our competitiveness in U.S. global markets.
    No. 2 there are a lot of advances being made in helping 
manufacturers use rare earth more efficiently and this was a 
big deal for our company, we've done a lot of this research 
ourselves. For example we're finding ways in working with 
downstream manufacturers on how to use less of the--of one of 
the more scarce rare earths called dysprosium, less of that 
rare earth in these permanent rare earth magnets. What that 
does is it allows more dysprosium to be made available for use 
in other magnets, and the more magnets that can be made, the 
more that the automotive makers and many other technologies can 
use these. That research is improving the efficiency of many 
more products, it's also helping more consumers gain the 
benefits that these magnets provide.
    Finally let me just note there's understandably a lot of 
focus on the upstream side of rare earth and critical material 
production and that's important, and that's what this bill 
looks at. I would also encourage though the committee to look 
at the demand side or the downstream side of the critical 
materials equation. What I mean by that is the reality of the 
marketplace today is that downstream demand for these materials 
is what is largely driving upstream investment in their 
production.
    Today the fact is that most rare earth materials wherever 
they're produced in the world are not consumed by manufacturers 
in the U.S., their isn't as much of a manufacturing base in the 
U.S. that needs these materials, it's largely overseas. So as 
you look at the policy implications of how to make this process 
better, I would encourage you to look at the downstream 
manufacturing demand because that helps drive supply.
    Thank you very much.
    [The prepared statement of Mr. Sims follows:]

       Prepared Statement of Jim Sims, Vice President, Corporate 
         Communications, Molycorp, Inc., Greenwood Village, CO
    Chairman Wyden, Ranking Member Murkowski, and distinguished members 
of the Committee, my name is Jim Sims, and I am Vice President of 
Corporate Communications for Molycorp, Inc. I very much appreciate the 
opportunity to appear before you today to discuss S. 1600, the Critical 
Minerals Policy Act.
    A U.S. company headquartered in Greenwood Village, Colorado, 
Molycorp is the only advanced material manufacturer in the world that 
both controls a world-class rare earth resource and can produce high-
purity, custom engineered rare earth products to meet increasingly 
demanding and varied customer specifications. With 27 locations in 11 
countries, Molycorp produces a wide variety of specialized products 
from 14 different rare earths (lights, mids and heavies), the 
transition metals yttrium and zirconium, and five rare metals (gallium, 
indium, rhenium, tantalum and niobium). Molycorp produces rare earth 
magnetic materials through its Molycorp Magnequench subsidiary, 
including neodymium-iron-boron (NdFeB) magnet powders used to 
manufacture bonded NdFeB permanent rare earth magnets. Through its 
joint venture with Daido Steel and the Mitsubishi Corporation, Molycorp 
manufactures next-generation, sintered NdFeB permanent rare earth 
magnets. The Company also markets and sells a line of rare earth-based 
water treatment products through its Molycorp Advanced Water 
Technologies subsidiary.
HOW S. 1600 WILL ADVANCE THE CAUSE OF DOMESTIC MINERAL SUPPLY CHAIN 
        REVITALIZATION
    Rare earth elements (REEs), and rare metals more broadly, are 
increasingly critical to high-tech, clean tech and advanced civilian 
and defense systems. While the U.S. has significantly increased its 
domestic production capabilities of REEs in recent years, a wide 
variety of critical and strategic metal and mineral supply chains are 
missing a domestic production component. The Critical Minerals Policy 
Act is a solid step forward in the effort to revitalize domestic 
mineral supply chains in the U.S.
    Given that permitting reform is often a `third rail' in natural 
resource policy discussions, the fact that a majority of both parties 
on this Committee have found common ground on this issue is an 
extraordinary achievement. It demonstrates both courage and principled 
leadership by the bill's authors and cosponsors. Chairman Wyden, 
Ranking Member Murkowski, Senators Udall and Heller, and the other 
original cosponsors of this bill, all deserve praise for working so 
hard to forge the compromise that resulted in this legislation. Your 
demonstration of bipartisan commitment significantly increases the 
chances of Congressional passage of this legislation.
    On behalf of a company that walked a regulatory pathway that took 
15 years and more than 500 permits to restart rare earth production in 
California, let me offer some observations on several elements of S. 
1600:

   By launching a process to update and modernize critical 
        minerals policies in the U.S., and by encouraging better 
        coordination across the many federal agencies that oversee 
        aspects of mineral development, this bill would provide 
        additional regulatory certainty for all parties in permitting 
        processes. Increased regulatory certainty is a must if the U.S. 
        is to encourage greater private sector investment in domestic 
        mineral exploration, processing, and downstream supply chains 
        that can help meet the needs of manufacturers here in the U.S. 
        and around the world.
   The bill recognizes that much can be done to make permitting 
        processes more efficient, even without wholesale changes in 
        underlying law. Requiring performance metrics for the 
        processing of permit applications should spark new thinking and 
        innovative ideas for reasonable reforms.
   The bill's directive to complete a comprehensive national 
        resource assessment for each element designated as critical 
        should help to prioritize resource opportunities for both 
        government officials and private sector interests.
   Its focus on encouraging more efficient production and use 
        of critical materials, development of alternative materials, 
        and increased recycling is equally important. For a number of 
        critical materials, increased production will need to be 
        supplemented by these strategies to meet future global demand.
   Strengthening the education and workforce training 
        infrastructure related to critical material, a goal of this 
        bill, also is a high priority. The U.S. lags behind many 
        nations in this area, which in turn can negatively impact 
        investment decisions by private sector companies in critical 
        material supply chain development.
THE RE-BIRTH OF U.S. RARE EARTH PRODUCTION
    REEs offer a window into many of the issues listed above as well as 
the challenges of bringing more critical minerals and metals through 
permitting and into production.
    The U.S. was once the world's largest producer of REEs, thanks to 
the rare earth production done for more than 45 years at Mountain Pass, 
California, home to one of the largest, richest and most readily 
processable REE ore bodies in the world.
    Production at the original processing facility at Mountain Pass was 
halted in the late 1990s, and active mining of rare earth ore was 
suspended in 2002.
    However, fast forward to today: the U.S. is back online in REE 
production. Construction is complete at Molycorp's new, $1.55 billion 
state-of-the-art rare earth processing facility at Mountain Pass, and 
production is ramping up. Not only that, but once this facility is up 
to full-scale operation and its chemical processes are fully optimized, 
we will be able to produce REE materials with a dramatically smaller 
environmental footprint and at a cost of production that will make the 
U.S. competitive with any REE material producer in the world.
    Taking REEs from the ground, separating them from one another, and 
converting them to usable REE materials involves a highly complex, 
multi-stage series of chemical processes. The Mountain Pass facility is 
actually a collection of 12 operating systems that must work together 
both in series and in parallel. As our current rare earth production 
ramp-up continues, we are working to optimize and strengthen the 
system, improve rare earth recovery rates, improve on-time reliability, 
add redundancy, and increase product throughout.
    In order to better understand the process by which REE ore is 
converted into useful REE products, a short 4.5-minute Technology Tour 
video outlining this process can be seen here: http://
www.brainshark.com/molycorp/vu?pi=zHCzU9yV6zCQamz0.
    You can also click on the photo* at left to see the Technology 
Tour.
---------------------------------------------------------------------------
    * All photos have been retained in committee files.
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    All key production components of the Mountain Pass facility are 
operational, and we are in the process of conducting an orderly ramp-up 
of the many systems that work together to convert REE ore into usable 
products. The new facility was designed to produce at an annual rate of 
about 20,000 metric tons (mt) of rare earth oxide (REO) equivalent1 
products. Output can vary during the ramp-up and optimization phase, 
and that is normal for new chemical plant start-ups. To date, the 
system has demonstrated an annualized production rate of 15,000 mt of 
REO equivalent\1\ product, but we haven't sustained that rate due to 
the demands of process optimization. After we complete these 
procedures, which we expect to do in the first half of 2014, we 
anticipate increasing production volumes as demand requires.
---------------------------------------------------------------------------
    \1\ ``Rare earth oxide equivalent'' is the industry's standardized 
unit of measurement across all rare earth containing products. It is 
comparable to the oil and gas industry's ``unit of measurement.
---------------------------------------------------------------------------
TECHNOLOGY INNOVATION: REDUCED ENVIRONMENTAL FOOTPRINT
    Mountain Pass may be a re-started rare earth mine, but it is by no 
means the same facility it was in the late 1990s. After rare earth 
production was halted at Mountain Pass, Molycorp scientists went back 
to the drawing board to design new processes and technologies that 
could help to dramatically shrink the environmental footprint of rare 
earth production.
    These new technologies and process innovations, some of which have 
never before been used in the rare earth industry, have been 
successfully integrated in our new facility. They include:

   High-efficiency, on-site power generation through a clean-
        burning natural gas-fired Combined Heat and Power (CHP) plant. 
        Among other things, this technology is helping us reduce our 
        greenhouse gas emission (GHG) intensity as compared to legacy 
        operations.
   A high-efficiency water treatment and recycling plant. This 
        plant allow us to greatly reduce our fresh water usage and 
        helps to recycle process water.
   An onsite chlor-alkali plant, which allows us take 
        wastewater and convert it into the chemical reagents used in 
        rare earth processing
   Higher rare earth recovery rates from our ore, which means 
        that the facility can produce more rare earth products using 
        the same amount of ore as before.
   An innovative tailings disposal system, which removes most 
        of the water from mine tailings (for recycling) and allows 
        tailings to be formed into a paste, which sets up into a solid 
        substance for permanent onsite disposal. This eliminates the 
        creation of a tailings ``dam.''

    In short, once fully operational and optimized, this facility will 
operate as the world's most environmentally advanced rare earth 
processing complex.
TECHNOLOGY INNOVATION--GLOBALLY COMPETITIVE PRODUCTION COSTS
    In addition to significantly reducing environmental externalities 
associated with REE production, the technology innovations developed by 
Molycorp also will help reduce the cost of producing REE materials at 
Mountain Pass. Producing REEs at a cost that is competitive in global 
markets is vital to the viability of any REE production facility.
    For example, Molycorp dedicated a significant amount of early-stage 
capital to install an onsite chlor-alkali plant, which when fully 
operational will enable Mountain Pass to convert what was once 
wastewater discharge--hundreds of gallons a minute of salty water--into 
chemical reagents needed for rare earth processing. In essence, 
Molycorp has built a recycling loop at Mountain Pass that continually 
regenerates these reagents from wastewater and recycles virtually all 
of our process water.
    This capability will significantly reduce the overall environmental 
footprint of rare earth production, as well as drive down our cost of 
production. By making our own reagents from wastewater, we will be able 
to do the following:

   Buy less reagents from the open market. (Chemical reagents 
        are a significant portion of rare earth production costs);
   Sell excess reagents we produce; and
   Virtually eliminate wastewater disposal costs.

    Additionally, this capability allows Molycorp to produce REE 
materials that are recognized in downstream markets for the 
environmentally superior manner in which they are produced. We believe 
that what is good for the environment can also be good for business.
HOW REES ARE ENABLING TECHNOLOGIES THAT INCREASE ENERGY EFFICIENCY AND 
        LOWER POWER-RELATED EMISSIONS
    One of the more exciting rare earth materials that we make from 
Mountain Pass ore is permanent rare earth magnetic materials, which 
when made into magnets can significantly improve the energy efficiency 
of motors, generators, compressors, and other devices. Because they 
also are significantly smaller than competing, less efficient 
``ferrite'' magnet technologies, rare earth permanent magnets allow for 
smaller motors. This allows manufacturers to save on the use of other 
materials such as copper, steel, etc.
    One example of the growing use of rare earth permanent magnets is 
in residential water circulation pumps.
    In Europe, regulations now require the use of high efficiency water 
circulation pumps to distribute heat in buildings. The European 
Commission (EC) estimates that there are more than 100 million of these 
devices currently installed in the EU, and that their energy draw can 
make up between 5 and 10 percent of the typical electricity bill in 
households. That adds up: across the EU, these devices consume more 
than 50 terrawatt-hours per year of electricity, which is equivalent to 
about two percent of the overall electricity consumption in the EU. 
This amount of electricity generation equates to more than 30 million 
tons per year of CO2, according to the EC.
    Manufacturers are now turning to pumps that utilize rare earth 
permanent magnets in order to increase efficiencies. These next-
generation, variable speed pumps can reduce annual electricity use by 
60 percent or more, according to the EC. This equates to more than 30 
TWh/year of avoided energy consumption.
    Another example of rare earth materials used to increase energy 
efficiency is in electric motors used in automobiles. There can be 
dozens of individual electric motors in a modern automobile. When these 
motors utilize permanent rare earth magnets, instead of larger, heavier 
and less powerful iron-based permanent magnets, manufacturers are able 
to significant reduce vehicle weight. That translates into higher fuel 
efficiency and an enhanced ability to meet increasing stringent 
Corporate Average Fuel Economy (CAFe) standards. Additionally, rare 
earth permanent magnets allow motors to be smaller and more compact, 
which in turn allows more space in the passenger compartment. Hybrid 
electric, plug-in hybrid, and all-elective vehicles especially benefit 
from rare earth permanent magnets.
    From a macroeconomic perspective, motors and motor-driven systems 
are estimated to be the single largest end use of electricity in the 
U.S., consuming over twice as much electricity as lighting, the second 
largest end use. Even small increases in the efficiency of these 
systems can translate into very significant reductions in energy demand 
and associated emissions, such as GHGs.
    Energy efficiency experts and motor industry leaders agree that 
enhancing motor and motor-driven system efficiencies is one of the most 
promising--and currently overlooked--pathways to lower energy use and 
emissions reductions. Rare earth permanent magnets can play a key role 
in those efforts.
ADVANCES IN REE MATERIAL SCIENCE ARE INCREASING THE EFFICIENT USE OF 
        SCARCE HEAVY REES
    One of the most important technology advances being made today in 
rare earth material science relates to the use of relatively scarce 
heavy rare earths, such as Dysprosium, in permanent rare earth magnets. 
This heavy rare earth (HREE) generally exists in very small quantities 
relative to other rare earths in virtually all REE ore bodies. It is 
added in small amounts to high-performance rare earth permanent magnets 
that must operate in relatively higher temperature, `under the hood' 
operating environments, generally those above 150C. When added at 
levels between 2 percent and 10 percent, Dysprosium helps these magnets 
retain their magnetic power.
    Given that this HREE is a truly `rare' rare earth, and is 
overwhelmingly produced today in one nation (China), manufacturers have 
been reluctant in recent years to utilize these high-performance 
magnets in some applications.
    Fortunately, continuing advances in REE material science, some of 
which are being pioneered by Molycorp scientists, are allowing magnet 
manufacturers to make rare earth permanent magnets with less and less 
Dysprosium.
    Manufacturers are also finding ways to incorporate low-Dysprosium 
NdFeB magnets into their systems. Together, these efforts are allowing 
greater use of sintered NdFeB magnets with only 2 percent--4 percent 
Dysprosium, instead of traditional levels of 8 percent--10 percent 
Dysprosium. Such reductions are already having an impact on global 
demand levels for these scarce rare earths. With more Dysprosium 
available to markets, a greater number of sintered NdFeB magnets can be 
made and utilized in energy efficiency applications.
    Also, advances in material science and engineering are expanding 
the use of bonded NdFeB magnets, made by Molycorp's Magnequench 
subsidiary, that have no Dysprosium content.
    Some of the motors in a modern automobile that can utilize 
permanent rare earth magnets with little to no Dysprosium.
    A separate technology trend is the continuing migration from tri-
phosphor fluorescent lighting to LED lighting. Tri-phosphor lighting 
utilizes several relatively scarce rare earths, such as Terbium, 
Europium, and Yttrium. This continuing shift to LED lighting is already 
helping to soften demand, and increase the availability, of HREEs like 
Terbium and Yttrium.
CHALLENGES TO EXPANDING DOMESTIC REE PROCESSING CAPACITY IN THE U.S.
    The most significant barrier to entry for new rare earth producers 
is undoubtedly the capacity to take mixed rare earth minerals out of 
the ground and chemically process them into separated, usable rare 
earth products. Virtually no two rare earth deposits are the same, and 
the often complex mineralogy of some deposits makes them highly 
challenging to chemically process. Consider these facts:

          1. There are more than 200 different minerals that contain 
        rare earths.
          2. Virtually all rare earth deposits are comprised of 
        multiple types of minerals.
          3. The unique chemical structure of the rare earth-bearing 
        minerals in an ore body can require a chemical processing 
        facility that is unique to that deposit. Many rare earth 
        deposits will require their own unique separate chemical 
        processing facility.
          4. Some rare earth-bearing minerals in a single deposit can 
        require different chemical approaches to rare earth separation 
        than other minerals found in the same deposit. Such multi-
        mineralogic ore bodies can be so difficult and costly to 
        process as to be uneconomic.
          5. Some rare earth-bearing minerals, including those that 
        have a relatively higher percentage of HREEs, have never been 
        successfully processed at the commercial scale to remove and 
        separate the rare earths they contain.

    These factors only scratch the surface of the many challenges 
inherent to economically extracting and separating rare earth elements 
from various ore bodies. From the perspective of policymakers, this 
underscores the importance of encouraging investment and continuing 
research and development in the area of rare earth chemical processing. 
With so many technical and economic challenges that must be met, more 
certainty in permitting and the overall regulatory framework would be 
welcomed by those seeking to bring new mines and production facilities 
online.
    A close corollary to this is the relative lack of workforce 
knowledge and training in the U.S. today relative to rare earth 
chemical processing challenges. Fortunately, several U.S. universities, 
including Iowa State University, Montana State University, and the 
Colorado School of Mines, ably represented here today by Dr. Rod 
Eggert, have in recent years initiated new curricula aimed at better 
educating the next generation of technical leaders for work in the rare 
earth industry.
    Additionally, the Administration`s support for the Critical 
Materials Hub, housed in the Department of Energy's Ames Research Lab 
in Ames, Iowa and led by Dr. Alex King, also is helping to strengthen 
and reinforce the America's knowledge infrastructure in this area.
THE ROLE OF INCREASING GLOBALIZATION IN CRITICAL MATERIAL SUPPLY CHAINS
    The increasing rare earth production at Molycorp's Mountain Pass 
facility, as well as new production that has come online in Malaysia by 
the Australian company Lynas, is helping to diversify global production 
of rare earths and to reduce the world's collective reliance on the 
world's predominant rare earth producer, China. Other nations are 
working to start rare earth mines and associated separations 
capabilities. Additionally, facilities that process rare earths into 
various downstream, value-added products, such rare earth metals, rare 
earth alloys, and rare earth magnetic materials, also have come online 
in various nations around the world.
    One impact of such increasing globalization of vertically 
integrated rare earth supply chains is to provide manufacturers with 
multiple options for their rare earth supplies. This helps to de-risk 
critical material upstream supply chains and to reduce rare earth price 
volatility. All of these factors are helping to restore confidence in 
rare earth markets.
    The capital market's response to the market instability of 2010 and 
2011 has been to shift private capital to the development of these 
integrated supply chains. This has resulted in a significantly stronger 
global rare earth supply chain for manufacturers around the world.
SUMMARY
    Thank you again, Chairman Wyden, Ranking Member Murkowski, and 
distinguished members of the Committee, for allowing Molycorp to 
present our views on S. 1600. This bipartisan legislation represents a 
very good step forward in the effort to revitalize domestic mineral 
supply chains in the U.S. It deserves bipartisan support in the 
Congress and should be supported by critical material producers and the 
manufacturing community that relies upon reliable supplies of these 
materials.

    The Chairman. Let's do this. If I can call an audible with 
the indulgence of my colleagues, I have got to be in 2 other 
places right now. We also have the chairman of the mining 
subcommittee and, of course, the ranking member of the full 
committee here. I just wanted to ask one quick question and 
then we'll just continue with our witnesses.
    Mr. Sims you all were the largest producer of rare earths 
in the country, but you shut down your operations and you've 
since revived it and are actively ramping up production. Why 
did you shut down?
    Mr. Sims. A couple of reasons Mr. Chairman, but I could 
probably boil them down to 2.
    No. 1 Mountain Pass, that facility had some environmental 
issues with wastewater spills. We produce a lot of saltwater in 
this chemical process and there were some spills of that water 
and those were issues that shutdown the processing of rare 
earths.
    Then we had a mine permit that lapsed in 2002, we didn't 
get that renewed in time, it was probably more our fault than 
anything else. So that physically stopped mining at the 
facility. Then when that permit was renewed in 2004 the then 
owners of that facility which was Unocal, Union Oil of 
California, looked at the global economics of rare earths and 
determined that they just didn't know how to make money making 
rare earths at that facility.
    The Chairman. So the China issue had--was a factor in what 
you all were trying to do and that----
    Mr. Sims. A major factor Mr. Chairman.
    The Chairman [continuing]. Part of the shutdown, because 
what we're trying to do, what Senator Murkowski and Senator 
Udall and I have all been a part of. Senator Manchin is trying 
to get more processing in the United States and it seemed to me 
as we looked at it that China was a big factor in that shutdown 
and also the price situation was a factor. Is that fair to say?
    Mr. Sims. Very fair to say and I'll say that now with the 
new technologies that have been developed, we're going to be 
able to produce rare earths at a cost that's among the lowest 
in the world including that in Asia and China.
    The Chairman. I don't want to take time from additional 
witnesses, but it seems to me there are lessons here that 
relate to the development of other U.S. sources of rare earths 
and that's why our legislation is so important.
    So I apologize to our other witnesses for the hectic nature 
of the morning. Senator Manchin is chairman of the mining 
subcommittee, Senator Murkowski, of course (is the key author 
of this legislation, and they will helm the remainder of the 
panel and I appreciate all the witnesses. We'll be working very 
closely with you.
    Senator Murkowski noted an enormous amount of work has gone 
into this bill, literally years and we're going to get the 
administration, Senator Murkowski on this as well----
    Senator Murkowski. Yes.
    The Chairman [continuing]. I appreciate your bringing up.
    Senator Manchin gavel is yours and know we are in good 
stead with you and Senator Murkowski, thank you.
    Senator Manchin. [Presiding]. She'll lead me straight I 
know that.
    So what we'll do Mr. Isaacs if you would proceed now with 
your statement.

    STATEMENT OF DAVID ISAACS, VICE PRESIDENT OF GOVERNMENT 
          AFFAIRS, SEMICONDUCTOR INDUSTRY ASSOCIATION

    Mr. Isaacs. Thank you Senator Manchin and Senator 
Murkowski.
    My name is David Isaacs, I'm with--testifying on behalf of 
the Semiconductor Industry Association, we are the association 
of the U.S. based semiconductor companies involved in the 
design and manufacturing of semiconductors. As you probably 
know semiconductors are the key enabling technology that 
support all modern electronics and therefore advancements in 
semiconductor design and manufacturing has led to the 
innovations in IT, and telecommunications, and transportation, 
and medical devices, and national security systems.
    So in addition to being a major employer and one of the 
country's leading exporters we are a key foundational 
technology that supports our overall economic strength. We very 
much appreciate the chairman and ranking member for convening 
this hearing and addressing this important legislation because 
the process of manufacturing and fabricating advanced 
semiconductors depends on the use of certain key materials, 
whether they are minerals or gases or chemicals that have 
certain unique chemical and physical properties.
    In many instances there are no known substitutes for those 
materials and therefore having a secure and continuous supply 
of those materials is essential to our continued success and 
our continued ability to innovate, and central to the economy 
as a whole. As semiconductors get more and more advanced and 
feature sizes are at the nanoscale level, the use of materials 
with these unique properties becomes ever more critical.
    Our views on this issue are very much informed by our 
recent experience with helium and as this committee well knows 
and thanks to the leadership of Senator Murkowski and others 
and Chairman Wyden this Congress was able to address that issue 
last year and get enacted into law one of the few bills that 
passed Congress to avoid a major shortage of helium.
    Helium is not just used for party balloons and the like, 
but is critical to a number of industrial applications 
including semiconductors and we were facing major shortages, 
major price increases of that essential gas and again there--
for many of our processes there were no known substitutes and 
so it was a really dire situation.
    But again thanks to the leadership of this committee we 
were able to get enacted into law the helium stewardship act 
which avoided a very dire situation. But this was a near miss 
and so our interest in this bill is very much consistent with 
the intent of the legislation, which is to identify critical 
materials and develop a policy framework for avoiding future 
disruptions in the supply chain.
    So we are taking action as an industry and working with a 
industry consortium known as SEMATECH and through our global 
technology roadmap to identify critical materials and we very 
much look forward to engaging in the effort that will take 
place under this bill to identify key materials for the 
semiconductor industry and develop the appropriate policies.
    We very much appreciate this bill and support it and are--
one point we would like to raise for your consideration as you 
continue with work on this bill is to ensure that the 
definition of critical mineral is broad enough to encompass the 
full range of materials that are critical to semiconductors 
manufacturing and other industrial applications. We very much 
agree with the holistic approach that the bill takes that looks 
not only at the extraction step but also processing and other 
downstream steps that could serve as bottlenecks in the supply 
chain.
    So we very much appreciate the opportunity to testify and 
we're happy to answer any questions.
    Thank you.
    [The prepared statement of Mr. Isaacs follows:]

   Prepared Statement of David Isaacs, Vice President of Government 
              Affairs, Semiconductor Industry Association
    The Semiconductor Industry Association (SIA), the voice of the U.S. 
semiconductor industry,\1\ appreciates the opportunity to testify in 
support of the Critical Minerals Policy Act (S.1600). We commend 
Ranking Member Murkowski and Chairman Wyden, as well as the large group 
of bipartisan co-sponsors, for introducing this important legislation 
and for convening this hearing. We look forward to continuing to work 
with this Committee to ensure that the U.S. has a secure supply of the 
materials that are critical to the manufacture of semiconductors and by 
extension the health of the U.S. semiconductor industry and the U.S. 
economy as a whole.
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    \1\ SIA seeks to strengthen U.S. leadership of semiconductor design 
and manufacturing by working with Congress, the Administration and 
other key stakeholders. SIA works to encourage policies and regulations 
that fuel innovation, propel business and drive international 
competition in order to maintain a thriving semiconductor industry in 
the United States. Additional information on SIA is available at 
www.semiconductors.org.
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    Semiconductors are the micro-circuits (sometimes referred to as 
``chips'' or ``computer chips") that are the enabling technology for 
all modern electronics found in computers and cell phones, 
transportation and health care devices, information and communications 
systems, and numerous aspects of our national defense. Because 
semiconductors are a foundational technology for virtually all areas of 
our economy, continued U.S. leadership in semiconductor technology is 
essential to America's continued global economic leadership and our 
national security. Semiconductors are one of the nation's top 
exports\2\ and the industry directly employs about 250,000 employees 
and supports approximately 1 million indirect jobs.\3\
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    \2\ During the period 2008-12, semiconductors were the second 
largest export from the U.S., after aircraft. Source: U.S. 
International Trade Commission. Industry Defined By: NAIC Codes 336411 
(Aircraft); 334413 (Semiconductors); 336111 (Automobiles); 324110 
(Petroleum Refinery Products), Based from total exports revenue.
    \3\ http://www.semiconductors.org/clientuploads/Jobs %20Rollout/
Jobs%20Issue%20Paper__April__2013.pdf.
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I. Semiconductor Manufacturing and Critical Materials
    Contrary to the popular perception that most high-tech 
manufacturing has been offshored to Asia, advanced semiconductor 
manufacturing remains strong and growing in the U.S.\4\ The process of 
manufacturing semiconductors is incredibly complex, employing 
sophisticated equipment and techniques developed by the world's leading 
scientists and engineers\5\ and the precise and controlled use of 
specific materials, chemicals, and gases that possess unique chemical 
and physical attributes. The semiconductor industry is innovating at 
the atomic level and each material used in our manufacturing is 
carefully selected to meet our technology needs and integrated together 
with high precision manufacturing tools to produce high performance 
semiconductors. As circuit features reach the nanoscale level,\6\ the 
semiconductor industry's use of materials with unique properties 
becomes even more critical.
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    \4\ The majority of production (56 percent) from U.S. semiconductor 
firms is located in the United States, and the U.S. is home to more 
leading-edge process technology manufacturing facilities (i.e., 22 
nanometer process technology or less) than any other country in the 
world. Source: IC Insights, Global Fab Database. SIA member companies 
continue to invest and expand in the U.S., with the construction of new 
and expanded state-of-the-art fabrication facilities across the 
country. Overall, U.S.-based semiconductor companies retain over 50 
percent of global market share in a highly competitive market. Source: 
SIA/iSuppli/WSTS.
    \5\ The industry invests on average 22 percent of revenue in R&D, 
amounting to approximately $32 billion in 2012. Source: World 
Semiconductor Trade Statistics (WSTS) and IC Insights. Semiconductor 
companies receive a large number of patents each year and possess 
extensive patent portfolios. Six of top 15 US companies receiving 
patens in the U.S. were semiconductor companies. Source: US Patent and 
Trademark Office, compiled by IFI CLAIMS Patent Services (January 
2013).
    \6\ Nanotechnology is the science, engineering, and technology 
conducted at the nanoscale, a range from 1 to 100 nanometers (nm). One 
nanometer is a billionth of a meter, or 10-9 of a meter.) See http://
www.nano.gov/nanotech-101. Current leading edge chips have over a 
billion transistors on a single chip and features of 22 nanometers 
(nm), and the industry is engaged in ongoing development at the scale 
of 10 nm (i.e., 22 billionths of a meter, or roughly a 4,000th the 
width of a human hair). See ``Moore's Law: The rule that really matters 
in tech (Oct. 15, 2012) (available at http://news.cnet.com/8301-11386--
3-57526581-76/moores-law-the-rule-that-really-matters-in-tech/).
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    The building blocks of advanced semiconductors include a range of 
elements, including arsenic, cerium, cobalt, copper, fluorine, gallium, 
germanium, indium, phosphorus, silicon tantalum, tungsten, tin, 
titanium, and others. Our industry also relies on a number of specific 
chemicals and industrial gases in our production process. The materials 
utilized in the semiconductor manufacturing process are selected 
because they possess unique chemical and physical properties. In many 
instances, there are no known alternatives to these materials that 
satisfy our functional needs.
    The semiconductor industry relies on a complex global supply chain 
that consists of numerous suppliers of materials, chemicals, and gases. 
Many of these materials are subject to multiple processing steps and 
pass through multiple hands prior to shipment to a semiconductor 
manufacturing facility (a ``fab'') for use in our manufacturing 
process. As a downstream user of these materials, SIA member companies 
are typically several steps removed from the extraction of the basic 
material, and therefore we believe it is important to adopt a holistic 
approach and look at the entire supply chain when assessing potential 
vulnerabilities in supply of these critical materials.
    Because of our reliance on key materials--and the potential 
vulnerabilities in the supply of these materials--we believe that the 
Critical Minerals Policy Act is an important bill that warrants prompt 
consideration. We support the goal of the bill, which is to identify 
minerals that are critical to the American economy and may be subject 
to potential supply disruptions, and to develop a framework for 
policies to prevent potential disruptions to the supply of these 
minerals. Our industry has experienced shortages, price spikes, or 
other disruptions of key materials in the past, and we believe that it 
should be a national priority to take reasonable steps to improve the 
security of supply of critical materials. The implications of a supply 
disruption in the semiconductor industry reach far beyond our industry 
because so many sectors of our economy are dependent on the electronics 
that are enabled by semiconductors. Consequently, the ripple effects of 
a supply disruption can adversely impact major elements of the U.S. and 
global economy.
    Our industry's recent experience with supply shortages in the 
supply of helium illustrates the potential adverse implications that 
may result in the disruption in the supply of critical materials for 
the semiconductor industry. Helium is an essential gas in the 
semiconductor manufacturing process, and because helium has unique 
functional attributes, there are no known alternatives to this gas for 
many of processes in our manufacturing processes. Last year our 
industry faced significant shortages in the supply of helium, as well 
as substantial price increases, as a result of several factors, 
including the pending closure of the Federal Helium Reserve. Our 
suppliers were shipping a reduced allocation at dramatically increased 
cost to semiconductor fabs, and despite efforts to conserve and recycle 
this gas or find alternatives in some processes, our industry was 
facing the risk of having insufficient quantities to operate. This 
created a very significant risk for our industry and the economy as a 
whole.
    Fortunately, this Committee recognized the need to resolve this 
problem and Chairman Wyden and Ranking Member Murkowski led the 
successful efforts in enactment into law of the Helium Stewardship Act 
(PL 113-40). We greatly appreciate the leadership of this Committee in 
enacting this essential legislation in a timely manner. But this 
experience demonstrates the need to work proactively to develop the 
appropriate policies to avoid future disruptions to the supply of 
critical materials.
    Our industry has also faced other disruptions in the supply of 
processed materials that are essential to semiconductor production. To 
cite one prominent example, in July 1993, an explosion at a Sumitomo 
Chemical plant in Japan shut down a factory that supplied over half of 
the world supply of a high purity resin used in semiconductor packages. 
The value of the resin was estimated to be only 0.26 of a penny per 
integrated circuit, but without the resin semiconductor production 
would come to a halt, a disruption that the U.S. government recognized 
would soon be felt in the computer, automobile, telecommunications 
equipment, and other manufacturing industries. Spot prices for one type 
of chip, dynamic random-access memory (``DRAM'') memory chip nearly 
doubled, and DRAM buyers who did not have long term contracts were 
paying in excess of $300 million a week for several weeks after the 
explosion. Since 95 percent of world production of the high purity 
resin was located in Japan, there was a concerted effort by the U.S. 
industry and government to press Sumitomo Chemical and other Japanese 
suppliers to allocate remaining inventory and production transparently 
and fairly. In part due to long supply chains using sea freight, there 
was sufficient inventory to overcome the crisis until the Sumitomo 
Chemical resumed operations in November of 1993. This example 
illustrates the need for policies that adopt a holistic approach to 
assessing the supply chain of critical materials.
    These are just a sampling of instances that illustrate the 
potential vulnerability of the supply chain.\7\ In order to avoid 
future supply disruptions, SIA is pleased that this Committee is taking 
action to secure the supply of critical materials for the future.
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    \7\ Another example was the result of Hurricane Katrina, which 
caused extensive damage to a major liquid hydrogen facility in New 
Orleans. Coupled with a previously planned closure of another plant in 
Canada, the damage to this plant caused a shortage of supplies of 
liquid hydrogen. More recently, the industry is concerned by actions 
such as the recent announcement by China to reduce the export quota for 
rare earth minerals. See http://www.bloomberg.com/news/2013-12-13/
china-cuts-first-batch-rare-earth-export-quota-for-second-year.html.
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II. Actions by the Semiconductor Industry to Secure Supply of Key 
        Materials
    In light of our recent experience with the shortage of helium, SIA 
looks forward to working with the Congress and the Administration to 
identify critical materials and develop the appropriate policies to 
secure the supply of key materials. Our industry is engaged in ongoing 
efforts to identify critical materials used in our processes and avoid 
harmful disruptions to the supply of these materials.

          1. An industry consortium, SEMATECH,\8\ has a Critical 
        Materials Council that works to analyze risks to the critical 
        materials supply chain and develop contingency plans for 
        dealing with possible disruptions.
---------------------------------------------------------------------------
    \8\ See http://www.sematech.org/.
---------------------------------------------------------------------------
          2. The industry's technology roadmap, the International 
        Technology Roadmap for Semiconductors (ITRS),\9\ includes a 
        chapter on emerging materials that will be needed for future 
        innovations in our industry.
---------------------------------------------------------------------------
    \9\ See http://www.itrs.net/.

    SIA is leveraging these ongoing efforts, as well as studies and 
reports from government and other experts,\10\ to evaluate the 
materials critical to the semiconductor manufacturing process. Our 
assessment will consider of a broad range of factors, including the 
following:
---------------------------------------------------------------------------
    \10\ See, e.g., U.S. Department of Energy, Critical Materials 
Strategy (December 2011) (available at http://energy.gov/sites/prod/
files/DOE__CMS2011__FINAL__Full.pdf); U.S. Geological Survey Minerals 
Information (available at http://minerals.usgs.gov/minerals/).

   The nature, type, and amount of usage in the semiconductor 
        industry
   The availability of alternatives to the material to satisfy 
        the industry's functional requirements
   The degree of reliance on imports of the material
   The geographic concentration and location of sources of the 
        material
   The nature of the supply chain and potential vulnerabilities 
        in supply
   Known worldwide reserves and anticipated future supplies
   Current consumption and expected future demand
    Percentage of U.S. consumption of the material, and the 
        usage in the semiconductor industry as compared with other uses
   Price and price trends
   Past incidents of supply disruptions or price spikes

    As we continue with this process and identify critical materials 
and potential vulnerabilities in the supply of these materials, we hope 
that our recommendations will be considered for inclusion in the lists 
compiled by the Secretary under this bill.
III. SIA Suggestions on the Critical Minerals Policy Act
    SIA offers the following suggestions for the consideration of the 
Committee as you continue work on S. 1600.

          1. Definition of ``critical mineral''

    The bill defines a ``critical mineral'' as ``any mineral or 
element'' designated as critical, with exclusions for materials that 
are fuels or water. While this definition is broad, we believe that it 
is important to ensure that this definition is sufficiently broad to 
encompass the full range of materials that are critical to the 
semiconductor industry. The semiconductor industry relies on a range of 
chemicals, gases, and other materials that may fall outside the 
definition of a ``mineral'' or ``element.'' For example, drawing on the 
recent experience with helium, it is possible that this gas might fall 
outside the definition of ``mineral.'' Alternatively, even if it was 
captured by the term ``element,'' it is possible that it may be 
excluded as a ``fuel,'' since it is typically co-located with natural 
gas and extracted as a byproduct of the natural gas extraction process. 
There may be other materials or compounds that are essential to the 
semiconductor manufacturing process that might inadvertently fall 
outside the definition of this term. Accordingly, we request that the 
definition of ``critical mineral'' (or ``critical material") is broad 
enough to capture the full range of materials that are critical to 
semiconductor manufacturing and the U.S. economy as a whole.

          2. Definition of ``critical mineral manufacturing''

    Section 101(a)(2) defines ``critical mineral manufacturing'' 
specifically cites a number of important sectors of the economy, 
including ``consumer electronics.'' Semiconductors play a pivotal role 
in all the listed sectors, including consumer electronics. Nonetheless, 
we believe that this term should be broadened to encompass the full 
range of electronics that are critical to our economy, not only 
consumer electronics. For example, the bill omits transportation and 
information technology, two important sectors that are reliant on 
innovations enabled by semiconductors. Some of these sectors may not be 
consumer focused but still have semiconductors as an essential 
component.
    We further note that Section 101(a)(2), regarding the draft 
methodology for designating critical minerals, employs the same 
reference to ``consumer electronics'' regarding ``important uses'' of 
these minerals. This list should also be expanded to include a broader 
range of sectors that rely on semiconductors, information technology, 
and electronics.

          3. Criteria for Designation as ``Critical''

    Section 101(a) sets forth the factors to be considered in the 
methodology for designation as ``critical,'' with a focus on minerals 
that may be subject to supply restrictions and are used in important 
economic sectors. SIA agrees with this general approach, and suggests 
that these criteria should be made more detailed to encompass a broader 
range of factors that could warrant a designation as a critical 
mineral. Pages 3-4 of our testimony lists a number of factors that we 
believe should be considered. We also urge the Committee to take a 
holistic approach to evaluating the supply chain that supplies critical 
materials to the semiconductor industry and other sectors, because 
vulnerabilities in the supply may occur far beyond the extraction of 
the material.

          4. Policy Changes to Address Critical Minerals

    Section 102 enumerates certain policy changes in response to the 
designation of a mineral as critical, such as changes to the National 
Materials and Minerals Policy, Research and Development Act of 1980. 
Similarly, Section 106 calls for a study by the National Academies of 
Science to update its report on ``Hardrock Mining on Federal Lands.'' 
We agree that these measures may be appropriate, but the bill should 
address the full range of policies that could impact critical 
materials, whether or not they pertain to minerals and minerals 
extraction. Once again, drawing on the helium example, we suggest that 
the bill should be broad enough and flexible enough to trigger 
appropriate revisions to policies relating to helium, such as the 
Helium Stewardship Act.

          5. Recycling, Efficiency, and Supply

    Section 106 calls for the Secretary of Energy to conduct a research 
and development program ``to promote the efficient production, use, and 
recycling of critical minerals throughout the supply chain.'' We agree 
that such a study could be beneficial to improving the efficiency in 
the use of critical materials. Among other things, reforming the rules 
governing the import and export of used electronics for recycling could 
facilitate the recovery of valuable materials contained in these 
products. We should exercise caution, however, before imposing new or 
ill-advised mandates on the use, labeling, reuse, or recycling of these 
materials.

          6. Alternatives

    Section 107 calls for the Department of Energy to conduct a study 
on potential alternatives to critical minerals. We strongly support 
research to evaluate alternatives to certain critical materials. 
Because our industry selects materials because of their unique physical 
and chemical properties, there may not be suitable alternatives in the 
semiconductor industry. Nonetheless, we support additional research in 
this area.
    We note that the study called for in Section 107 appears to be 
limited solely to critical minerals in energy technologies. This is 
certainly one essential area for study, but the bill should call for an 
assessment of potential alternatives in the full range of critical 
mineral manufacturing.
    Thank you for the opportunity to offer this testimony on behalf of 
the U.S. semiconductor industry, and we look forward to working with 
the Committee as it works on this important bill.

    Senator Manchin. Thank you Mr. Isaacs.

  STATEMENT OF GREGORY CONRAD, EXECUTIVE DIRECTOR INTERSTATE 
 MINING COMPACT COMMISSION, AND ON BEHALF OF ALASKA DEPARTMENT 
              OF NATURAL RESOURCES, ANCHORAGE, AK

    Mr. Conrad. Good morning Mr. Chairman, Ranking Member 
Murkowski.
    My name is Gregory Conrad and I serve as executive director 
of the Interstate Mining Compact Commission which is a 
multiple--multi-governmental organization representing the 
natural resource and environmental protection interest of our 
26 member States.
    I'm pinch hitting today for Robert Swenson, the Deputy 
Commissioner of the Alaska Department of Natural Resources who 
was supposed to appear before you but due to weather in Juneau 
had several flights canceled and was unable to be here and he 
sends his apologies.
    On behalf of Governor Sean Parnell the State of Alaska and 
the 26 member States of the IMCC we appreciate this opportunity 
to testify in strong support of S. 1600. As State governments 
we have a significant stake in this debate and we applaud this 
bipartisan effort to revitalize the United States critical 
minerals supply chain and reduce the Nation's dependence on 
foreign supply. In the face of growing resource nationalism 
abroad, it is crucial that the United States take steps to 
account for, protect and further bolster domestic sources of 
critical minerals.
    Developing our Nation's mineral wealth in a manner that 
maximizes access to minerals while maintaining environmental 
responsibility must be a fundamental component of our efforts 
to sure up national mineral resource security.
    My testimony today will address why this legislation is 
necessary and timely. In particular I will outline 
complimentary efforts the State of Alaska is undertaking 
through its strategic minerals initiative launched by Governor 
Parnell in 2011.
    Some of these same efforts are also being pursued in 
similar ways by other IMCC member States. Recognizing the 
Nation's need for domestic production of strategic and critical 
minerals and the significant minerals potential in Alaska, 
Governor Parnell announced a 5 part initiative to assess, 
incentivize, and develop strategic minerals in Alaska.
    This initiative includes undertaking a statewide assessment 
of Alaska's strategic mineral potential, supporting the 
development of known and highly perspective strategic mineral 
occurrences through infrastructure partnerships and incentives, 
improving the structure and efficiency of the permitting 
process, deepening partnerships in cooperation with the Federal 
Government and other stakeholders to encourage domestic 
exploration, development, and processing of rare earth elements 
and other strategic minerals, and attracting new investment in 
markets for Alaska's abundant mineral resources.
    Our hope is that this committee can use Alaska's strategic 
minerals initiative as an example of successful government 
investment in the mineral sector, engage the level of 
investment needed to address the national effort.
    Our first critical component of Alaska's strategic minerals 
initiative was the State's strategic and critical minerals 
assessment project compiling existing datasets was a first key 
step in the process, and it allowed the State to focus limited 
funds on highly perspective State lands that are open to 
mineral exploration. Partnering with Federal agencies was also 
an important step to ensure that geopolitical boundaries do not 
hinder the geological analysis.
    The State's efforts to provide publicly available high 
quality and consistent digital geologic datasets will allow 
policymakers and land managers to make informed decisions, spur 
minerals exploration, and subsequent mine development, and 
ultimately reduce the Nation's reliance on foreign supply.
    Since project initiation in 2012 Alaska has spent $3.8 
million on field investigations and as a result over 3.9 
million acres have been assessed and more than 1.6 million 
acres of high resolution air borne geophysics has been required 
for a total of 5.5 million acres of mapping.
    To contemplate similar programs for our nationwide effort 
significantly more funding and boots on the ground will be 
necessary. S. 1600 would move us in this direction in 
meaningful ways but enhanced funding is a must.
    Turning to another significant aspect of S. 1600 Governor 
Parnell initiated a statewide permitting initiative in 2010 
that called on State resource agencies to evaluate their 
permitting process to make them more timely, predictable, and 
efficient. Legislative support has been essential for Alaska to 
make these improvements, and in Fiscal Year 2012 the Alaska 
Legislature provided significant funding for the State to 
create efficiencies in the permitting process.
    Since 2011 Department of Natural Resources has been able to 
reduce its backlog on permits and authorizations by more than 
50 percent. Alaska has also worked with miners and several 
State and Federal agencies to modernize Alaska's mine 
permitting forms. This change has simplified the process for 
miners, eliminated or simplified duplicative and confusing 
technical terms, and will improve application processing by 
reducing areas-errors and increasing readability. We believe 
that S. 1600 would similarly provide relief in this manner.
    As domestic needs and supply constraints evolve it is 
imperative the government is ready with the data and regulatory 
environment necessary to address the unique challenges and meet 
the Nations need for domestic resources. S. 1600 is a much 
needed bipartisan effort to address this and is an example 
through Alaska's efforts on how this effort might work on a 
national scale.
    In closing I would like to submit a statement for the 
record reflecting the position of IMCC on this important 
legislation.
    Thank you for the opportunity to testify today.
    [The prepared statement of Mr. Swenson follows:]

   Prepared Statement of Robert Swenson, Deputy Commissioner, Alaska 
             Department of Natural Resources, Anchorage, AK
I. Introduction
    Chairman Wyden, Ranking Member Murkowski, and honorable members of 
the Senate Committee on Energy and Mineral Resources--My name is Robert 
Swenson and I am Deputy Commissioner of the Alaska Department of 
Natural Resources (AK DNR). On behalf of Governor Sean Parnell, thank 
you for this opportunity to testify in strong support of the Critical 
Minerals Policy Act of 2013. We applaud this bipartisan effort to 
revitalize the United States' critical minerals supply chain and reduce 
the nation's dependence on foreign supply.
    I have also been entrusted by the 26 member and associate-member 
states of the Interstate Mining Compact Commission (IMCC) to convey 
their views to the Subcommittee today, and to express their gratitude 
for your leadership in this area, as well as their strong support for 
S. 1600.
    Strategic and critical minerals (SCM) are those minerals determined 
to be essential for use in the United States but subject to potential 
supply disruptions. The U.S. Geological Survey (USGS) maintains a list 
of critical minerals that is updated on the basis of supply risk and 
changing technologies. The list includes rare-earth elements, the 
platinum-group metals, graphite, and 13 other elements or element 
groups. It is worth noting that these are just a subset of the 36 
elements identified by the USGS for which the United States imports 
more than 70 percent of its supply, and that this list will change over 
time based on supply and the evolution of demand.
II. Overview of Today's Testimony
    My testimony today will address why this legislation is necessary 
and timely. I will also outline very similar and complementary efforts 
the State of Alaska is undertaking through its strategic minerals 
initiative launched by Governor Parnell in 2011. My primary objective 
is to share specific examples of how government investment can 
significantly improve our understanding of resource potential, ensure 
protection of the environment, and encourage private sector investment 
to help meet our mineral commodity needs.
    Before getting into substantive matters, I would like to briefly 
mention my professional background as it pertains to this testimony and 
provide some information about the IMCC.
    As the State Geologist and now Deputy Commissioner of AK DNR, a 
state agency employing more than 1,100 resource professionals, I have 
been in charge of designing and implementing the State of Alaska's 
strategic and critical mineral effort. The AK DNR workforce includes 
scientists with expertise in conducting geological mapping and airborne 
geophysical studies as well as experts in permitting who work to ensure 
that exploration and development is conducted in a manner that is 
compatible with Alaska's unique environment and stringent regulatory 
standards.
    The IMCC, of which the State of Alaska became a full member last 
year, is a multi-state organization that represents the natural 
resource and related environmental protection interests of its member 
states. Twenty-one states have ratified their membership in the IMCC 
through acts of their respective state legislatures, and five others 
participate as associate members while they pursue enactment of state 
legislation ratifying their membership. A primary focus of the IMCC is 
liaising with Congress and the federal government to promote a 
cooperative effort between state and federal agencies in advancing 
responsible mining development and environmental protection.
    As the primary regulators of mineral production activity within 
their borders, the IMCC member states have a vital interest in the 
development of all minerals, particularly those of strategic and 
critical importance to the United States. Even where minerals are 
produced on federal lands, states often work in concert with our 
various federal agency partners to ensure that these minerals are mined 
in an efficient and effective manner, while also protecting the 
environment and balancing impacts on other resources such as the land, 
water and air.
III. Significance of S. 1600
    In its findings, S. 1600 declares that ``the United States lacks a 
coherent national policy to assure the availability of minerals 
essential to manufacturing, national economic well-being and security, 
agricultural production, and global economic competitiveness. We 
strongly agree with this finding. The bill seeks to establish a new 
critical minerals policy that:

   Facilitates domestic production;
   Promotes investment-quality, environmentally-sound domestic 
        mining, processing and minerals recycling;
   Establishes a national assessment for mineral demand, supply 
        and needs; and
   Addresses permitting inefficiencies that impact the minerals 
        sector

    Our Nation's federal agencies (e.g., the USGS, the U.S. Bureau of 
Land Management (BLM), and the U.S. Forest Service (USFS) ), will take 
a lead role in implementing this new policy and, to be successful, they 
will need to establish strong partnerships with the states that have 
the resource base to support a strategic minerals sector and the 
regulatory systems and expertise to develop those resources.
    As shown in Figure 1* in the appendix to this testimony, as of 
2012, the United States relied on imports for most of its strategic and 
critical minerals. Figure 1 is a graph from the U.S. Geological 
Survey's 2013 mineral commodity summary of 63 mineral commodities 
important to the United States. The figure shows that our nation relies 
on imports for 100 percent of 17 of the 63 minerals and relies on 
imports for more than 50 percent of 25 additional minerals. Our 
reliance on imported minerals, however, is not due to an absence of 
resource potential.
---------------------------------------------------------------------------
    * All figures have been retained in committee files.
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    In fact, while much additional work and investment is needed to 
develop domestic supplies, many U.S. regions contain significant 
potential for strategic and critical minerals. To help understand 
Alaska's potential, we have modified Figure 1 to include current, past, 
and potential production, and highlight the commodities that are 
currently on the USGS list of SCMs.
IV. Alaska's Strategic and Critical Minerals Initiative
    The State of Alaska is blessed with vast mineral potential on its 
lands. Based on USGS estimates, if Alaska was a country, it would be in 
the top 10 for:

   Coal (17 percent of the world's coal; 2nd most in the world)
   Copper (6 percent of the world's copper; 3rd most in the 
        world)
   Lead (2 percent of the world's lead; 6th most in the world)
   Gold: (3 percent of the world's gold; 7th most in the world)
   Zinc: (3 percent of the world's zinc; 8th most in the world)
   Silver (2 percent of the world's silver; 8th most in the 
        world)

    In addition, Alaska has more than 70 known occurrences of rare 
earth elements (REEs) and multiple occurrences of SCM s, as noted on 
Figure 2. We expect that continued exploration will lead to additional 
discoveries.
    Recognizing the nation's need for domestic production of SCMs and 
the significant minerals potential in Alaska, Governor Parnell directed 
the Department of Natural Resources to hold an inaugural Alaska 
Strategic and Critical Minerals Summit on September 30, 2011. During 
the summit, the governor announced Secure Alaska's Future: Strategic 
Minerals, a five-part initiative to assess, incentivize and develop 
strategic minerals in Alaska. This initiative includes:

   Undertaking a statewide assessment of Alaska's strategic 
        mineral potential;
   Supporting the development of known and highly-prospective 
        strategic mineral occurrences through infrastructure 
        partnerships and incentives;
   Improving the structure and efficiency of the permitting 
        process
   Deepening partnership and cooperation with the federal 
        government and other stakeholders to encourage domestic 
        exploration, development, and processing of REEs and other 
        strategic minerals.
   Attracting new investment and markets for Alaska's abundant 
        mineral resources

    I will now give you a brief summary of these efforts as an example 
of what can be done with proper leadership, cooperation, and funding. 
My hope is that this Committee can use Alaska's Strategic Minerals 
Initiative as an example of successful government investment in the 
minerals sector and gauge the level of investment needed to address a 
national effort.
            Statewide Assessment
    Following Governor Parnell's 2011 directive, and with funding 
approved by the Alaska Legislature, the Alaska Division of Geological & 
Geophysical Surveys (DGGS) embarked on a program to better characterize 
Alaska's SCM endowment. The schedule and timetable for completion of 
the division's Strategic and Critical Minerals Assessment project is 
shown in Table 1**, and Exhibit A of the appendix provides a list of 
products that will be made available through this project.
---------------------------------------------------------------------------
    ** All tables and exhibits have been retained in committee files.
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    Compiling existing data sets was a key first step in the process 
and it allowed the state to focus limited funds on highly-prospective 
state lands that are open to mineral exploration. Partnering with 
federal agencies was an important step to ensure that geopolitical 
boundaries do not hinder the geological analysis.
    High-quality, district-scale geological data is lacking for most 
areas of Alaska with known SCM occurrences. The most basic and useful 
data--geologic maps--are generally not available at a scale useful for 
mineral exploration (1:63,360 or 1'' = 1 mile). Much of the other 
available public data occurs in a patchwork of coverage of varying 
quality, vintage, and scale. The state's efforts to provide publicly 
available, high quality and consistent digital geologic datasets will 
allow policy makers and land managers to make informed decisions; spur 
mineral exploration and subsequent mine development; and ultimately 
reduce the nation's reliance on foreign supply. S. 1600 would greatly 
enhance and support these types of efforts and initiatives on both 
state and federal lands.
    The Strategic and Critical Minerals Project proposal calls for 
spending $2.73 million a year for five years (subject to the 
availability of funding). Since project initiation in 2012, DGGS has 
spent $3.8 million on field investigations.
            Results of the Assessment Program
    The Strategic and Critical Minerals Project has produced a 
significant amount of data since its initiation in 2011. In geologic 
mapping at both reconnaissance and detailed scales, over 3.9 million 
acres have been assessed, and more than 1.6 million acres of high 
resolution airborne geophysics has been acquired, for a total of 5.5 
million acres of mapping. To put this into context, the Commonwealth of 
Virginia contains approximately 27.4 million acres within its 
boundaries. With the available funding over a 3 year period we have 
been able to cover about 20 percent of the area of Virginia. In 
addition to the mapping effort, the state has performed modern 
geochemical analysis (focused on the full suite of elements) of nearly 
10,000 archived and new samples collected during the mapping effort. 
Much of this geochemical work has been in cooperation with the USGS, 
which has significantly broadened the aerial coverage and distribution 
of the information, as shown in Figure 3.
    To contemplate similar programs for a nationwide effort, 
significantly more funding and `boots on the ground' would be 
necessary. Certainly, there is a tremendous variability in the level of 
data coverage and data quality across the nation, and, as a result, 
performing comprehensive resource assessments will require a 
coordinated effort and the creation of a robust funding mechanism 
between states and federal agencies. S. 1600 would move us in this 
direction in meaningful ways.
            Federal funding through Statemap and data preservation
    An excellent example of cooperative funding and leveraging of state 
and federal dollars to acquire geologic information is the National 
Geologic Cooperative Mapping Program. This national program has been a 
cornerstone of cooperation between State Geologic Surveys and the USGS 
and has been supported by Alaska and IMCC over the years. Another key 
federal program that helps to archive samples and other forms of legacy 
geologic and geophysical data is the National Geological & Geophysical 
Data Preservation Program. A tremendous amount of valuable information 
was acquired at a very low cost in Alaska by sampling archived 
materials from both the State and USGS collections. It is imperative 
that these cost-effective programs are maintained and sufficiently 
funded to address the evolving geologic needs of the nation, including 
the strategic minerals assessment program. Again, the provision in S. 
1600 will facilitate this type of work greatly.
V. Alaska's Efforts to Improve Permitting
            Statewide Permitting Reform
    Governor Parnell initiated a statewide permitting initiative in 
2010 that called on state resource agencies to evaluate their 
permitting processes to make them more timely, predictable and 
efficient. This effort began in earnest in 2011.
    The Department of Natural Resources has pursued permitting reform 
in several ways: investing in our staff, modernizing our technology, 
and working with the Alaska Legislature to enact statutory changes. 
Through our work on this over-arching permitting initiative, we are 
also addressing the governor's Strategic Minerals initiative, which 
also called on state officials to make the permitting process more 
structured and efficient.
    Legislative support has been essential for us to make these 
improvements. In FY12, the Alaska Legislature provided approximately 
$2.7 million in operating funds and $2.5 million in capital funding for 
our Division of Mining, Land & Water to create efficiencies in its 
permitting process. In FY12 and 13, the Legislature approved funding to 
fill vacant positions focused on permitting.
    What progress have we made? Since 2011, the Department of Natural 
Resources has been able to reduce its backlog of permits and 
authorizations by more than 50 percent. Furthermore, the Alaska 
Legislature has approved several bills introduced by Governor Parnell 
to modernize our statutes. One of those bills, enacted in 2013, 
authorizes state agencies to evaluate the possibility of administering 
the federal program for permitting dredge and fill projects in surface 
waters and wetlands. Under this program, the state, rather than the 
U.S. Army Corps of Engineers, would administer many Clean Water Act 
Section 404 permitting responsibilities in cooperation with the U.S. 
Environmental Protection Agency. While this would be a major 
undertaking and significant new expense for the state, assuming primacy 
for this federal program may make permitting projects, including mining 
projects, in Alaska more efficient, timely, and certain.
    Specifically related to mining, our Department has worked with 
miners and several state and federal agencies to modernize Alaska's 
mining permit application forms. Three previous versions of application 
packets used for hardrock exploration, mechanical placer mining, and 
suction dredge operations were consolidated into one uniform 
application packet in an updateable Adobe format. These new application 
packets are now available online for use during the 2014 mining season. 
This change has simplified the process for miners, eliminated or 
simplified duplicative and confusing technical terms, and will improve 
application processing by reducing errors and increasing readability. 
We believe that S. 1600 would similarly provide relief in this same 
manner.
            Large Project Coordination
    Alaska employs an interagency Large Mine Permitting Team (LMPT) 
approach to the review of permits and authorizations for mining 
projects. This team-based approach, to our knowledge, is unique in the 
nation. It is a voluntary process, at the applicant's expense, whereby 
the applicant enters into an agreement with DNR's Office of Project 
Management and Permitting (OPMP) to provide a Large Project Coordinator 
(LPC), who acts as the State's primary point on contact for the 
project. The LPC coordinates the participation of the technical LMPT 
members from the different state regulatory agencies, who are also 
funded by the applicant via the funding agreement with OPMP. When a 
federal Environmental Impact Statement (EIS) is required under the 
National Environmental Policy Act (NEPA), OPMP typically signs on as a 
Cooperating Agency on behalf of all of the state agencies and 
coordinates their participation in the NEPA environmental review. The 
LPC works to minimize duplication of effort by the agency 
representatives and to coordinate, to the degree possible, the 
permitting requirements and timelines of the different state and 
federal agencies. The State of Alaska has long felt that a federal 
coordinator similar to the State's LPC could help to coordinate federal 
permitting.
    Alaska's coordinated team approach helps to increase permitting 
efficiencies and to ensure that permitting requirements are not 
overlooked. The funding agreement with OPMP also provides a means for 
hiring 3rd party contractors, if the state agencies lack the in-house 
technical expertise for reviewing and evaluating project proposals and 
supporting documents. A recent addition to Alaska's approach to mine 
permitting has been the requirement for Health Impact Assessments (HIA) 
which objectively evaluate the potential impacts to human health, both 
negative and positive, from mine development. The HIA program is housed 
in the Alaska Department of Health and Social Services and is staffed 
by public health professionals.
    Because resource development projects and environmental protection 
are equally important to Alaska, we have invested a lot of attention to 
our permitting processes and feel we have a system that is thorough, 
balanced and efficient. In recent years, the LMPT has participated in 
the EIS for the Greens Creek Tailings Expansion, the re-issuance of 
authorizations and financial assurances for the Kensington Gold Mine, 
and modifications to the Fort Knox Gold Mine's Plan of Operations and 
Waste Management Permit. S. 1600 seems to embrace this same type of 
approach for federal projects and should also facilitate the permitting 
of projects on federal lands.
VI. Working with Federal Agencies and Industry
    One of the most cost-effective ways to gather new data in remote 
areas with high costs of data acquisition is through partnerships and 
grant programs that leverage the limited funding of all interested 
parties. Methods for leveraging can include data sharing, direct 
contribution to expand programs, cost sharing through competitive grant 
programs, and the cooperative use of archived samples and data sets 
where results are shared by all parties.
    In Fall 2013, DGGS leveraged its Wrangellia airborne survey by 
coordinating with a mineral exploration company, allowing the company 
to fly an airborne survey that overlapped a portion of the survey area. 
DGGS has obtained the results from the company's survey, at no cost, 
and will incorporate it in our analyses and make it available to the 
public. DGGS made a similar arrangement with CIRI, an Alaska Native 
regional corporation, for a 100-square-mile area adjacent to the 
state's Farewell survey area. DGGS will remain flexible and work 
cooperatively with other private, industry and government partners to 
leverage limited funding. This is an example of the multi-stakeholder 
approach that S. 1600 means to utilize.
    DGGS maintains close working relationships with the USGS and the 
U.S. Bureau of Land Management (BLM) as part of the state's SCM 
project. Specifically, DGGS and the USGS signed two memoranda of 
understanding (MOU). The first is a cooperative agreement to evaluate 
Alaska's Strategic & Critical Minerals potential. Work includes: 1) 
statistically identifying SCM-related elements with high values in 
statewide geochemical data in order to identify areas with high SCM 
potential; 2) identifying areas in Alaska with geology favorable for 
finding SCM-related mineral deposits, and; 3) re-analyzing historic 
USGS samples and obtaining modern geochemical analyses to facilitate 
mineral exploration for SCM.
    The second MOU with the USGS is a cooperative agreement to enhance 
DGGS geophysical surveys. The agreement formalizes a cooperative 
program for the USGS and DGGS to 1) collaborate on new processing of 
existing and any future DGGS airborne geophysical survey data, 2) 
collaborate on development of new interpretative products (appropriate 
to both agencies), and 3) provide for the ability to share appropriate 
confidential geophysical data and information between the geophysical 
personnel of both agencies.
    DGGS also has an informal cooperative agreement with the BLM to 
document, archive, and make publically available (on DGGS's web site) 
all of the historic US Bureau of Mines Strategic & Critical Minerals 
data and publications in Alaska.
    S. 1600 appears to encourage this same type of cooperation among 
state and federal agencies to stimulate mineral production on both 
state and federal lands. We are particularly supportive of those 
provisions in S. 1600 that would require enhanced coordination between 
federal government agencies such as BLM and USFS and state government 
agencies that have similar responsibilities for the development of 
mineral resources. We believe that renewed and revitalized efforts in 
this regard would avoid duplicative reviews, minimize paperwork and 
result in timelier processing of permit applications. The bill also 
recognizes and gives credence to the critical role played by the states 
with jurisdiction over mining projects.
VII. Summary
    As domestic needs and supply constraints evolve, it is imperative 
that government is ready with the data and regulatory environment 
necessary to address the unique challenges and meet the nation's needs 
for domestic resources. For its part, the State of Alaska has invested 
in the assessment of its resources for many years. Historically, the 
federal government has made significant investments in these critical 
activities as well. However, to the recent failure to prioritize the 
USGS minerals program have created a situation where these assessments 
are difficult or nearly impossible to implement at a national scale.
    The Critical Minerals Policy Act of 2013 is a much needed 
bipartisan effort to address this situation. The bill before you speaks 
to unique risks concerning the supply chain of critical and strategic 
minerals that are important for national security, protection of the 
environment, and economic well-being of the nation. By addressing the 
data requirements for resource assessments and examining the permitting 
process for inefficiencies that may unnecessarily hinder responsible 
development, this legislation will help remove some of the barriers to 
environmentally sound domestic production, and provide the raw 
materials for new technologies that will provide a host of benefits to 
the nation.
    As stated in the bill, the federal government cannot accomplish 
these tasks alone. It is critical that state and federal agencies work 
in close cooperation, leveraging their expertise and funding to 
maximize efficiency. Providing sufficient federal funding and matching 
grant opportunities would be a crucial part of the legislation and 
should be contemplated for all sections of the bill, including Section 
103; Resource Assessment.
    Alaska's strategic minerals initiative is a good example of how 
this effort might work on a national scale. While Alaska's work isn't 
finished yet, it has: gathered the data needed to assess the mineral 
potential of more than 5 million acres of highly-prospective State 
land; addressed inefficiencies in the regulatory framework; coordinated 
permitting; and increased the domestic exploration and production of a 
host of mineral commodities, including strategic and critical minerals. 
The investment history depicted in Figure 4 shows that these efforts 
have been successful. In Alaska, exploration expenditures--the front-
end risk money that leads to the next discovery and potential 
development--have exceeded $100 million dollars for each of the last 
eight consecutive years, and exceeded $300 million per year for three 
of those years.
    The experience in many of the IMCC member states, particularly in 
the West, has been similar and highlights the importance of a 
coordinated approach for mineral development and related environmental 
protection. The efforts and investment contemplated by the Critical 
Minerals Policy Act of 2013 will help the Nation achieve similar 
results.
    Thank you again for the opportunity to testify before this 
committee.

    Senator Manchin. Thank you sir.
    Ms. Thomas.

  STATEMENT OF JENNIFER THOMAS, DIRECTOR, FEDERAL GOVERNMENT 
       AFFAIRS, THE ALLIANCE OF AUTOMOBILE MANUFACTURERS

    Ms. Thomas. Thank you Chairman Manchin and Ranking Member 
Murkowski.
    My name is Jennifer Thomas and I am director of Federal 
Government Affairs to the Alliance of Automobile manufacturers, 
which is the trade association that represents 12 auto makers 
that make roughly 3 out of every 4 new vehicles sold in the 
U.S. every year.
    On behalf of the alliance I appreciate the opportunity to 
offer our views on S. 1600, the Critical Minerals Policy Act of 
2013 and the need for reliable and affordable access to the 
minerals that are vital to automobile production.
    To meet the aggressive 54.5 miles per gallon fuel economy 
standards by model year 2025 auto makers are fully engaged in 
developing more advanced technology vehicles, more efficient 
power trains and lighter vehicle bodies. This new generation of 
sophisticated and fuel efficient vehicles will be increasingly 
reliant on a variety of commodities, many of which appear to 
meet the bills definition of a critical mineral.
    For example various lighter weight high strength steel 
alloys contain a variety of minerals including chromium, 
nickel, and manganese, and are utilized to reduce the vehicle's 
weight while maintaining the integrity of a vehicle. Platinum 
group metals are essential components of a vehicles catalytic 
converter, significant reducing carbon monoxide, hydrocarbon, 
and nitrogen oxide emissions.
    Small quantities of rare earth elements have been used in 
conventional vehicles for many years, but hybrids, plug-
institutions, and EV's use larger quantities of rare earth 
elements in their electric motors and their more complicated 
hybrid battery systems.
    Simply put minerals are the building blocks of richly every 
automobile on the road today. Ensuring affordable and reliable 
access to them is key to the continued success of the 
automotive sector.
    We commend Senators Murkowski, Wyden, and Udall for 
crafting comprehensive and bipartisan legislation that will 
help create a more secure and domestic supply chain for 
critical minerals.
    According to the U.S. Geological Survey, U.S. manufacturers 
and diverse industries are more than 50 percent reliant on 
imports for than 3 dozen minerals commodities. This dependency 
leaves the U.S. industries susceptible to potential supply 
disruption in producing countries, as a result of political 
instabilities or a significant growth in internal demand.
    The Critical Minerals Policy Act promotes policies to help 
ensure robust and secure supply chain of domestically produced 
critical minerals. The Alliance supports the requirements 
outlined in Title 1 to establish a list of minerals critical to 
the U.S. economy and create analytical and forecasting 
capabilities to provide accurate and timely mineral information 
to avoid supply shortages, mitigate price volatility, and 
prepare for increased demand.
    Every auto maker maintains a process to manage risks 
throughout its vast global supplier network and the existence 
of impartial analysis and forecasting for critical minerals 
similar to what EIA produces for a variety of energy sources 
will help industry identify risks early and ultimately manage 
them.
    Automakers also support the DOE research programs 
established in Sections 106 and 107 that would facilitate the 
efficient production, reuse, and recycling of critical minerals 
as well as programs that would identify and develop suitable 
alternatives and thereby reducing the demand of--for critical 
minerals. Given the diversity of sources impacted by the 
availability of minerals, DOE is the right agency to coordinate 
with stakeholders in developing best practices and innovative 
approaches for using existing minerals efficiently and for 
introducing viable and affordable alternatives when necessary.
    We greatly appreciate the opportunity to offer our views on 
the Critical Minerals Policy Act and the need for a robust and 
stable critical minerals market. Whether it's the aluminum in 
automotive frames, the platinum in catalytic converters, or the 
lithium in electric vehicle batteries minerals are essential 
components in every vehicle on the road today.
    This sensible bipartisan legislation will help ensure 
reliable, affordable domestic access to critical minerals, 
while promoting recycling, reuse and the development of viable 
alternatives to help reduce their demand.
    Thank you again and I'll be happy to answer any of your 
questions.
    [The prepared statement of Ms. Thomas follows:]

  Prepared Statement of Jennifer Thomas, Director, Federal Government 
            Affairs, The Alliance of Automobile Manufactures
    Thank you, Chairman Wyden, Ranking Member Murkowski and members of 
the Committee. The Alliance of Automobile Manufacturers (Alliance) is a 
trade association of twelve car and light truck manufacturers comprised 
of BMW Group, Chrysler Group LLC, Ford Motor Company, General Motors 
Company, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi 
Motors, Porsche Cars, Toyota, Volkswagen Group and Volvo Cars. 
Together, Alliance members account for roughly three out of every four 
new vehicles sold in the U.S. each year. Auto manufacturing is a 
cornerstone of the U.S. economy, supporting eight million private-
sector jobs, $500 billion in annual compensation, and $70 billion in 
personal income-tax revenues. On behalf of the Alliance, I appreciate 
the opportunity to offer our views on S. 1600, the Critical Minerals 
Policy Act of 2013, and the need for reliable and affordable access to 
the minerals that are vital to automobile production. We applaud the 
Committee for the thoughtful and bipartisan approach it has taken to 
address this important policy issue.
    Today's automobile is among the most sophisticated technology owned 
by consumers. Not only is it advanced from electronics, computer and 
connectivity standpoints, but it must also be durable and reliable. An 
automobile must function consistently and well in the harshest climate 
conditions from freezing cold to desert heat, running on the roughest 
roads from urban potholes to unpaved country and off-road conditions, 
performing at highway speeds and in congested city streets for as much 
as a 150,000-mile lifetime, all while meeting thousands of regulatory 
requirements. Virtually every aspect of the modern automobile is now 
high-tech, uses advanced materials and is developed through cutting-
edge processes. To keep pace with ever-growing consumer demands for 
sophisticated new technologies, Booz & Co. found auto industry R&D 
spending climbed from $7.4 billion to $102 billion in 2013. By 
comparison, the entire global aerospace and defense industry spent 
roughly $25.5 billion in the same year.\1\
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    \1\ Jaruzelski, B., Loehr, J., and Holman, R. The Global Innovation 
1000: Navigating the Digital Future. Booz & Co. Issue 73. Winter 2013.
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    To meet the aggressive 54.5 miles per gallon (mpg) fleet fuel 
economy standards by model year (MY) 2025, automakers are fully engaged 
in further refining the production of vehicles and the implementation 
of advanced technologies--developing more hybrids, plug-in hybrids, 
battery electrics, fuel cell vehicles, more efficient power trains, and 
lighter vehicle bodies. This new generation of sophisticated, high-tech 
and fuel-efficient vehicles will be increasingly reliant on a variety 
of commodities, many of which appear to meet the bill's definition of a 
critical mineral. For example, various lighter-weight, high-strength 
steel alloys contain a variety of minerals, including molybdenum, 
chromium, nickel, and manganese, and are utilized to reduce vehicle 
weight while still maintaining the integrity of a vehicle. Platinum 
group metals (PGMs) are essential components of a vehicle's catalytic 
converter, significantly reducing carbon monoxide (CO), hydrocarbon 
(HC), and nitrogen oxide (NOX) emissions. Finally, rare 
earth magnets are used in the electric motors found in most hybrid and 
electric vehicles and in the nickel metal hydride batteries utilized in 
current generation hybrid electric vehicles. Some current and many 
future hybrid and electric vehicles are expected to utilize lithium ion 
batteries and while they do not contain rare earth elements (REEs), 
lithium ion batteries do contain minerals such as cobalt and manganese, 
in addition to lithium. Simply put, minerals are the building blocks of 
virtually every automobile on the road today. Ensuring affordable and 
reliable access to them is key to the continued success of the 
automotive sector.
    Automobile manufacturing is among the most capital-intensive 
industries. Automakers and suppliers must make substantial investments 
at the front end on research, design, development, testing and 
certification before a vehicle enters production. New technologies 
carry significantly higher costs, at least initially, as they are 
developed and refined for use on the various types of vehicles needed 
by American consumers. Additionally, production cycles in the auto 
industry are five years or longer and not all vehicles are reengineered 
at the same time. This need for longer lead times requires increased 
transparency and certainty throughout the global supply chain. Any 
unexpected disruptions have the potential to result in significant 
economic harm.
    We commend Senators Wyden and Murkowski for crafting comprehensive 
legislation that will help create a more secure domestic supply chain 
for critical minerals. According to the U.S. Geological Survey, U.S. 
manufacturers and others are more than 50 percent reliant on imports 
for more than three-dozen mineral commodities, including REEs, 
titanium, and cobalt. This dependency leaves U.S. industries 
susceptible to potential supply disruptions in producing countries as a 
result of natural disasters, political instability or market 
manipulation. The Critical Minerals Policy Act promotes policies to 
help ensure a robust and stable supply chain of domestically produced 
critical minerals and, thus, provides industries reliable and 
affordable access to critical minerals.
    The Alliance supports the requirements outlined in Title I of the 
Critical Minerals Policy Act to establish a list of minerals critical 
to the U.S. economy. Following this designation, the legislation calls 
for an analytical and forecasting capability to be established to 
identify critical mineral supply and demand to ensure ``informed 
actions be taken to avoid supply shortages, mitigate price volatility, 
and prepare for demand growth and other market shifts.'' Every 
automaker maintains a process to manage risk throughout its vast global 
supplier network. The existence of impartial analysis and forecasting 
for critical minerals, similar to what the U.S. Energy Information 
Administration (EIA) produces for various energy sources, will help 
industry identify risks early and ultimately manage them.
    Mineral-dependent industries must manage and mitigate risks of 
shortages or price spikes through a variety of means, including 
diversifying suppliers to the maximum extent possible, using minerals 
efficiently throughout the production process and establishing 
aggressive recycling programs to recapture supplies when vehicles are 
taken off the road. Automakers support the Department of Energy (DOE) 
R&D programs established in Sections 106 and 107 of Title I that would 
facilitate the efficient production, use, and recycling of critical 
minerals and identify and develop alternative materials that can be 
used to reduce the demand for critical minerals. Given the diversity of 
sectors potentially impacted by the availability of certain minerals, 
DOE is the right agency to coordinate with stakeholders in developing 
best practices and innovative approaches for using existing critical 
minerals efficiently and for introducing viable and affordable 
alternatives when necessary.
    We appreciate the opportunity to offer our views on the Critical 
Minerals Policy Act and the need for a robust and stable critical 
minerals market. Whether it's the aluminum in automotive frames, the 
platinum in catalytic converters, or the lithium and nickel in electric 
vehicle batteries, minerals are vital components in every automobile on 
the road today. This sensible, bipartisan legislation will help to 
ensure reliable and affordable domestic access to critical minerals, 
promote recycling, and identify and develop viable alternatives to 
reduce the demand for critical minerals. The Alliance stands ready to 
work with the Committee on this important energy and natural resources 
policy. Thank you again and I will be happy to answer any of your 
questions.

    Senator Manchin. Thank you.

  STATEMENT OF RODERICK G. EGGERT, PROFESSOR OF ECONOMICS AND 
   BUSINESS, COLORADO SCHOOL OF MINES, AND DEPUTY DIRECTOR, 
 CRITICAL MATERIALS INSTITUTE, AN ENERGY INNOVATION HUB OF THE 
                      DEPARTMENT OF ENERGY

    Mr. Eggert. Thank you Ms.--thank you Mr. Chairman and 
Ranking Member Murkowski.
    My name is Rod Eggert I'm a professor of Economics and 
Business at Colorado School of Mines. I also am deputy director 
of the Critical Materials Institute, the DOE Energy Innovation 
Hub that Mr. Danielson discussed in Panel 1. I also chair the 
National Research Council Committee that prepared the 2008 
study, ``Minerals, Critical Minerals and the U.S. Economy''.
    Let me begin with my summary thoughts and then provide an 
explanation, my summary thoughts. S. 1600 aligns well with the 
recommendations of the 2008 National Research Council Study on 
critical materials. Also the recommendations on the 2011 expert 
review panel report on energy critical elements prepared by a 
panel of the American Physical Society and the Materials 
Research Society.
    S. 1600 also aligns well with my previous testimony and 
published statements on policy in this area. Especially 
noteworthy I think are its wholistic and comprehensive nature 
and its focus on the entire supply chain.
    Now for my explanation, as an economist I believe in the 
power and effectiveness of markets and so my inclination is to 
favor market solutions rather than government interventions. 
But markets are not panaceas, governments have the 
responsibility to facilitate market activities, especially in 
situations when markets are not or do not work well.
    In the case of critical minerals and materials there are 4 
areas in which I think government activities can play an 
important even essential role: first in the area of 
international trade, policy and government activities should 
promote undistorted trade when trade distortions distort 
markets. This is an important issue in a number of mineral 
markets, but as I realize this is outside the scope or the 
purview of this committee's activities, I won't say anything 
further on this issue.
    Second, policy and government activities should strive for 
more efficient processes for the regulatory review of potential 
new mineral development activities. Foreign sources are not 
necessarily more risky than domestic sources but when they are, 
domestic sources of mineral resources can help offset risky 
foreign sources. Sections 104 & 105 of the proposed legislation 
would be an important step in this regard.
    Third, policies and government activities are essential in 
facilitating collection and dissemination in analysis of 
information. There's a long tradition of government providing 
basic information on which sound private and public decisions 
are made and Sections 101, 103, and 108 address information and 
analysis.
    Fourth and finally policy and government activities should 
facilitate research and education. Research and education are 
traditional public goods, that is investments that the private 
sector acting alone is likely to undersupply because the 
benefits of these investments are diffuse, difficult to 
capture, often easy to copy, risky, and far in the future. Over 
the longer term R&D is perhaps the key to eliminating the 
supply risks associated with critical minerals and materials.
    Sections 106 and 107 would help focus R&D attention on a 
critical minerals and materials. Section 109 would help 
reinvigorate--Section 109 which focuses on education and work 
force would help reinvent--reinvigorate our intellectual on 
academic infrastructure in mineral resources and materials 
which has to some degree withered in the recent past.
    So overall and to repeat my evaluation I support S. 1600, 
it aligns well with a number of recent expert review studies on 
this issue as well as my own previous published statements on 
critical minerals and materials.
    Thank you for the opportunity to testify today, I'd be 
happy to answer any questions.
    [The prepared statement of Mr. Eggert follows:]

 Prepared Statement of Roderick G. Eggert, Professor of Economics and 
   Business, Colorado School of Mines, and Deputy Director, Critical 
  Materials Institute, An Energy Innovation Hub of the Department of 
                                 Energy
    Good morning, Mr. Chairman, members of the Committee, ladies and 
gentlemen. My name is Rod Eggert. I am a professor of economics and 
business at Colorado School of Mines, as well as deputy director of the 
Critical Materials Institute, an energy innovation hub of the U.S. 
Department of Energy. My area of expertise is the economics of mineral 
resources. In addition to my current activities related to critical 
minerals and materials, several years ago I participated in two review 
panels relevant for today's hearing. I chaired the committee of the 
U.S. National Research Council that prepared the 2008 report Minerals, 
Critical Minerals, and the U.S. Economy. I served as a member of the 
committee of the American Physical Society and the Materials Research 
Society that prepared the 2011 report Energy Critical Elements: 
Securing Materials for Emerging Technologies. I also testified 
previously on critical minerals and materials before a Subcommittee of 
this Committee (2010), a House Committee (2011), and a committee of the 
European Parliament (2011).
    I organize my remarks into three sections. First, I describe the 
context for current concerns about critical minerals. Second, I present 
my views on appropriate roles for government in light of these 
concerns, which reflect my previous testimony and published papers. 
Third, I comment on S. 1600 itself.
Context
    Mineral-based materials and products are becoming increasingly 
complex. Early cell phones in the 1980s consisted of materials that 
used approximately 30 elements from the periodic table; today's smart 
phones contain 60-70 mineral-derived elements. General Electric uses 
more than 70 of the first 83 elements of the periodic table in its 
products or processes used to make these products. In contrast, as 
recently as three decades ago, a typical household owned products 
containing perhaps only 30 or so of these elements.
    New technologies and engineered materials create the potential for 
rapid increases in demand for some elements used previously and even 
now in small quantities. The most prominent-although by no means only-
examples are neodymium and dysprosium in permanent magnets for 
electronics and high-efficiency motors; europium, terbium and yttrium 
in advanced lighting systems; lithium in batteries; and gallium, 
indium, and tellurium in thin-film photovoltaic materials.
    These technological developments raise two concerns. The first is 
that supply will not keep up with demand growth due to the time lags 
involved in bringing new production capacity online or more 
fundamentally the basic geologic scarcity of certain elements. The 
second concern is that supply is insecure or risky because of fragile 
supply chains. The causes of fragility are several and vary from case 
to case: industry concentration; reliance on imports from politically 
risky countries, some of which impose export restrictions on primary 
raw materials; and reliance on by-product production. In both cases, 
mineral availability-or more precisely, unavailability-is a potential 
constraint on the development and deployment of emerging and important 
technologies, especially in the energy, electronics, transportation and 
defense sectors.
Roles for Government\1\
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    \1\ See Eggert (2010) and Eggert (2011), as well as two expert-
panel reports in which I participated (APS/MRS 2011, NRC 2008). My 
testimony today overlaps considerably with views I expressed in 
previous testimony before (a) the Subcommittee on Energy, Committee on 
Energy and Natural Resources, September 30, 2010, (b) the Committee on 
Industry, Research, and Energy of the European Parliament, January 26, 
2011, and (c) the Subcommittee on Energy and Mineral Resources, 
Committee on Natural Resources, U.S. House of Representatives, May 24, 
2011.
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    As an economist, I believe in the power and effectiveness of 
markets. Markets provide strong incentives for private investments that 
re-invigorate supply and reduce supply risks. Markets encourage users 
of critical materials to obtain ``insurance": for example, in the short 
term, users can maintain stockpiles, diversify sources of supply, 
develop jointsharing arrangements with other users, or develop tighter 
relations with producers. Over the longer term, users can undertake 
research and development to develop alternative materials that use less 
of, or no, elements subject to significant supply risks. Scarcity and 
supply risk encourage investments in mineral exploration and mine 
development (potentially funded by users seeking secure supplies), 
improved manufacturing efficiency, and recycling of manufacturing 
wastes and end-of-life products.
    But markets are not panaceas. Government plays essential roles in 
facilitating market activities. For mineral resources, government can 
play four important roles that facilitate well-functioning markets and 
help ensure reliability of material supplies in the short term and 
availability of mineral resources in the long term:

          1. Encourage undistorted international trade.--The 
        governments of raw-materialimporting nations should fight 
        policies of exporting countries that restrict rawmaterial 
        exports to the detriment of users of these materials. The U.S., 
        European, and Japanese filings with the World Trade 
        Organization against China and its restrictions on rare-earth, 
        molybdenum, and tungsten exports are examples.
          2. Improve regulatory-approval processes for domestic 
        resource development.--Foreign sources of supply are not 
        necessarily more risky than domestic sources. But when foreign 
        sources are risky, domestic production can help offset the 
        risks associated with unreliable foreign supplies. Developing a 
        new mine in the United States appropriately requires an 
        approval process that allows for public participation and 
        consideration of the potential environmental and social effects 
        of proposed mining. This process is costly and time consuming--
        arguably excessively so, not just for mines but for 
        developments in all sectors of the economy. I do not suggest 
        that mines receive preferential treatment, rather that 
        attention be focused on developing better ways to assess and 
        make decisions about the various commercial, environmental, and 
        social considerations of project development.
          3. Facilitate provision of information and analysis.--I 
        support enhancing the types of data and information the federal 
        government collects, disseminates and analyzes. Sound decision-
        making requires good information. Government plays an important 
        role in ensuring that sufficient information exists. The 
        Department of Commerce and Department of Labor collect and 
        publish information on the state of the national economy that 
        informs public and private decision making, as does the Energy 
        Information Administration in the realm of energy. With respect 
        to mineral resources and material supply chains, I recommend 
        (a) enhanced focus on those parts of the mineral and material 
        life cycle that are under-represented at present including 
        reserves and subeconomic resources, by-product and co-product 
        primary production, stocks and flows of materials available for 
        recycling, in-use stocks, material flows, and materials 
        embedded in internationally traded goods and (b) periodic 
        analysis of mineral criticality over a range of minerals. At 
        present, the markets for most critical minerals are less-than-
        completely transparent, in large part because the markets are 
        small and often involve a relatively small number of producers 
        and users, many of which find it to their competitive advantage 
        to keep information confidential.
          4. Facilitate research and education.--I recommend that the 
        federal government develop and fund pre-commercial activities 
        that are likely to be underfunded by the private sector acting 
        alone because the benefits of these activities are diffuse, 
        difficult to capture (easy to copy), risky, and far in the 
        future. Over the longer term, science and technology are keys 
        to responding to concerns about the adequacy and reliability of 
        mineral resources and mineral-based materials, to improving our 
        ability to recycle essential yet scarce elements, and to 
        developing alternatives to these elements.
          Education and research go hand in hand. Educational programs, 
        especially those at the graduate level, educate and train the 
        next generation of scientists and engineers, who in the future 
        will respond to concerns about newly emerging critical 
        minerals. Education and research in the geosciences, mining, 
        mineral processing and extractive metallurgy, environmental 
        science and engineering, manufacturing, and recycling can 
        mitigate supply risks and increase material availability. 
        Improvements in materials design-fostered by education and 
        research in materials science and engineering-can ease the 
        pressures imposed by those elements and materials subject to 
        supply risks or limited availability. Government, in addition 
        to simply funding education and research, can play an important 
        role in facilitating collaborations among universities, 
        government research laboratories, and industry.

    These views on appropriate roles for government are not mine alone. 
A common conclusion of essentially all recent studies on critical 
minerals and materials is to urge governments to improve and expand 
activities related to information and analysis, education, and research 
(for example, APS/MRS 2011, European Commission 2010, NRC 2008).
S. 1600, The Critical Minerals Policy Act of 2013
    My views above form the conceptual lens through which I consider S. 
1600, the Critical Minerals Policy Act of 2013. My specific comments:

          1. Overall.--S. 1600 covers three of the four areas I discuss 
        above. The fourth area, promoting undistorted international 
        trade in mineral resources and materials, is outside this 
        Committee's purview.
          2. Section 101 Designations.--This section is consistent with 
        my third role for government. I support efforts to identify 
        minerals that are most critical in the sense that they are both 
        (a) subject to potential supply restrictions and (b) important 
        in use. NRC (2008) recommends this sort of evaluation and 
        periodic re-evaluation. Japan and the European Union already 
        carry out this type of evaluation from the perspective of the 
        Japanese and European economies (see European Commission 2010). 
        Periodic re-evaluation is essential, as what is ``critical'' 
        changes over time as materials, products, and market conditions 
        evolve and change.
          3. Section 102 Policy.--The amendments to the National 
        Materials and Minerals Policy, Research and Development Act of 
        1980 are appropriate and consistent with my views on the role 
        of government.
          4. Section 103 Resource Assessment, Section 108 Analysis and 
        Forecasting.--These sections represent actions that are 
        important parts of information and analysis, my third role for 
        government.
          5. Section 104 Study, Section 105 Agency Review and 
        Reports.-- The actions these sections require would be an 
        important start to improving the efficiency of the process of 
        regulatory approval for domestic mineral development (my second 
        area of government action).
          6. Section 106 Recycling, Efficiency and Supply, Section 107 
        Alternatives.--These sections are consistent with my fourth 
        role of government. They would require the Secretary of Energy 
        to conduct programs of research and development. The Department 
        of Energy already funds programs in the areas identified in 
        Section 106 and 107. Passage of S. 1600 would provide greater 
        justification for, and allow for possible expansion of, these 
        activities.
          7. Section 109 Education and Workforce.--This section is 
        consistent with my fourth role of government in the area of 
        critical minerals. Over the last several decades, 8 the Unites 
        States has lost a significant amount of its intellectual 
        infrastructure in the area of mineral resources.
          8. Section 110 International Cooperation.--Although 
        international cooperation is not part of my conceptual 
        framework for government involvement in critical minerals, I 
        support it. The United States is not the only nation facing 
        supplychain risks for mineral resources and downstream 
        materials. No nation can expect to be, nor should strive to be, 
        self-sufficient. Japan, the European Union, and several 
        individual European countries, in particular, have ongoing 
        activities in this area. There is much to learn from their 
        efforts, and we have a responsibility to work together with our 
        allies on mutually beneficial activities that help ensure 
        supply chains of critical raw materials

    Senator Manchin. Thank you, and what we'll do is I'll start 
out with a few questions if I may and then Senator Murkowski 
will fill right in.
    General Latiff, I know you spent over 30 years on active 
duty with the Air Force and spent most of it working on 
research and development weapons systems acquisitions. So you 
truly understand how critical these minerals are. In your 
opinion is there adequate domestic supply right now or do we 
have to rely on the world's supply?
    Mr. Latiff. To answer your first question Senator, I do 
understand how critical they are having made several large 
programs, which had material shortages, I do know. I also 
maintain a working relationship with a number of people who are 
still in the acquisition business.
    In terms of domestic supply the answer is clearly no. Most 
of what we get somewhere along the line in the supply chain is 
touched by foreign countries.
    Senator Manchin. If I may interrupt, for domestic supply is 
it we don't have the resources in our country or we can't 
extract the resources because of our laws, rules, regulations, 
things of this sort?
    Mr. Latiff. I think it's both, there are many cases in 
where we're dependent for the basic materials, but there are 
many cases where we also have supplies or reserves in this 
country. But to the problem you point out, we can't extract 
them or process them in many cases. Then in making the final 
products we also again then have to send them overseas.
    Senator Manchin. Can I ask you another question then?
    Mr. Latiff. Yes sir.
    Senator Manchin. What prohibition does the United States--
what prohibition do we have against foreign countries owning 
U.S. critical minerals coming and buying our reserves and 
controlling those reserves? If we've identified that as a 
critical mineral for our Nation, the consumption of our Nation, 
and the--and wellness of our Nation and yet we have laws and 
rules that prohibit us from extracting it for whatever reason, 
and we can't find the balance between the environment and the 
need of our Nation.
    Then we allow foreign countries to come in and control that 
supply if you will, is there any laws that you know of that we 
prohibit them from buying critical minerals deposits?
    Mr. Latiff. Senator I would defer, I do not have the 
knowledge of the laws.
    Senator Manchin. Would anybody on the committee know that, 
Mr. Sims?
    Mr. Sims. Senator there is a process in Federal law that's 
governed by a government entity called The Committee on Foreign 
Investment in the U.S. We know it as CFIUS. I'm not an expert 
on CFIUS, but I do know that that committee, that process has 
purview when there are proposed to be significant foreign 
investments in U.S. assets that are considered critical of 
some--at some level. So there is a process and know the CFIUS 
committee looks at a lot of potential investments. The history 
shows that sometimes they let those investments happen and 
other times they don't.
    Senator Manchin. The reason I know that much, Virginia we 
have law for some of the world's best coking coal to make 
steel. Most of that has been purchased by foreign countries, 
and I don't--I didn't know there was any interference 
whatsoever with that, it was just a matter of transaction, as 
if they were dealing with a neighbor next door.
    Mr. Sims. Yes.
    Senator Manchin. It didn't make any sense to me whatsoever 
to set here and watch that happen, but--and you--Senator Wyden 
asked you the question I think you answered it you know why--
the reasons and everything. You're probably in a better 
position to evaluate these minerals I mean the deposits that we 
have they are so critical to our economy and to the everyday 
use of Americans. You find it extremely hard to get through the 
permitting process and the review and the EPA process.
    Are they working with you or do you feel like you're 
fighting them continuously? Don't be afraid because I--we fight 
them every minute of every day.
    Mr. Sims. No I appreciate that Senator, I appreciate that. 
I have to say that it took us 15 years to get Mountain Pass, 
California back up and running in making rare earth prior to 
that Mountain pass----
    Senator Manchin. What--you know what were you producing, 
what are you extracting?
    Mr. Sims. Rare earth elements.
    Senator Manchin. OK.
    Mr. Sims. In virtually all deposits of rare earths all of 
the naturally occurring rare earths are all combined together, 
so you make one you've got to make most of the others----
    Senator Manchin. Sure.
    Mr. Sims [continuing]. If not all of them. I experienced--
    Senator Manchin. The things your products--things that your 
raw material is used for give me an example of some of--
    Mr. Sims. Advanced wind turbines, automobiles, the little 
ear buds that my kids put in so they can claim that they're not 
hearing me.
    Senator Manchin. Everything that we depend for quality of 
life we have today.
    Mr. Sims. Absolutely, absolutely.
    Senator Manchin. It almost took you 15 years to get through 
the permitting process.
    Mr. Sims. It is, but I would say Senator, it's fair to say 
that part of that was our fault as well.
    Senator Manchin. Sure.
    Mr. Sims. We actually worked very cooperatively, we tried 
to and I think successfully with a lot of local stakeholders 
and we changed our permit application as we went forward in 
response to request by stakeholders. That helped us get to the 
end result. We also changed our technology and advanced it as 
we went forward so we had to apply for different permits. It 
was a give and take, it took a little longer than we would have 
liked, but we did get through the end of the process.
    Senator Manchin. My time is up and I'll go for the second 
round, I want to turn it over to Senator Murkowski who I'm a 
proud cosponsor on this bill with her and I appreciate she 
bringing it back to our attention.
    Senator.
    Senator Murkowski. Thank you.
    It's encouraging to hear from each of you, your support for 
the legislation. As I mentioned in my opening comments I think 
we--there's been a lot of give and take and going back and 
forth and trying to build a bill that is reasonable, rational, 
and has support and gagging from the various industries and 
academia that you represent, it's clear that we've struck the 
right cord. Now we need to work a little bit with the 
administration here so that we can get a positive yes answer 
from DOE, but we'll work on that.
    Mr. Isaacs I want to specifically note your comments and 
how the issue with the helium bill and how we were really on 
the edge of something bad happening if we were not to have 
dealt with that situation in a timely manner and how that kind 
of feeds into not only this debate about how we proceed with 
our critical minerals, but hopefully making sure that we're 
connecting the dots.
    Again, whether we're talking about the auto industry or 
semiconductors the acknowledgement that these critical minerals 
which I think the only thing that a lot of us used to know 
about them was that they were difficult to pronounce and all 
seemed to end an um. But beyond that what are they, what do 
they do and I think that there's clearly a growing awareness, 
but we have more to do in helping people understand the 
significance and the importance of these critical elements, so 
the connect with what we did with helium I think is 
particularly important.
    Mr. Sims relating the situation with Molycorp I think is 
helpful to us here on the committee, 500 permits, 15 years to 
kind of work everything through should tell us something, but I 
also appreciate you saying look that not all of this was 
government inaction in fairness there were other factors in 
play here. I am assuming that you have read our 40 page bill 
and I would be curious to know what your reaction is to the 
permitting section of the bill, do you think we hit the right 
note here?
    Mr. Sims. Senator Murkowski I think you did, I mean I think 
when Congress looks at any of these issues related to reforms 
or permitting processes you have to look through that--you have 
to look through the lens of what's politically possible as 
well. This bill does not seek to make any major changes in 
underlying law like NEPA Etcetera. But there are a lot of 
things that can be done without those changes being made, it 
would be highly controversial, but a lot of things could be 
done in the process itself and I think the bill points to 
those.
    I think at the end of the day whatever the law says about 
permitting it really comes down as we found to whether you can 
build a level of trust between the permit applicant, the 
regulator, and other stakeholders at the table. Having said 
that to have as your bill does call for performance metrics of 
how the process is working is very important. To have--it 
points to--it encourages folks to look creatively--I think 
within the confines of current law as to how to make this 
process better. One thing that could be done now is for example 
to have the various considerations by Federal agencies of NEPA 
applications to be done concurrently as opposed to 
consecutively.
    Now there are cases when that doesn't work, but most cases 
where it does that would make a very big difference. I'm sure 
most folks in my situation would say it'd make a huge 
difference that doesn't require any change in fundamental 
underlying law. So I think your bill is encouraging folks to be 
creative on both sides of the table as to how to make that go 
faster.
    Senator Murkowski. Let me ask you Mr. Conrad for the Alaska 
perspective and I appreciate you pinch hitting here for Mr. 
Swenson. This is the time of year that Juneau is sucked in, 
maybe it's because the legislature is in session but that's 
neither here nor there.
    You hit on several initiatives that the Governor has 
advanced in terms of statewide assessment which I think is 
critically important, I'm curious to know if you think that 
when it comes to the data that is so important in making sure 
that we have collected sufficient amounts of geologic data to 
really form out the actions moving forward when it comes to 
accessing our critical minerals, also if you could speak to the 
permitting issue that Mr. Sims has just addressed.
    When we think about the hurdles to accessing our--any or 
our minerals in the state of Alaska, there are hurdles that are 
out there but I think the most significant that I hear from 
people about is the permitting process. If you can speak to not 
only the data collection and whether or not we're doing a good 
job there and also from a permitting perspective if we are 
moving ourselves up from that dead last position that I 
mentioned in my opening comments in terms of getting responses 
on our mineral opportunities.
    Mr. Conrad. Thank you Senator.
    The States have also been--often been we refer to is the 
laboratories of democracy, the laboratories of invention and I 
think Alaska is a perfect example of the State that has taken 
great strides to address both of those issues. To first 
identify the importance of the need for modern data and how we 
are able to access that data, which is sometimes a matter of 
resources and sometimes a matter of technology. Often a matter 
of working cooperatively with other stakeholders and 
particularly our Federal partners to achieve the type, and the 
level, and the quality of data that we need.
    Alaska has made great strides in that area has identified 
not only the need, but how to go about finding this data, 
addressing this data and the innovative approaches that are 
necessary to make that happen.
    On the permitting side, again Alaska has had great success 
in using a cooperative approach within its--within the State 
itself in developing an interagency approach to how permitting 
should be handled within the States to coordinate among all the 
agencies that are critical to the development and the 
permitting of a mine, especially a large scale mine.
    Again I think has demonstrated that that kind of an 
approach at the Federal level would be very helpful in 
achieving the type of coordination that we need to move that 
process forward and more effectively. We believe that S. 1600 
addresses both of those matters in significant ways. If we can 
couple that with some additional funding to assist with some of 
this work that we need to do particularly in the data area, 
we'll be well on our way to making, we believe--
    Senator Manchin. Right.
    Mr. Conrad [continuing]. Some significant strides here.
    Senator Murkowski. Good, good, thank you.
    I--we'll have another question----
    Senator Manchin. Sure, sure.
    Senator Murkowski [continuing]. But I'll defer it to you.
    Senator Manchin. Just very quickly, so you're saying that 
basically the Mining Compact Commission endorses the 
legislation as written?
    Mr. Conrad. Yes in our statement that I've supplied for the 
record.
    Senator Manchin. Thank you very much.
    Also, to Mr. Isaacs this--maybe you and Ms. Thomas might 
want to chime in on this one, but changing, you know we hear so 
much about changing the cooperate tax laws and it'll bring 
industry, and bring jobs back, and bring manufacturing back. 
But we're finding out now if we don't have the critical 
minerals here to provide we can do all we might and you can't 
come unless you have the resources here to do what you need to 
do.
    Do you think it's adequate, I mean we have adequate 
supplies to be able to bring you back if we have balance in our 
corporate laws too our corporate tax laws that would give you 
the incentives to bring those jobs back to America?
    Mr. Isaacs. Senator first of all semiconductor 
manufacturing is alive and well in the U.S. We are the world 
and either the number, No. 2, or number 3 exporter of the 
United States, so--and the industry continues to grow and 
particularly at the leading edge of advanced semiconductor 
manufacturing. But having said that, there's obviously a host 
of policies including----
    Senator Manchin. Are you concerned about supply?
    Mr. Isaacs. Yes, absolutely and we employ a global supply 
chain that's highly complex, and therefore, domestic supply is 
critical, but it's only part of the holistic approach that 
needs to be taken, which you know we really need to be taking a 
global look at this and making sure that the supply chain is 
secure around the world.
    Senator Manchin. What would--where is the--where's your 
largest suppliers? Where do you buy most of your raw materials?
    We'll just say the industry itself, what country does it 
depend on, next to us?
    Mr. Isaacs. I'm not sure I can fully answer that question, 
but you know----
    Senator Manchin. We hear----
    Mr. Isaacs [continuing]. One thing to keep in mind----
    Senator Manchin [continuing]. So much about China.
    Mr. Isaacs. One thing to keep in mind is that we are 
typically several steps removed from the extraction of the raw 
material from the ground. I think the helium situation was a 
rare instance where we were maybe one or 2 steps removed from 
the extraction from the ground. But in most cases we depend on 
various steps of extraction, processing, refining to get the 
type of material that we need. So where it's originally--the 
original source of the material we'd have to do some more 
research into that.
    Senator Manchin. If you could do that for us it would help 
because I'm sure you're falling and in case we have for our 
trade agreements or any type of relationships we have with some 
of these countries that we depend on heavily, it doesn't go 
quite right.
    What position does that put our country in, our government 
we've seen what we've done with energy, with oil hasn't been 
too good when we needed it, so we hope we don't get in a 
situation with rare earth minerals too and we would hope you 
would advise us on that where your dependency is and what 
critical factor it would have if you couldn't get it.
    Mr. Isaacs. Yes, thank you and as I mentioned before we are 
working with our industry technical consortion to look at the 
materials in our supply chain and look at the sources of those 
materials and we hope to feed that into this process.
    Senator Manchin. Ms. Thomas do you want to comment on 
supply, what you believe it should have on your supply chain as 
far as the manufacturing and volume goes?
    Ms. Thomas. I would just add that we are also very 
concerned about supply shortages and you know we also have a 
very complex global network of suppliers and you know greater 
transparency in sharing of real time information is very 
valuable to--throughout the supply chain, so I think the 
information that would be generated through a lot of the 
programs and this legislation would provide you know valuable.
    Senator Manchin. Can you give us a little bit of an 
inventory, maybe you can check with your suppliers basically on 
what--I mean on your manufacturers where their supply chain 
comes from. Most of the minerals are in----
    Ms. Thomas. Sure I mean----
    Senator Manchin [continuing]. Much of the material they 
use.
    Ms. Thomas. Yes, that's a question more for our suppliers 
and I'd certainly be happy----
    Senator Manchin [continuing]. I hope you would.
    Ms. Thomas [continuing]. To get back to you with that.
    Senator Manchin. That would help us along as we proceed.
    Dr. Eggert, I know that legislation expands academic 
programs related to critical minerals including the traditional 
academic programs and also our work force training which is so 
needed. How do you see the investment education impacting the 
development of our critical minerals? How would you see that 
happening?
    Mr. Eggert. I think an investment in education is 
essential. It takes a number of complimentary ingredients to 
develop a mine to create a successful mineral processing or 
manufacturing activity. It's not just the raw material, but 
it's an educated and trained work force and in many of the 
minerals and materials disciplines we've allowed the academic 
infrastructure to some degree to wither over the last several 
decades. So I think a trained and educated work force is an 
essential ingredient in mining and manufacturing.
    Senator Manchin. An investment that pays off right?
    Mr. Eggert. Yes.
    Senator Manchin. Thank you.
    Thank all of you for your testimony.
    Senator Murkowski. Dr. Eggert let me continue with you I'm 
assuming coming from School of Mines that you have to a certain 
extent, tracked historical levels of mining activity throughout 
the country? Is that fair?
    Mr. Eggert. To some degree yes.
    Senator Murkowski. Can--then to the degree that you're 
able, can you give the committee any assessment in terms of 
what you have seen over a period of time, how mining activity 
in the industry within the country has changed and the reasons 
that we've seen decline or increase in certain areas, and I 
don't expect you to give me more than 45 seconds here, so if 
you can distill it, what changes we're seeing and why?
    Mr. Eggert. OK, first the level of investment in the mining 
industry tends to be very selectable to the United States and 
elsewhere and the United States in that regard has not been 
much different than other countries around the world. Having 
said that the U.S. share of total worldwide mineral investment 
has as a general rule been declining, part of that I think can 
be attributed to the more stringent environmental and other 
social permitting requirements necessary for mineral 
development.
    But also to be fair over the last several decades a number 
of other countries have opened up their borders to mineral 
investment. Areas that had been underexplored in the past, a 
past when Canada, the United States, Australia, South Africa 
were the major destinations of investments. So part of the 
declined in the U.S. share of investment I think has to be 
attributed to good opportunities elsewhere.
    Senator Murkowski. Let me ask you Mr. Conrad from the 
Alaska perspective just some of the trends that we're seeing 
within the state in terms of the private investment that we 
recognize is key, you cannot make any of this happen unless 
you've got the investment side. What has helped to either bring 
new companies, new investment to this state, what has hurt 
investment opportunities within the mining industry?
    Mr. Conrad. Thank you Senator Murkowski.
    Let me just give you an overview perspective that Bob 
Swenson provided to me in preparation for the hearing and where 
he noted that the mining investment in Alaska right now is 
primarily on state and private land as opposed to Federal land. 
If you look at some of the figures that are provided in his 
testimony you would note that the total area of state mining 
claims and prospecting sites for 2012 was about 4,500,000 
acres, whereas the total area on Federal lands for 2012 was 
about 168 thousand acres.
    That's attributable primarily from his perspective, and I 
think in general from Alaska's perspective to the need for 
governmental support in supplying the kind of modern data that 
we need and do not yet have, land access, and then permitting 
efficiencies in terms of attracting investment. When those 
things don't line up well, it has a negative impact on that 
investment activity.
    Senator Murkowski. One question and this will be my last, I 
put it out to all of you it's what I asked both on the first 
panel and this was the issue of forecasting and better--trying 
to better understand what we might need in terms of these 
critical minerals. Again recognizing that we're doing a lot of 
work to find substitutes, a lot of work to reuse, recycle, but 
the issue of being better able to forecast.
    Again we've got different industries that are represented 
at the table here, but how can we do a better job of forward 
thinking in terms of being able to anticipate what it is that 
we will need so that we avoid the threat of an imminent crisis 
like we almost had with helium? I'll throw it out to whoever 
wants to start.
    Mr. Isaacs, I'll pick on you.
    Mr. Isaacs. We very much rely on the USGS and other expert 
sources of information and again we as I mentioned earlier we 
have an exercise called the International Technology Roadmap 
for Semiconductors which includes a chapter that looks at 
emerging materials that will be critical to the next generation 
of semiconductors, so that's our attempt to forecast to the 
future and what we'd like to do is integrate that effort with 
the exercise under this bill to identify the materials that are 
most critical for our industry and develop the appropriate 
policies to avoid vulnerabilities going forward.
    Senator Murkowski. So Mr. Sims from the producer side you 
know you're getting push from industry that says we need it, we 
need it, how do we get more folks like Molycorp engaged?
    Mr. Sims. I think it's fair to say that at least in our 
little world of rare earths that virtually all independent 
forecast show significantly increasing demand for most of 
those, so the signals is out to us as producers to try to 
produce more and to try to do more recycling which we're 
involved with and some other technologies. Getting the capital, 
the private capital necessary to bring some of these projects 
online is difficult.
    We went through a several year process of raising about 
over $1.5 billion all in the private capital markets, that is 
not easy to do. But there are companies that are out there 
trying to do it right now and a lot of it depends on the value 
and the perceived quality of the resource. But in terms of 
downstream forecasting of demand anything the government can do 
that would help us in the private sector understand the broader 
perspective that would be very helpful.
    Senator Murkowski. General Latiff from the defense side, 
the security side.
    Mr. Latiff. Senator the number of DOD Weapons Systems is 
small enough, but it's not going to drive demand significantly 
for a lot of these minerals, so I'll answer a different 
question and that is that some of the weapons systems that we 
have are so critically dependent on some of these materials for 
their performance, and so it is important to the DOD to know 
what future availability of these materials is going to be as 
they plan their weapons systems which go out as you know for 
many years.
    Senator Murkowski. Right.
    Anybody else want to weigh in?
    Ms. Thomas.
    Ms. Thomas. Yes I'll just add that it would be extremely 
helpful to the automakers and our suppliers in providing you 
know information on availability and allow us to identify risks 
early on and ultimately manage them properly.
    Senator Murkowski. OK, good.
    Dr. Eggert you can wrap it up.
    Mr. Eggert. A supplementary point, I think many of the 
markets for the minerals and materials that we're talking about 
are not very transparent. The supply chain risks are often 
hiding because the final purchaser is 5 or 6 steps removed from 
the initial mining and to some degree, and I don't want to 
overstate the point, but to some degree it's like what happened 
with--during the financial crises the risks were buried and not 
obvious to all involved and through forecasting and scenario 
building one can help make these supply chains more transparent 
and allow all participants to better manage their risks.
    Senator Murkowski. That's an excellent point. It's a good 
way to end this conversation.
    The awareness of the significance of critical minerals in 
all aspects of our life I think that that is growing, but I do 
think that the legislation that we have presented before the 
committee here is one that will help us build on that. But the 
whole aspect of transparency and just how far removed 
throughout this chain you have the actual minerals themselves 
versus the application.
    I think this goes exactly to what you were speaking of 
Senator Manchin when you asked you know from semiconductor 
perspective or from the perspective of the auto industry where 
you're getting your stuff from. Most of it is just so far 
removed that we just don't make that connection. We need to 
figure out how we better make that connection so that that risk 
is fully informed and with that I thank you and thank all the 
members of the panel here.
    Senator Manchin. Now I will just follow up and say thank 
you all for attending and your insight and hopefully you can 
get us some information and find out exactly the effect this 
going to have because I truly believe with the policies we have 
in this country allowing foreign countries to own these vital 
resources that we need, and we're going to be dependent on many 
generations to come and basically what would effect--if we 
shutdown what would it effect the economics of this country.
    That would be vital for us to know that if you could help 
us with that we'd appreciate it. I do appreciate all of your 
input. Does anybody have any final comments they want to make 
before we close this out?
    If not, meetings adjourned.
    [Whereupon, at 12:10 p.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              

                               Appendix I

                   Responses to Additional Questions

                              ----------                              

        Response of David Isaacs to Question From Senator Wyden
    Question 1. As the Committee learned from the helium situation, the 
supply of raw materials to manufacturing industries like yours doesn't 
get a lot of national attention until suddenly you don't have them. 
Like helium, there really aren't a lot of substitutes for some of these 
critical minerals in the manufacturing process; but unlike helium, the 
specific minerals that are critical vary from industry to industry. 
What's the best approach to make sure that Federal Government is 
working closely with industries like yours to make sure that our 
efforts are focused on the right minerals and processing and 
manufacturing processes?
    Answer. We believe that close consultation between government and 
industry will be essential in identifying the right critical minerals 
and the appropriate policies needed to avoid future supply disruptions. 
We recommend that the government should actively engage with a wide 
range of industry sectors and solicit the views of industry experts in 
materials and supply chain management on these matters. As stated in 
our testimony, the semiconductor industry would welcome the opportunity 
to engage with the appropriate government officials on this issue. 
Accordingly, the government should establish a forum for a structured 
dialogue with industry experts, perhaps in the form of an advisory 
committee or similar entity.
    In addition, it will be critical to ensure that the list of 
critical minerals remains current and is adjusted in response to 
changing circumstances, so the consultation between government and 
industry must happen on an ongoing basis. In this regard, we note that 
Section 101(e)(1) of the Critical Minerals Policy Act (S.1600) provides 
that the list of critical minerals should be reviewed and updated every 
5 years. The dialogue between government and industry should be 
integrated as part of this process.
       Response of David Isaacs to Question From Senator Barrasso
    Question 1. In your testimony, you discuss the importance of helium 
to semiconductor manufacturers. You explain that S. 1600's definition 
of ``critical mineral'' might not include helium. You note that helium 
is a byproduct of natural gas and that the bill's definition of 
``critical mineral'' excludes: ``fuel minerals, including . . . natural 
gas.'' You go on to say that: ``the bill should be broad enough and 
flexible enough to trigger appropriate revisions to policies relating 
to helium.
    Would you please elaborate on why it is essential that the bill 
address helium and policies associated with helium production?
    Answer. SIA believes that the enactment into law of the Helium 
Stewardship Act was critical in ensuring a continued supply of this 
critical gas to the semiconductor industry and other users of helium 
throughout the economy. Passage of the helium law last year 
successfully addressed concerns about the supply of helium, at least 
for the next several years. The SIA testimony did not intend to focus 
solely on helium or suggest that this bill should address policies 
related to helium. Instead, our intent was to use helium as an example 
and urge the Committee to ensure that the bill would cover the full 
range of materials that are critical to semiconductor manufacturing, in 
order to avoid future supply disruptions and price with regard to other 
materials. The SIA testimony raised the potential for helium and other 
similar materials to fall outside the definition of ``critical 
mineral,'' and stated:

    There may be other materials or compounds that are essential to the 
semiconductor manufacturing process that might inadvertently fall 
outside the definition of this term. Accordingly, we request that the 
definition of ``critical mineral'' (or ``critical material'') is broad 
enough to capture the full range of materials that are critical to 
semiconductor manufacturing and the U.S. economy as a whole.

    Similarly, our testimony stated that the designation of a material 
as critical should result in consideration of a broad range of policy 
changes to avoid potential disruptions to the supply of this material, 
not simply policies relating to mining. Our reference to the Helium 
Stewardship Act was intended as an example of one such policy change 
that should be contemplated in the future once a material is designated 
as critical. We did not intend to suggest that the Critical Minerals 
Policy Act needed to revisit the Helium Stewardship Act at this time.
                                 ______
                                 
     Responses of Robert H. Latiff to Questions From Senator Wyden
    Question 1. Although the Committee on Energy and Natural Resources 
doesn't have jurisdiction over the defense agencies, Sen. Murkowski and 
I recognize the need to make sure that national security is part of a 
national program to address critical minerals. What are your 
recommendations to ensure that defense agencies are working closely 
with civilian agencies like the Department of Energy and the Department 
of Interior on this problem?
    Answer. I know that in developing the annual stockpile reports to 
Congress, DLA (DOD) coordinates with Dept. of Commerce on usage rates 
of various materials. I think that research portfolios, while not 
necessarily de-conflicted, are at least shared, say between DOD and 
DOE, on these topics. I think there is evidence of coordination at many 
levels and on many topics. The Defense Production Act Committee is an 
example. Such high level committees have numerous working level groups 
below them. However, in my experience, agencies, lacking any higher 
level of guidance, while willing to coordinate, will tend to protect 
organizational equities. There really needs to be active and sustained 
involvement by the Executive Office of the President and OMB. While not 
precisely associated with this question, I think the President's 
Initiatives for Advanced Manufacturing and for the Materials Genome 
Initiative are related, and are steps in the right direction. These are 
emphasized from the top of the Executive Branch to all appropriate 
agencies. A similar Presidential priority placed on materials security, 
in the form of a ``Critical Materials Availability Initiative'' would 
be a welcome counterpart to S. 1600. Also, perhaps, an annual report to 
Congress by the Director of the Office of Science and Technology Policy 
(OSTP) might spur more sustained efforts by all agencies.
    Question 2. Although there is obviously a strong connection between 
critical minerals and national security, the use of those minerals is 
generally known. Do you see any reason why the list of critical 
minerals should be classified and not available to the public?
    Answer. As you know, the DOD conducts scenario planning in its 
effort to determine what materials may be critical and in short supply 
under certain conflict conditions. Based on those analyses, DOD reports 
to Congress what it believes might need to be stockpiled in the event 
of future wartime scenarios. While unlikely, the DOD, so as not to 
reveal strategic thinking on particular conflict scenarios, may have 
good reasons to classify such a report to Congress. However, the 
overall determination on an ongoing basis for those materials important 
to us and for which the nation needs to take action to insure their 
availability, should be widely known. I see absolutely no reason for 
such a list of critical materials to be classified. On the contrary, it 
needs to be open and available and act as a guiding document.
    Question 3. One of the key tenants of a strong military has always 
been to stay ahead of the opposition technologically. As you point out 
in your testimony, critical minerals are literally critical to national 
security since so many of our weapons systems rely on them. Recently, 
the Defense Authorization Bill called on the Pentagon to increase its 
stockpiles of critical minerals. That might be a short-term solution to 
the problem, but wouldn't you agree that in the long-term, the U.S. has 
to have a more comprehensive strategy toward dealing with this problem?
    Answer. I absolutely agree with this sentiment. In general, I think 
the DOD has made significant progress in the last several years in 
thinking about and trying to deal with these issues. There have been 
substantial improvements in DLA's methodologies to address the 
stockpile needs, there has been the creation of the Strategic Materials 
Protection Board (albeit off to a slow start), and I think there have 
been a lot of dedicated materials experts at lower levels within the 
Department who have recognized problems of resource dependency and have 
worked steadily to mitigate them. However, I think DOD leadership has 
been slow to react and it is still not clear to me that DOD has 
coherent plans beyond stockpiling a few key materials and supporting 
Defense Production Act projects for some key suppliers. Stockpiling is 
a short-term fix and is subject to many variables. It doesn't solve the 
problem of having to depend on others for either raw materials, 
materials processing, or component manufacturing for which we may not 
have the domestic capability. I would like to see a more coherent 
approach to working with other government agencies to insure domestic 
supplies and processing capabilities for the most important materials.
                                 ______
                                 
       Response of Jennifer Thomas to Question From Senator Wyden
    Question 1. As the Committee learned from the helium situation, the 
supply of raw materials to manufacturing industries like yours doesn't 
get a lot of national attention until suddenly you don't have them. 
Like helium, there really aren't a lot of substitutes for some of these 
critical minerals in the manufacturing process; but unlike helium, the 
specific minerals that are critical vary from industry to industry. 
What's the best way to make sure that Federal Government is working 
closely with industries like yours to make sure that our efforts are 
focused on the right minerals and processing and manufacturing 
processes?
    Answer. The Alliance appreciates the opportunity to provide input 
on ways the Federal Government and industry can work together on the 
very important issue of critical mineral availability. Automakers 
design and build vehicles to synthesize a variety of systems and 
individual parts to meet an array of individual customer needs and 
demands and to comply with thousands of pages of international, federal 
and state regulations. The average automobile has 30,000 unique 
components and each individual component is comprised of multiple 
chemicals, minerals and mixtures. Each automaker works with a global 
network of more than 1,000 suppliers, spanning multiple sectors from 
electronics to textiles. Many automotive components are obtained from 
suppliers as finished products, which are then integrated into the 
vehicle. As such, it is essential that any coordination on the issue of 
critical mineral availability and processing begin at the supplier 
level, where component composition decisions are made.
    Many policies outlined in S.1600, the Critical Minerals Policy Act 
will help spur much-needed cooperation between government and industry 
on this important issue. For example, this legislation will establish 
analytical and forecasting capabilities to better identify critical 
mineral supply and demand. This will help mitigate supply shortages, 
price volatility, and unexpected demand growth. Such analysis and 
forecasting for minerals, similar to what the U.S. Energy Information 
Administration (EIA) produces for various energy sources, will help 
industry identify potential risks early and ultimately manage them. 
Additionally, the Department of Energy (DOE) research programs created 
in S.1600 would facilitate the efficient production, use and recycling 
of critical minerals. These programs would also identify and develop 
alternative materials that can be used to reduce the demand of critical 
minerals. To effectively implement such programs, the Alliance 
recommends that DOE coordinate closely with the diverse stakeholders in 
order to develop best practices and innovative approaches for using 
existing minerals more efficiently and for introducing viable and 
affordable alternatives when necessary.
    The Alliance commends the Committee for the thoughtful and 
bipartisan approach it has taken to address this important policy 
issue. Minerals have long been vital to automobile production and the 
more sophisticated, high-tech and fuel-efficient automobiles of 
tomorrow will be increasingly reliant on critical minerals. We stand 
ready to work with the Committee to ensure a reliable and affordable 
critical minerals market.
                                 ______
                                 
         Response of Jim Sims to Question From Senator Barrasso
    Question 1a. In your testimony, you state that Molycorp: ``walked a 
regulatory pathway that took 15 years and more than 500 permits to 
restart rare earth production in California.'' You explain that: 
``[i]ncreased regulatory certainty is a must if the U.S. is to 
encourage greater private sector investment in domestic mineral 
exploration.'' You note that S. 1600: ``recognizes that much can be 
done to make permitting processes more efficient.'' Finally, you say 
that the bill: ``should spark new thinking and innovative ideas for 
reasonable reforms.'' What are the additional steps Congress should 
take to expedite the permitting process for critical minerals projects?
    Answer. There are a variety of pathways that the U.S. Government 
can take to make these processes more efficient. Perhaps one of the 
most important would be to require/encourage/incentivize applicants and 
federal agencies to work together on concurrent permit reviews under 
NEPA, rather than the consecutive reviews that are generally done now. 
That would save all parties a great deal of time and resources.
    Requiring publicly available performance metrics of federal agency 
actions and review of permits would be a very significant reform. This 
would allow officials from both political parties to look 
dispassionately at the relative efficiency of these government 
processes. It also is likely to identify areas where improvements can 
and should be made.
    Also, thought should be given to requiring disclosure of the 
various economic and societal costs of inaction, or delay, in 
permitting processes. This might be a contentious proposal, but it 
would provide policymakers and the public with additional information 
to consider in the debate that often surrounds individual critical 
materials projects.
    Question 1b. Should Congress take steps to expedite the review 
process under the National Environmental Policy Act?
    Answer. NEPA processes can undoubtedly be improved, as can 
virtually all federal statutes of this complexity and impact on the 
economy and the environment. However, any such reforms should be the 
result of a legislative process that includes buy-in from both 
political parties. While this is very difficult, attempts to push 
through NEPA reforms without some level of bipartisan cooperation are 
doomed to failure, in my view, and can actually set back the overall 
thrust to greater efficiency. This is why I believe that S. 1600 is a 
good step forward, given that it may shed important light on data and 
trends that would better inform future debates on the larger permitting 
regime.
                                 ______
                                 
       Response of Roderick Eggert to Question From Senator Wyden
    Question 1. Colorado School of Mines is one of the few schools in 
the country with academic classes and programs focused on critical 
minerals, and you've been teaching there for over 25 years. General 
Latiff's testimony says essentially that the number of technical papers 
and the number of people being trained in these disciplines are 
dropping compared to the rest of the world. The U.S. isn't keeping up. 
What are the training and education needs that must be met in order to 
have a workforce that is prepared to operate within a more robust 
critical material industry?
    Answer. The primary needs are in the following areas: economic 
geology, mining engineering, mineral processing and extractive 
metallurgy, and materials science and engineering. Perhaps just as 
important are (funded) research opportunities that attract faculty 
members and students in more traditional disciplines to research on 
critical materials (for example, chemistry, chemical engineering, and 
physics).
    Responses of Roderick Eggert to Questions From Senator Barrasso
    Question 1A. In your testimony, you say that we should ``[i]mprove 
[the] regulatory-approval processes for domestic resource 
development.'' You explain that the approval process: ``is costly and 
time consuming-arguably excessively so, not just for mines but for 
developments in all sectors of the economy.'' Finally, you state that 
S. 1600 would be ``an important start to improving the efficiency'' of 
the regulatory approval process. Would you please elaborate on how the 
regulatory approval process is far too costly and time-consuming to 
mineral producers?
    Answer. A major issue, perhaps the most important issue, is the 
number of permits and approvals required and the lack of an orderly 
process to coordinate applications and reviews of applications. Other 
countries, such as Australia and Canada, are able to achieve comparable 
or better results, in terms of allowing for public participation and 
incorporating public views into regulatory reviews, with simpler and 
less-cumbersome processes.
    Question 1B. To what extent does the National Environmental Policy 
Act (NEPA) contribute to these excessive costs and delays?
    Answer. I do not feel qualified to comment specifically on NEPA.
    Question 1C. Should Congress take steps to expedite the review 
process under NEPA?
    Answer. Again, I do not feel qualified to suggest specific 
modifications to NEPA.
    Question 2. In your testimony, you argue that the United States 
should: ``[e]ncourage undistorted international trade.'' You explain 
that: ``raw material-importing nations should fight policies of 
exporting countries that restrict raw material exports.'' You note that 
the U.S., Europe, and Japan have fought China's export restrictions on 
critical minerals at the World Trade Organization.
    Over the last year, this Committee has debated the costs and 
benefits of exporting liquefied natural gas (LNG). The Committee will 
soon debate the costs and benefits of exporting crude oil.
    Isn't it fair to say that our nation's own restrictions on LNG and 
crude oil exports undermine our credibility when advocating for free 
trade of other raw materials-such as critical minerals?
    Answer. I do not support restrictions on LNG and crude oil exports.
      Response of Roderick Eggert to Question From Senator Franken
    Question 1. Critical minerals are essential for a wide range of 
technologies today. But technology, as you know, is changing rapidly. 
My concern is that figuring out which minerals will be critical in the 
future is difficult, particularly for rapidly evolving high-tech 
applications. How can we ensure that the process for designating 
minerals as ``critical minerals'' is flexible enough to take into 
account the potential for future changes to which minerals are actually 
critical?
    Answer. (1) I agree that figuring out which materials may become 
critical in the future is difficult and will not become an exact 
science. The process of monitoring potentially critical materials 
inevitably will require judgment, as well as attention to technological 
developments that may dramatically influence demand for specific 
elements and materials. What I suggest is a continuing monitoring 
capability to reduce the likelihood of being surprised, which is what 
happened with rare-earth elements.
    (2) More specifically, establishing an external advisory or review 
board with rotating membership, responsible for reviewing and vetting 
draft lists of critical minerals, would help ensure that new viewpoints 
are considered by whomever in the federal government is responsible for 
undertaking identification of critical minerals.
                                 ______
                                 
    Responses of David Danielson to Questions From Senator Murkowski
    Question 1. Many of us look to the Department of Energy to be an 
advocate for our energy supply within the councils of our government. 
There's a corollary concern present here, however: because so many new 
energy technologies rely so heavy on critical minerals, we also need 
your Department to be an advocate for our domestic mineral supply. Can 
you make that commitment to us? In the interagency process, are you 
willing to highlight the importance of, and push for actions that would 
facilitate, a steady, affordable, and domestic supply of minerals?
    Answer. The Department is committed to ensuring a sustainable 
domestic supply chain for the clean energy economy, including the 
foundational materials supporting clean energy technologies. The 
Department's Critical Materials Strategy reports make clear that 
diversified global supply chains are essential for a sustainable clean 
energy economy.
    The Critical Materials Institute (CMI) at Ames National Laboratory 
is a lead contributor to the Department's research and development on 
critical materials issues. CMI addresses materials criticality problems 
by developing technologies spanning the supply chain and across the 
lifecycle of materials.
    DOE takes an active role in interagency coordination, 
collaboration, and planning in the critical materials space to help the 
U.S. government make better strategic decisions, and will continue 
interagency leadership as co-chair of the National Science and 
Technology Council Subcommittee on Critical and Strategic Mineral 
Supply Chains. This Subcommittee facilitates a strong, coordinated 
effort across federal agencies to identify and address important policy 
implications arising from strategic minerals supply issues. Areas of 
focus for the Subcommittee include identifying emerging critical 
materials, improving depth ofinformation, and identifying R&D 
priorities. The Subcommittee also informally reviews and examines 
domestic and global policies that affect the supply of critical 
materials, such as permitting, export restrictions, recycling, and 
stockpiling.
    Question 2. Is the Department working on any follow-up reports to 
supplement its 2010 and 2011 Critical Mineral Strategy documents? If 
so, please describe the expected timing of their release and the 
expected scope of their content.
    Answer. By the end of2014, the Department of Energy plans to assess 
whether an update to the 2011 Critical Materials Strategy is needed, 
given the related research and development and coordination work 
underway.
    In addition to the Critical Materials Strategy reports, the 
Department of the Interior, through the USGS Mineral Resources Program, 
provides annual collection, analysis, and the dissemination of data 
that document production and consumption for about 100 mineral 
commodities, both domestically and internationally for 180 countries 
(http://minerals.usgs.gov/minerals). This full spectrum of mineral 
resource science allows for a comprehensive understanding of the 
complete life cycle of nonfuel mineral resources-resource formation, 
discovery, production, consumption, use, recycling and reuse.
    Question 3. The Department has allocated hundreds of millions of 
taxpayer dollars to develop high-density energy storage devices that 
utilize lithium metal. Yet global demand for lithium is rising, 
particularly in China, and the United States is already heavily 
dependent on imports. Has the Department analyzed any potential supply 
chain impacts that we could face with regard to lithium? Could we see a 
situation similar to what has happened with rare earth elements? How 
could that impact our ability to commercialize new technologies that 
rely upon this metal?
    Answer. In 2010 and 2011, the Department released Critical 
Materials Strategy reports which, in addition to identifying critical 
materials, identified lithium as a ``near critical'' material. The 
reports identified lithium because of its important role in batteries 
for hybrid and electric vehicles. While lithium does not face the same 
magnitude of risk to supply chain disruption as rare earth elements, 
the Department is still applying the three pillars of the Critical 
Materials Strategy to lithium research and development.
    The Department is currently addressing this issue by reducing 
criticality risks for lithium. Because of the projected importance of 
lithium supply for clean energy applications, the Department will 
continue R&D in this important area to mitigate potential supply chain 
constraints. For example, within the Office of Energy Efficiency and 
Renewable Energy the Geothermal Technologies Office has funded the 
development of technologies to cost effectively extract minerals such 
as lithium, manganese and zinc from geothermal brines- to improve 
domestic production at reduced costs and to increase the overall value 
of geothermal electricity generation. The Vehicle Technologies Office 
has supported a project to expand lithium carbonate and lithium 
hydroxide production to supply the domestic battery industry as well as 
a project to recycle lithium batteries for resale of lithium carbonate.
    Question 4. Given the range of new technologies that are expected 
to account for larger and larger shares of lithium consumption, does 
the Department believe we could face constraints or even a shortage in 
the supply of lithium available for more traditional applications such 
as batteries? Has the Department done anything to help mitigate such a 
scenario? What steps, if any, does the Department believe are warranted 
to prevent that from happening?
    Answer. As mentioned above, the Department is addressing potential 
supply constraints with regard to lithium. Currently, the Department's 
research efforts focus on diversifying supply, developing substitutes, 
and driving recycling of lithium. Because there are significant 
additional low cost potential sources of lithium from desert brines, 
lithium has a lower risk of supply disruption than certain rare earth 
elements, even under high global electric vehicle deployment scenarios. 
However, because dramatic increase in global lithium battery production 
could lead to asupply-demand mismatch in the next five years, the 
Department is applying the three pillars of the Critical Materials 
Strategy to lithium research and development.
    The Critical Materials Institute at Ames National Laboratory 
conducts research and development (R&D) addressing supply diversity, 
substitutes, and recycling for lithium. Other national laboratories 
also contribute to lithium R&D. For example, the Joint Center for 
Energy Storage Research (JCESR), the Energy Innovation Hub for Battery 
and Energy Storage, is addressing lithium substitutes. Launched in 
December 2012, JCESR is managed by the Department's Office of Science 
and is led by Argonne National Laboratory. The mission of JCESR is to 
develop new battery chemistries beyond lithium-ion and to deliver 
electrical energy storage with five times the energy density and one-
fifth the cost oftoday's commercial batteries within five years.
    Within the Office of Energy Efficiency and Renewable Energy, the 
Vehicles Technology Office has supported a project to expand lithium 
carbonate and lithium hydroxide production to supply the domestic 
battery industry, and the Geothermal Technologies Office has funded the 
development of technologies to cost effectively extract minerals such 
as lithium from geothermal brines to improve domestic production at 
reduced costs and to increase the overall value of geothermal 
electricity generation.
    Finally, the Department's Advanced Research Projects Agency- Energy 
also supports R&D on a broad array of novel battery technologies that 
do not use the lithium-ion platform.
                                 ______
                                 
     Responses of David Danielson to Questions From Senator Franken
    Question 1. Rare earths are critical to the high-tech sector and 
the energy sector. But in many cases, we are dependent on imports from 
China. In recent years, we've seen large price increases for these rare 
earth elements, and we need to make sure that our dependency doesn't 
harm our manufacturing sector. This is one of the reasons why I am a 
cosponsor of S. 1600, the Critical Minerals Policy Act of 2013. Can you 
talk about which particular clean energy technologies are most 
dependent on rare earth elements?
    Answer. The Department's 2010 and 2011 Critical Materials Strategy 
reports identified five rare earth materials-neodymium, europium, 
terbium, dysprosium, and yttrium- as critical materials currently 
essential for America's transition to cost-competitive clean energy 
technologies and subject to supply risk. Neodymium and dysprosium are 
used for magnets, which are found in electric vehicle motors and wind 
turbine generators. Europium, terbium, and yttrium are used in 
phosphors for efficient lighting. In addition, another rare earth 
element, lanthanum, is used in nickel metal hydride batteries. However, 
as lanthanum is relatively abundant, DOE did not identify it as 
critical in its Critical Materials Strategy reports.
    Question 2. How does our dependence on China impact these sectors 
of the clean energy economy?
    Answer. While China has been and continues to be a dominant source 
for critical materials, the on-going challenge is developing a secure 
domestic supply chain or substitutes for these critical materials so 
that as clean energy technologies are developed and deployed in the 
United States they can also be manufactured in the United States. The 
vulnerability associated with global dependence on critical materials 
underscores the importance of the Department's research and development 
activities in this area. The Department's Critical Materials Strategy 
and coordinated R&D efforts address supply chain disruption risks by 
diversifying supply, developing substitutes, and driving recycling of 
critical materials.
    Question 3. What have been the major barriers that have prevented 
us from mining, separating, and refining rare earth elements for use 
here in the United States?
    Answer. One of the primary barriers to upstream domestic critical 
materials development has been the high capital requirements associated 
with overcoming the technical challenges at this stage in the supply 
chain. This barrier to entry has led to a natural monopoly of 
processing operations concentrated in certain countries.
    The Department addresses processing innovations through research 
and development (R&D) to help reduce processing capital requirements. 
For example, the Critical Materials Institute is considering new, lower 
cost ways to extract, separate, and process rare earth metals from ores 
and recycled materials, such as neodymium for permanent magnets and 
europium for lighting.
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

 Statement of Dr. John G. Parrish, Chair (AASG), California Geological 
           Survey, Department of Conservation, Sacramento, CA
    Thank you for the opportunity to submit written testimony for the 
record on S. 1600, the Critical Minerals Policy Act of 2013. This 
testimony is presented on behalf of the Association of American State 
Geologists (AASG). Our organization represents the State Geologists of 
the 50 United States and Puerto Rico. Founded in 1908, AASG seeks to 
advance the science and practical application of geology and related 
earth sciences in the United States and its territories, commonwealths, 
and possessions. AASG strives to optimize the role that State 
Geological Survey agencies play in delivering benefits to the people of 
the United States in relation to developing economic prosperity, 
understanding and mitigating natural hazards, protecting the public's 
property and lives, as well as appreciation and preservation of our 
natural environmental heritage.
    AASG recognizes the hard work of Chairman Wyden, Ranking Member 
Murkowski, the cosponsors of the Critical Minerals Act of 2013, and the 
members of this Committee. We commend your efforts to strengthen our 
nation's capacity to address the challenges associated with critical 
minerals and we would like to emphasize the role that State Geological 
Surveys can play in tackling this important issue.
AASG POSITION STATEMENT ON MINERAL RESOURCES
    AASG strongly supports adequate funding of mineral resources 
programs within relevant Federal agencies, including the Departments of 
Agriculture, Defense, Energy, Health and Human Services, Interior, and 
Labor. Further, AASG advocates that, as appropriate, these programs be 
implemented through Federal-State partnerships to achieve mutually 
beneficial goals relative to mineral resources.
BACKGROUND
    Minerals and mineral materials provide the fundamental components 
for manufactured goods, agricultural fertilizers, and construction. The 
U.S. economy, defense systems, and our lifestyle depend on stable 
supplies of minerals. Mineral resources are commercially quarried or 
mined in every state in the United States. Crushed stone, sand and 
gravel, needed for concrete and asphalt, are widely distributed, but 
many other commodities have been concentrated by geological processes 
and occur only in certain locations. With its large land area and 
diverse geological settings, the United States has many key mineral 
resources necessary for society to function. The locations of mineral 
resources are not all known.
    Recent discoveries of world-class deposits of gold, copper, and 
zinc in the United States and continued exploration by mining companies 
illustrate that the U.S. remains a prime target for new mineral 
resource discovery.
    Two studies by the National Research Council, Minerals, Critical 
Minerals, and the U.S. Economy, and Managing Materials for a 21st 
Century Military, and a 2011 report by the American Physical Society on 
Energy Critical Elements, find that the United States lacks sufficient 
information about its mineral needs and supplies. Up-to-date, accurate, 
geological mapping is critical to fulfilling State and Federal 
responsibilities for stewardship of our natural resources. Geologic 
maps and investigations are essential to an understanding of natural 
processes responsible for the formation of mineral deposits and the 
hydrological-chemical consequences of mining and land reclamation.
    State Geological Surveys are uniquely positioned to help address 
the need for geological maps and studies, and to collect, preserve, and 
disseminate the geological information that is needed to ensure 
adequate domestic supplies of critical minerals.
S. 1600, THE CRITICAL MINERALS ACT OF 2013
    AASG strongly supports adequately funded mineral resources programs 
within the relevant Federal agencies and we support the aims and 
actions outlined in Sections 101 (methodology for identifying critical 
minerals), 103 (resource assessment), 108 (analysis and forecasting), 
and 109 (education and workforce) of S. 1600.
    We urge you to recognize the specific expertise of State Geological 
Surveys and to consider the following items:
    Establish a grant program in strategic and critical mineral 
resources similar to the National Cooperative Geologic Mapping Program 
(NCGMP). The NCGMP, which was established under the National Geologic 
Mapping Act of 1992, is the primary source of funds for the production 
of geological maps in the United States. For over two decades, funds 
from the NCGMP have supported cooperation between Federal, State, and 
university partners to deliver modern geological maps. The maps 
produced under this program are one of the most valuable tools for 
assessing the mineral wealth and mineral potential of the nation. We 
urge you to consider creating a parallel program to enable effective 
cooperation between Federal, State, and university experts on 
understanding strategic and critical mineral resources.
    Amend the National Geological and Geophysical Data Preservation 
Program Act of 2005 (42 USC 15908) to specifically mention and 
authorize funding for maintaining information on critical minerals. 
State Geological Surveys and other organizations, including Federal 
agencies, already hold information, such as written records, maps, 
drill core, rock samples, and exploration and mining records, that 
relate to critical minerals. These collections reflect substantial 
investments by industry and government over more than 150 years, yet 
these irreplaceable records are currently at risk of disposal or ruin 
because more than 25 percent of the nation's geological data 
repositories are currently at or near their storage capacity. 
Dedicating funds to preserving and providing access to existing 
information on critical minerals would be highly cost effective and 
would provide on-demand access to a trove of valuable information.
    Thank you for the opportunity to present this testimony to the 
Committee.
                                 ______
                                 
     Statement of Interstate Mining Compact Commission, on S. 1600
    The Interstate Mining Compact Commission (IMCC) submits this 
statement in support of S. 1600, The Critical Minerals Act of 2013. 
IMCC is a multi-state governmental agency representing the natural 
resource and related environmental protection interest of its 26 member 
states. The Commission is comprised of duly appointed representatives 
of the Governors of their respective departments of Natural Resources 
or Environmental Protection. As such, the member states ofiMCC have a 
vital interest in the development of minerals, particularly those of 
strategic and critical importance to the United States. Furthermore, 
one of IMCC's primary functions is to support effective communication 
and collaboration between our member state regulators and their 
counterparts in the federal agencies, especially where it pertains to 
permitting for mineral extraction and related activities. In pursuit of 
both these goals, IMCC believes that this bill will have a significant 
benefit and therefore lends its full support.
    In the face of growing ``resource nationalism'' abroad, it is 
crucial that the US take steps to account for, protect, and further 
bolster domestic sources of critical minerals. Developing our Nation's 
mineral wealth in a manner that maximizes access while maintaining 
environmental responsibility must be a fundamental component of efforts 
to shore up national mineral resource security. One of the strategies 
employed by S. 1600 in pursuit of that goal is the streamlining of 
supply chains through elimination of unnecessary permitting 
requirements. Parallel permitting requirements convolute these supply 
chains, reducing our Nation's access to domestic sources of vitally 
important natural resources to the ultimate detriment of national 
resource security. The US should endeavor to realize the immense 
benefits potentially derived from intentional, conscientious 
development of our Nation's rich supply of mineral resources, both on 
state and federal lands. IMCC believes S. 1600 to be a significant step 
in the right direction.
    In addition to the interest in enhancing our states' and thus our 
Nation's mineral wealth, IMCC member states have a more specific 
interest in supporting S. 1600. As primary regulators of mineral 
production activity within their borders, designing efficient but 
responsible permitting processes is a top priority. Even where minerals 
are produced on federal lands, the states often work in concert with 
various federal agencies in regulating minerals under applicable 
federal laws. Arriving at the optimal design for these often 
interrelated permitting processes is contingent on real and frequent 
collaboration among state and federal agencies. IMCC is therefore 
particularly supportive of provisions in S. 1600 designed to enhance 
this vitally important coordination. Through these collaborative 
efforts, state and federal agencies will hopefully be able to eliminate 
some of the redundant permitting and processing mechanisms currently in 
place in certain arenas. As Sections 102(a)(9) and 105(a)(3)(C) of the 
bill indicate, parallel permitting requirements lead to duplicative 
efforts on the part of our member state regulators and our federal 
colleagues. Expediting these permitting processes by minimizing 
unnecessary delays, preventing unnecessary paperwork, and avoiding 
duplication of effort, will allow all those involved to work smarter 
rather than harder. This in turn contributes to the ultimate goal of 
mineral regulation: to ensure that these resources are mined in an 
efficient and effective manner while also protecting the environment.
    For all of these reasons, IMCC urges the Subcommittee to move 
forward with markup and passage of S. 1600, the Critical Minerals 
Policy Act of 2013. We welcome the opportunity to work with the 
Subcommittee and contribute to this legislative initiative and thank 
you for the opportunity to submit this statement. We would be happy to 
answer any questions or provide additional information.
                                 ______
                                 
  Statement of Materior Corporation, Mayfield Heights, OH, on S. 1600
    The Materion Corporation (Materion), headquartered in Mayfield 
Heights, Ohio, respectfully submits the following comments to the 
United States Senate Committee on Energy and Natural Resources 
regarding S. 1600, the Critical Minerals Policy Act of 2013.
    Materion supplies highly engineered advanced enabling materials to 
leading and dynamic technology companies across the globe. Our product 
offerings include precious and non-precious specialty metals, precision 
optical filters, inorganic chemicals and powders, specialty coatings 
and engineered clad and plated metal systems.
    Our products, services and expertise help enable our customers' 
technologies. We supply sophisticated thin film coatings for hard disk 
drives, specialty inorganic chemicals for solar energy panels, bio-
compatible materials for implantable medical devices, specialty alloys 
for miniature consumer electronics components, optical filters for 
thermal imaging, critical components for infrared sensing technology, 
special materials for LEDs and much more.
    Materion is the free-world's only integrated ``mine-to-mill'' 
supplier of beryllium-based products. Materion owns and operates its 
beryllium mine in Delta, Utah, and has characterized a 70+year supply 
of beryllium ore. Small deposits of beryllium ore are found in 
Kazakhstan and China, but Materion mines in excess of 70 percent of the 
world's supply. Currently, China does not export its supply of 
beryllium.
    Beryllium is a metallic element that has extremely unique 
properties. To name just a few, it is onethird lighter than aluminum, 
has six times the specific stiffness of steel and is transparent to X-
rays. Adding up to 2 percent beryllium to copper imparts springiness 
comparable to steel and corrosion resistance like stainless steel, yet 
retaining the electrical and thermal conductivity properties of copper. 
For these and other reasons, beryllium is the only material to be 
defined by the U.S. Department of Defense (DoD) as both strategic and 
critical to the United States. Beryllium is also defined as a critical 
material by the European Commission.
    Beryllium materials are used in research and industrial 
applications where reliability and superior performance are required. 
The final seal capping the leaking oil well in the Gulf of Mexico was a 
large ring of copper beryllium. The James Webb Space Telescope, 
launching this decade, has 16 beryllium mirrors to capture the images 
from space. The 2012 Nobel Peace prize for physics used atoms of 
beryllium to create a computer chip with the computing capacity of 
every computer on earth today. In short, beryllium can do things that 
no other element on earth can do.
    Materion offers the following comments on S. 1600, the Critical 
Minerals Policy Act of 2013.

          1. Materion strongly supports developing a critical minerals 
        policy as US leadership in innovation and technology is 
        inextricably linked to reliable access to and use of critical 
        minerals.

          As stated, the intent of S. 1600 is, ``To facilitate the 
        reestablishment of domestic, critical mineral designation, 
        assessment, production, manufacturing, recycling, analysis, 
        forecasting, workforce, education, research, and international 
        capabilities in the United States, and for other purposes.''
          As a producer and key supplier of critical materials, 
        Materion sees great value in US policies that would strengthen 
        both domestic capabilities and international trade to ensure 
        adequate supply of these materials. Materion supports these 
        goals.
          2. Beryllium should be designated as a critical mineral under 
        the provisions of the Critical Minerals Policy Act of 2013.

          According to the text of S. 1600, the Secretary of Interior 
        is directed to develop a draft methodology for assessing and 
        determining a list of not more than 20 critical minerals. The 
        methodology would be published in the Federal Register for 
        notice and comment. The assessment would be based on potential 
        international supply restrictions and the importance of use, 
        including energy technologies, defense, agriculture, consumer 
        electronics and health carerelated applications.

          This limited interpretation of what would constitute a 
        critical mineral under the bill and in the implementing 
        regulations may disqualify beryllium even though it is of 
        critical importance for use and innovation in the energy, 
        defense, consumer electronics and health care marketplace. 
        Beryllium should not be penalized by a designation protocol 
        because Materion has worked hard to ensure an adequate long-
        term supply.

          Unnecessary over-regulation of beryllium is the greatest 
        threat to the key markets for beryllium and the future 
        sustainability of a US supply. Worldwide supply of beryllium to 
        the free world comes primarily from a single source in the US--
        Materion. Small deposits of beryllium ore are found in 
        Kazakhstan and China, but Materion mines in excess of 70 
        percent of the world's supply. China does not export its supply 
        of beryllium. The company estimates a 70+year supply of 
        beryllium ore.

          Since beryllium ore is mined and processed domestically, the 
        primary current threat to US supply is not due to foreign 
        trading partners restricting imports of this critical mineral 
        into the US. Rather, unnecessary over-regulation of beryllium 
        is the greatest threat to the key markets for beryllium and the 
        future sustainability of a US supply. Regulatory overreach has 
        the potential to disrupt the beryllium business balance that 
        enables Materion to supply strategic and critical applications 
        of this mineral for defense and commercial customers. If US 
        production becomes infeasible due to US or foreign regulatory 
        policies, the US could be held hostage by China or Kazakhstan 
        who would not be able to meet world demands. A constrained 
        supply of beryllium for the US would very likely follow the 
        pattern that has occurred with other critical minerals; e.g., 
        rare earths and China domination.

          3. Notwithstanding the potential definitional restriction of 
        a critical mineral under S. 1600, the US Department of Defense 
        (DoD) has determined beryllium to be the only strategic and 
        critical material for US national security.

          See: (Report required by Section 843 of Public Law 109-364: 
        Report of Meeting, Department of Defense, Strategic Materials 
        Protection Board, December 12, 2008). DoD's determination is 
        based on the fact that:

                  High purity beryllium is both a strategic and 
                critical material.
                  High purity beryllium is essential for important 
                defense systems, and it is unique in the function it 
                performs. High purity beryllium possesses unique 
                properties that make it indispensable in many of 
                today's critical U.S. defense systems, including 
                sensors, missiles and satellites, avionics, and nuclear 
                weapons.

                  There is significant risk of supply disruption. 
                Without DoD involvement and support, U.S. industry 
                would not be able to provide the materials for defense 
                applications. There are no reliable foreign suppliers 
                that could provide high purity beryllium to the 
                Department.

    DoD stated, `` . . . beryllium meets all the conditions for being a 
critical material,'' and concluded, ``the Department should continue to 
take those special actions necessary to maintain a long term domestic 
supply of high purity beryllium.'' (emphasis added) Those special 
actions included the U.S. government investing $80+ million in a Title 
III Defense Production Act project with Materion to ensure a reliable 
supply of beryllium in the US.
    A 2013 Rand Corporation report, Critical Materials, Present Danger 
to U.S. Manufacturing, identified beryllium as a highly concentrated 
critical material although primary production is in the US.
    The Senate Committee on Energy and Natural Resources should include 
provisions in S. 1600 specifically designating materials deemed 
strategic and critical to DoD as a critical mineral to align with US 
national security interests.

          4. The European Union (EU) has also designated beryllium as a 
        critical material and has publically expressed concerns on the 
        impacts of over regulation of beryllium, in key emerging 
        technologies in the electronics industry.

          The European Commission (EC) listed beryllium as one of 
        fourteen critical materials (European Commission Critical Raw 
        Materials for the EU--Report of the Ad-hoc Working Group on 
        defining critical raw materials, 2010). Raw materials are 
        designated as being ``critical'' when the risks for supply 
        shortage and their impacts on the economy are higher compared 
        to other raw materials.

          According to the EC paper,

                  The most significant threats originate from perceived 
                risks associated with the use of beryllium in 
                electronic products. EU regulatory fears and NGO-
                propagated ``banning'' of the use of materials 
                containing beryllium lead to unwarranted attempts to 
                find substitutes that do not offer the same qualities 
                with respect to performance, sustainability and 
                environmental protection. The data that authorities 
                rely on is not current and does not reflect the most 
                recent scientific studies. In general, authorities are 
                reluctant to break from the past and are not open to 
                new scientific studies even if they are conducted in 
                accord with OECD guidelines or originate from proven 
                workplace strategies. Because the cost of beryllium is 
                high compared with that of other materials, it is used 
                in applications in which its properties are crucial. In 
                some applications, certain metal matrix or organic 
                composites, high-strength grades of aluminum, pyrolytic 
                graphite, silicon carbide, steel, or titanium may be 
                substituted for beryllium metal or beryllium 
                composites. Copper alloys containing nickel and 
                silicon, tin, titanium, or other alloying elements or 
                phosphor bronze alloys (copper-tin-phosphorus) may be 
                substituted for beryllium-copper alloys, but these 
                substitutions can result in substantially reduced 
                performance.

          5. Materion offers the following recommendations to revise S. 
        1600 for the Committee's consideration.

          Materion urges the Committee to carefully craft the criteria 
        for designation of a critical mineral in S. 1600 by giving 
        greater weight to the criticality of a mineral versus its 
        current supply limitations. Supply limitations come and go with 
        market demands and, therefore, there is no basis for over-
        weighting supply in the designation criteria. Minerals deemed 
        both strategic and critical to US national security interests 
        should be mandated for inclusion in the designation process 
        developed by the Department of Interior. Consistency among 
        Cabinetlevel departments regarding a concise regulatory policy 
        for beryllium as a critical mineral is absolutely necessary. 
        Its strategic importance to national defense and its 
        contribution to enhanced public safety, energy independence, 
        innovation, and unique applications that foster economic growth 
        and job preservation warrant beryllium being designated as 
        critical.

          We recommend the following.

          (a) S. 1600 should be amended to allow beryllium to be 
        designated as a critical mineral. For any material DoD 
        designates as strategic and critical, the Secretary of the 
        Interior should automatically designate it as critical as well, 
        and it should be included in the initial list of 20 substances. 
        US national security interests should take precedence. Keep in 
        mind that beryllium is a key material in every atomic weapon 
        and is critical to our armed forces in its use in fighter 
        aircraft, tanks, weapons guidance systems, night vision 
        systems, spacecraft, and satellites. The use of beryllium not 
        only protects those who serve our country, but also gives them 
        a tactical advantage.
          For example, a third provision could be added to Section 101 
        stating: ``Notwithstanding the methodology to be developed by 
        the Secretary of the Interior, any mineral deemed strategic and 
        critical to US defense or national security is automatically 
        designated as a critical mineral and should be included as part 
        of the Department of the Interior's published list.''

          (b) For the reasons stated above, the legislation should 
        include a provision that specifically requires the Department 
        of the Interior to consult with the Department of Defense.

          (c) Alternatively, at a minimum, the two criteria for a 
        substance to qualify as a critical mineral in the Department of 
        Interior methodology should be amended from an AND to an OR. 
        [Section 101(a)(1) and (2)].

          While this option may open the criteria for consideration of 
        a much broader group of minerals, it would allow for the 
        consideration of those minerals strategic and critical to 
        national security that are not threatened by traditional 
        international supply restrictions.

          6. Beryllium uses are hallmarks of innovation that are only 
        possible through critical minerals that give the US 
        technological advantages over other countries.

          Beryllium is a very unique critical mineral that provides 
        functionality in a number of high-tech applications on which 
        both commercial and defense customers rely. The following 
        discussion describes many of the leading edge technology 
        applications of the strategic and critical mineral beryllium.

          Approximately 80 percent of the beryllium used goes into 
        copper beryllium alloys, that are used to exploit an unmatched 
        combination of physical properties to produce highly reliable 
        components of systems that protect lives and where failure 
        could be either life-threatening or would provide lower 
        performance and reduced quality of life.

          Copper beryllium alloys are used for the manufacture of high 
        performance, electrically conductive terminals such as:

    --Extremely reliable automobile connectors for air bag crash sensor 
            and deployment systems, anti-lock brake systems, and new 
            drive-by-wire technologies.
    --Life-saving medical applications such as the connections in 
            medical operating rooms and monitoring equipment.
    --Critical connections and relays in electrical, electronic and 
            telecommunications equipment where failure would disrupt 
            the communications of emergency services like firefighters 
            and police.
    --No-fail aircraft and spacecraft electrical and electronic 
            connectors, which enable, for example, fly-by-wire 
            commercial airliners to achieve previously impossible fuel 
            efficiencies.
    --Household appliance temperature and other function controls that 
            provide reliability and safety to consumers while 
            minimizing energy and water use.
    --Relays used for telephone exchanges and controlling industrial, 
            domestic and automobile electrical equipment.

          Copper beryllium alloys are used for the manufacture of 
        mechanical components such as:

    --Critical aircraft components such as altimeter diaphragms.
    --Extremely long service life fire sprinkler water control valve 
            springs that must react to fires after decades of 
            inactivity to save lives and control fire damage.
    --Non-magnetic equipment components used in oil & gas exploration, 
            production and directional drilling equipment to improve 
            extraction efficiencies and reduce land despoliation at 
            drill sites by reducing the number and footprint of drill 
            sites.
    --Coal and mineral mining equipment bearings that operate longer 
            underground.
    --Mine detection and minesweeping systems that keep the global 
            forces safe.
    --Undersea fiber optic cable signal amplification ``repeater'' 
            housings that carry more simultaneous transmissions than 
            ever conceived of in the original cable systems.
    --Low-friction, high-strength aircraft landing gear bearings, 
            control rod ends and wing aileron/flap bearing bushings 
            that allow significant weight loss to reportedly lower 
            global fuel consumption and reduced associated carbon 
            dioxide emissions.
    --High thermal efficiency, reduced icing, aircraft components such 
            as pitot tubes to provide enhanced aircraft safety for 
            passengers.
    --Electrode holders and components of welding robots for automated 
            automobile and appliance welding allowing better working 
            environments for factory workers.
    --Property modifier for aluminum and magnesium castings with 
            enhanced properties that reduce weight to achieve fuel and 
            pollution reduction in automobiles and trucks.
    --Plastic and metal casting molds with enhanced thermal efficiency.

          Approximately 20 percent of the beryllium used is in the form 
        of pure metal, as a metal matrix composite containing over 50 
        percent beryllium or as a beryllium oxide ceramic.

    --X-ray transparent windows used to control and focus X-ray beams 
            in all medical, scientific and analytical devices 
            incorporating X-ray sources, providing finer resolution 
            thereby allowing earlier cancer detection in mammography 
            and other medical interventions.
    --Gyroscope gimbals and yokes for use in guidance, navigational and 
            targeting systems used on aircraft, armored vehicle and 
            marine missile systems providing levels of precision that 
            give our forces tactical advantages and minimize collateral 
            damage.
    --Satellite-mounted directional control devices for astronomical 
            and other telescopes and instruments to provide accurate 
            GPS locations signals and a wealth of scientific, 
            agricultural and climatic data.
    --Satellite structural components that reduce weight, provide 
            unmatchable rigidity at deep space low temperatures and 
            enable longer, more capable space missions.
    --Mirrors for terrestrial and space-mounted astronomical telescopes 
            that expand our knowledge of the universe, including the 
            mirrors on the James Webb Telescope. Beryllium mirrors were 
            not originally used on the Hubble telescope, but NASA 
            eventually had to use small beryllium mirrors to clear up 
            Hubble's blurred vision during a Hubble repair space 
            mission.
    --Beryllium is critical for the success of the multi-national ITER 
            fusion energy project located in Cadaraches, France that 
            offers the opportunity to provide sustainable energy 
            sourced from non-radioactive nuclear fusion. Beryllium is 
            the only material that can withstand the heat to control 
            the fireball-like plasma inside the chamber.
    --Medical isotope production nuclear reactors produce critical 
            isotopes for treatment of many types of cancer as a result 
            of the unique neutron beam reflective capabilities of 
            beryllium.
    --Substrates for mounting high-powered civil aviation radar systems 
            and power amplifiers that need cooling to prevent self 
            destruction.
    --Mobile telephone infrastructure equipment.
    --Medical excimer laser beam focusing and control components, 
            allowing surgeons unprecedented fine control of the high-
            energy laser beam during surgery.

    Preserving beryllium and other critical minerals for today's 
leading and life-saving technologies along with tomorrow's innovations 
must be a top priority to distinguish us from international 
competitors.
    Materion thanks the Senate Energy and Natural Resources Committee 
for considering these comments in crafting its Critical Minerals 
legislation and looks forward to a continuing dialogue on this 
important issue. We would be pleased to meet with the Committee, and we 
are always available to respond to any and all questions.
                                 ______
                                 
   Statement of Dr. P. Patrick Leahy, Chair, The Minerals Science & 
                   Information Coalition, on S. 1600
    Thank you for the opportunity to submit written testimony on S. 
1600, the Critical Minerals Policy Act of 2013, and on the importance 
of the federal government's mineral science and information functions.
    This testimony is presented on behalf of the Minerals Science & 
Information Coalition (MSIC), a newly formed group of minerals and 
materials interests united to advocate for reinvigorated minerals 
science and information functions in the federal government. Initial 
members include the Geological Society of America, Industrial Minerals 
Association--North America, National Stone, Sand and Gravel 
Association, Society for Mining, Metallurgy, and Exploration, Inc., 
Portland Cement Association, National Electrical Manufacturers 
Association, National Mining Association, Society of Economic 
Geologists, and the American Geosciences Institute. Other organizations 
are in the process of joining the Coalition. The Coalition represents 
trade associations, scientific and professional societies, groups 
representing the extractive industries, processors, manufacturers, 
other mineral and material supply-chain users, and other consumers of 
federal minerals science and information.
    MSIC commends Chairman Wyden, Ranking Member Murkowski, the 
cosponsors of the Critical Minerals Act of 2013, and the members of 
this Committee for recognizing the national importance of critical 
minerals and for your efforts to address this complex issue.
BACKGROUND
    Minerals and mineral materials are the starting point for many 
supply chains that are vital to the nation's economy and national 
defense. Supply chains can be long, complex, and vulnerable to 
disruption for many reasons. This vulnerability is highlighted by 
recent crises in the global supply of just two commodities--rare earth 
elements, caused by Chinese export restrictions, and helium, caused by 
uncertainty surrounding the Federal Helium Reserve in Texas. 
Restrictions in the supply of rare earths threatened the production of 
components that are essential for U.S. defense and weapons systems, in 
addition to a vast array of communications, clean energy, electronics, 
automotive, and medical products. A shortage of helium threatened high-
tech manufacturing, including the semiconductor industry; it also had 
impacts in the medical, aerospace, welding, and weather forecasting 
sectors. The nation's experiences with rare earth elements and helium 
are a wake-up call to us all.
    Both the private and the public sector realize that we must reduce 
risk to our supply chains. But we cannot do this without accurate, 
timely information on the nature, location, and characteristics of our 
domestic mineral resources, and on the worldwide supply of, demand for, 
and flow of minerals and materials. This information is the foundation 
for identifying and forecasting existing and emerging vulnerabilities, 
and for sound decision making by business leaders and policy makers.
    Given the vital national importance of minerals science and 
information, MSIC notes with alarm the consistent, severe decline in 
funding for the Mineral Resources Program at the U.S. Geological Survey 
(Fig.1)* This program is the sole federal source of scientific 
information and statistics on mineral resources, production, 
consumption, and environmental effects. The program's products are used 
extensively by industry, academia, policy makers, and the public, yet 
its funding has been cut by 30 percent, in constant dollar terms, over 
the past decade.
---------------------------------------------------------------------------
    * All figures have been retained in committee files.
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    The Coalition sees a significant need for national minerals 
forecasting capabilities. Forecasts based on reliable information would 
help industry and the government to forestall and mitigate possible 
disruptions to the flow of essential raw materials and components and 
would strengthen our national resilience.
    MSIC asserts that investment in minerals science, information, and 
forecasting is in the national interest.
S. 1600, THE CRITICAL MINERALS ACT OF 2013
    We support the aims of S. 1600 to strengthen and improve our 
understanding of critical minerals and to develop a robust scientific 
and statistical information and forecasting system to identify and 
anticipate threats to supply chains.
    In particular, the Mineral Science & Information Coalition endorses 
the actions proposed in Sec. 101, to develop a methodology for 
identifying critical minerals, Sec. 103, on resource assessments, Sec. 
108, on analysis and forecasting, and Sec. 109, on education and 
workforce.
    We urge you to continue your efforts to reinvigorate our national 
capacity to characterize, quantify, and forecast the sources, nature, 
and flow of minerals and mineral materials in support of national 
defense, a robust, resilient manufacturing sector, and a thriving 
economy.
    Thank you for the opportunity to present this testimony to the 
Committee.
                                 ______
                                 
             National Electrical Manufacturers Association,
                                                  January 31, 2014.
Hon. Ron Wyden,
Chairman, Committee on Energy and Natural Resources, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Committee on Energy and Natural Resources, Washington, 
        DC.
Re: Committee on Energy and Natural Resources Hearing on Critical 
Minerals Policy Act (S. 1600)

    Dear Chairman Wyden and Ranking Member Murkowski,

    Thank you for the opportunity to provide the following brief 
remarks on behalf of the National Electrical Manufacturers Association 
(NEMA) on the legislation considered today by the Committee on Energy 
and Natural Resources: The Critical Minerals Policy Act (S. 1600).
    NEMA is the association of electrical equipment and medical imaging 
manufacturers. Founded in 1926 and headquartered in Rosslyn, Virginia, 
its 400-plus member companies manufacture a diverse set of products 
used in the generation, transmission, distribution, and end use of 
electricity as well as medical diagnostic imaging. Worldwide annual 
sales of products in the NEMA scope exceed $140 billion.
    According to the U.S Geological Survey, the U.S. was 100 percent 
dependent on foreign sources for 17 mineral commodities in 2012 and 
more than 50 percent dependent on foreign sources for some 24 more.
    Challenging supply conditions and volatile prices of basic mineral 
inputs can be a significant threat to U.S. electroindustry companies, 
including in sectors such as lighting, electric motors, energy storage, 
superconducting materials, and medical imaging, as well as closely 
related industries including wind and solar electricity generation and 
hybrid and electric vehicles. The full scale of the threats remains 
uncertain, since these materials are used in various parts of product 
supply chains. However, while in many cases only small amounts of a 
specific mineral or mineral derivative may be present in a piece of 
manufactured equipment, its presence can be critical to performance of 
that equipment.
    In general, NEMA supports U.S. policies that provide greater 
assurance to electroindustry companies of stable, continuous and 
affordable supplies of critical minerals. More specifically, NEMA 
welcomes and supports the Critical Minerals Policy Act as a 
multifaceted strategy to modernize U.S. federal policy on mineral 
resources, information, research and know-how.
    The approach taken in S. 1600 is necessary to address this threat 
to U.S. electroindustry companies and jobs.
    First, the legislation would direct the Department of the Interior 
to establish a methodology for determining, on an ongoing basis, the 
mineral resources that are most critical to the U.S. economy, including 
manufacturers. The methodology will be created through a public process 
informed by input from businesses, associations and other stakeholder 
organizations and will be reviewed periodically. It is our 
understanding that a White House chartered interagency working group 
has already developed a draft methodology but it has not yet been made 
public.
    Although each company that uses minerals may have their own methods 
and information, the federal government plays an important role by 
providing objective information and guidance to policy-makers, market-
makers, and other interested parties.
    Second, the Act provides a set of policies across multiple federal 
agencies to address issues associated with the discovery, production, 
processing, use and re-use of critical minerals. For example, the White 
House is directed to establish a forecasting capability that will 
enable mineral policies to keep up with mineral markets and federal 
agencies to take steps to support economic competitiveness while 
maintaining environmental protections. In addition, the Interior and 
Agriculture Departments are tasked to ensure that federal permitting 
and review processes for proposed mining activities are even-handed and 
not stacked against well-designed and wellmanaged extraction and 
processing activities.
    Thirdly, the legislation addresses the challenges our country faces 
to make better use of the mineral and human resources already at hand. 
Specifically, the legislation directs the Department of Energy to 
continue and deepen its information, research, and development 
activities on alternative materials and reclamation and recycling of 
critical minerals that have already moved through the manufacturing 
supply chain and have reached the end of the consumer value chain. This 
is of particular interest to NEMA manufacturers of fluorescent lighting 
products as well as equipment that employs permanent magnets. It is 
also important that the legislation tasks that State Department with 
integrating critical minerals supply chain issues into international 
dialogues and cooperation activities.
    In addition, the legislation directs the Department of Labor to 
assess the portion of the U.S. workforce trained in mineral-related 
skills and identify present and future gaps in U.S. know-how. It also 
directs the Departments of Labor and Interior to collaborate in 
developing approaches that will enable more U.S. workers to become part 
of a vital U.S. minerals supply chain.
    In summary, we believe the Critical Minerals Policy Act provides a 
comprehensive and balanced approach to updating U.S. law and policy 
related to minerals that are most critical for NEMA manufacturers. NEMA 
commends yon both for introducing this legislation and for holding the 
NEMA Testimony for Record of January 28, 2014 Hearing on S. 1600 Senate 
Committee on Energy and Natural Resources hearing of the full Committee 
to begin the process of moving it forward. We look forward to working 
with you to achieve passage by the Committee and the full Senate as 
soon as possible.
    Thank you again for the opportunity to provide these brief remarks.
            Respectfully,
                                               Kyle Pitsor,
         Vice President, Government Relations, National Electrical 
                                  Manufacturers Association (NEMA).
                                 ______
                                 
 Statement of Randall J. Scott, President and Chief Executive Officer, 
                       Rare Element, Lakewood, CO
     Rare Element Resources Inc. appreciates the opportunity to comment 
on S. 1600, ``The Critical Minerals Policy Act,'' a bill our company 
strongly supports. We wish to briefly describe reasons for supporting 
S. 1600 and then detail why our advanced Bear Lodge Critical Rare 
Earths Project is poised to become America's next source of Critical 
Rare Earths (CREEs) by 2016.
    S. 1600--We welcome the funding that S.1600 provides to improve the 
mineral project permitting process in the United States. Unfortunately, 
over the past two decades, the U.S. has become wellknown globally for 
imposing increasing levels of delay and uncertainty on companies that 
wish to create new sources of strategic and critical minerals as well 
as high-tech and family-wage jobs and tax revenues on American soil. In 
our experience, agencies such as the Forest Service, which manages the 
lands where our Bear Lodge Project is located, lack important resources 
including personnel. S. 1600 gives assurance that regulatory agencies 
have sufficient in-house technical staff plus sufficient funding to 
access competent outside experts to bolster agency talent and move 
permits through the National Environmental Policy Act (NEPA) process in 
a timely fashion.
    Private capital, talent and time are precious and critical 
commodities in their own right. Unnecessary delays and stranded capital 
do nothing constructive to advance a critical rare earths project such 
as the Bull Hill Mine at our Bear Lodge Project toward its goal of 
becoming the next domestic critical rare earths producer, one that will 
be a strong American answer to Chinese global dominance in this sector.
    Today there is a likelihood of inexplicable permitting delay that 
has unfortunately become the norm from federal agencies. By bringing 
accountability and resources to agencies doing the permitting, S. 1600 
gives a greater assurance of certainty to companies such as ours that 
are working to meet the national goal of reestablishing a secure 
domestic rare earths supply chain.
    In short, Rare Element Resources believes S. 1600 is a valuable and 
overdue step toward assurance of renewed domestic critical minerals 
production. Its prompt enactment will be a key factor in keeping the US 
competitive with our partners and a step ahead of those unfriendly to 
us around the world.
    The Bear lodge Project--We are working to bring into production the 
Bear Lodge Critical Rare Earths Project in the Black Hills National 
Forest in northeastern Wyoming, with a goal of project commissioning in 
late 2016. Our focused exploration work over the past eight years has 
given America a growing, longlife rare earth district, with competitive 
grades of heavy and critical rare earths. With timely permitting and 
advancement of the Forest Service's ongoing Environmental Impact 
Statement (EIS), we believe the Bear Lodge Project can be America's 
primary source of critical rare earths beginning in 2016, making it a 
significant, valuable and secure domestic complement to the production 
from Molycorp's Mountain Pass Mine that is more weighted in the lighter 
rare earth elements.
    Mine commissioning at the Bear Lodge Project by 2016, while 
possible, is not assured. The EIS process has begun, and the Bear Lodge 
Project deserves a high level of urgency on the part of the Forest 
Service to complete the NEPA process in an accelerated and streamlined 
fashion.
    The Department of Energy has expressed the need to ``accelerate and 
streamline'' the federal permitting process through the entire critical 
minerals supply chain, beginning with mining. In his Global Threat 
Assessment to the Senate Intelligence Committee in March 2013, the 
Director of National Intelligence specifically cited ``regulatory 
hurdles'' as a factor limiting the United States' ability to counter 
China's monopoly on rare earth elements.
    We call for no shortcuts. Rather, focused attention, accelerated 
and streamlined urgency will allow the Forest Service to provide a 
Record of Decision by early 2016, leading to construction, 
commissioning and first production. This Committee is urged to stress 
to the Forest Service the importance of meeting this 2016 goal.
Why the Bear Lodge Project has become a Critical National Resource

   The Bull Hill Mine near Sundance, WY and the hydrometallurgy 
        plant at nearby Upton, WY combine to be North America's most 
        advanced rare earths development project.
   The mine has a small footprint of less than 900 acres in an 
        excellent location with adjacent infrastructure, power, 
        transportation, skilled labor and strong local and statewide 
        support.
   It is poised to begin production of 5,000 -10,000 tons of 
        rare earths annually by late 2016.
   The Bear Lodge Project will be a viable, secure domestic 
        source of such critical rare earths as Neodymium, Dysprosium, 
        Europium, Yttrium and Terbium for at least 25 years.
   The Forest Service has chosen the EIS Project Manager and 
        third-party EIS contractor, and expects to produce a Draft EIS 
        in 4Q 2014 and a final Record of Decision in 1Q 2016.
   Growth potential in the Bear Lodge Rare Earths district is 
        excellent, with adjacent exploration targets indicating further 
        heavy rare earth enrichment.
   Multiple economic and strategic benefits can come from the 
        Company's patent-pending metallurgical processing technology 
        that produces a 97 percent pure-bulk rare-earths concentrate 
        that is free of uranium and thorium.
   The process technology also enables process chemical 
        recycling and regeneration, giving lower capital and operating 
        expenses as well as a zero-discharge hydrometallurgy facility 
        and small tailings footprint.
   Evaluation of rare earth elemental separation from the 
        concentrate has begun.
   Rare Element Resources has entered into a non-disclosure 
        agreement with the DOE's Ames and Idaho National Laboratories 
        under the auspices of DOE's Critical Materials Institute for 
        rare earths separation research.
   The detailed design and economic analysis portions of the 
        Feasibility Study have begun.

    Innovative American mining companies such as Rare Element Resources 
need a timely ``Yes'' or ``No'' after we have invested private capital, 
talent and innovation to identify domestic resources and technologies 
that can help answer America's critical minerals needs. S. 1600 is a 
bold step toward ensuring that federal agencies can have the financial 
and personnel resources they need, and for these reasons Rare Element 
Resources strongly supports S.1600 and urges its prompt passage.
    Rare Element Resources Ltd. is a publicly traded mineral resource 
company focused on exploration and development of rare earth deposits, 
specifically those with significant distribution of critical rare 
earths. Headquartered in Lakewood, CO, the company was incorporated in 
1999. Its common shares are traded on the New York Stock Exchange 
Market (the ``NYSE MKT'') under the symbo ``EE'' and on the Toronto 
Stock Exchange (the ``TSX'') under the symbol ``RES.''
                                 ______
                                 
 Statement of Ken Collison, Chief Operating Officer, Ucore Rare Metals,
    This is written testimony submitted for the hearing record on 
S.1600, the Critical Minerals Policy Act. My name is Ken Collison, 
Chief Operating Officer for Ucore Rare Metals, Inc. (Ucore). Ucore is 
actively developing the Bokan- Dotson Ridge Rare Earth Project 
(project) located on Prince of Wales Island in Southeast Alaska. The 
project is in the final stages of evaluation and design and is 
anticipating initiating the NEPA permitting review process early in 
2014. The Bokan- Dotson Ridge project is particularly enriched with 
heavy rare earth elements, including the critical elements Dysprosium, 
Terbium and Yttrium. Approximately 40 percent (by weight) of the rare 
earth elements contained on the Dotson Ridge property are heavy rare 
earths elements, as disclosed in the Company's Nl43-101 compliant 
Preliminary Economic Assessment, released in January 2013.
    Ucore sincerely appreciates the recent initiatives in Washington to 
address the increasing lack of availability of rare earth products and 
magnet-making materials for domestic military and defense applications. 
Concerns regarding the withdrawal of ongoing supplies of Critical Rare 
Earth Oxides produced almost exclusively in China and consumed by US 
military contractors, has attracted significant legislative 
initiatives.
    The Critical Minerals Policy Act, submitted by Senators Lisa 
Murkowski (R- AK), Ron Wyden (D- Ore), Mark Udall (D- Col.), Dean 
Heller (R- Nev.) and 13 others, if fully enacted, will prevent supply 
shortages of critical materials and reduce US dependence on foreign 
sources through the revitalization of a domestic supply chain, 
including domestic production from near term facilities such as the 
BokanDotson Ridge project in Alaska. The bipartisan bill outlines 
mineral-specific actions for several elements, including yttrium and 
scandium, materials scheduled to commence production at the Bokan 
project by as early as 2017.
    Dotson Ridge is the richest domestic source of three heavy rare 
earth elements-dysprosium, terbium, and yttrium-which are critical to 
several advanced weapon systems, such as stealth helicopters and 
precision-guided weapons. Both dysprosium and yttrium are critical to 
multiple US defense systems. Dysprosium is a crucial ingredient in 
neodymium-iron-boron magnets as a means of increasing coercivity, 
applications of which include aircraft actuator motors in flight 
control systems, landing gear, and munitions. Yttrium is critical to 
the defense industry applications such as the manufacture of various 
ceramic and glass materials required in jet engines. The Joint Strike 
Fighter (JSF) development program relies on both Dy andY as critical 
input components.
    Currently, all of the world's commercially-available heavy rare 
earth elements are produced in China. Ongoing production and export 
quotas have limited the availability of these materials to global 
markets. According to a March 2012 report from DOD, yttrium, terbium, 
and dysprosium are all considered to be ``critical to the production, 
sustainment, or operation of significant United States military 
equipment,'' as well as ``subject to interruption of supply, based on 
actions or events outside the control of the government of the United 
States.'' Yttrium, in particular, was shown to be in deficit when 
considering projected future domestic supply.
    Thank you for the opportunity to submit testimony on this important 
bill.
                                 ______
                                 
        Statement of Dennis Watson, Mayor, City of Craig, Alaska
    This is written testimony submitted for the hearing record on 
S.1600, the Critical Minerals Policy Act. My name is Dennis Watson, 
Mayor of Craig, Alaska located on Prince of Wales Island in Southeast 
Alaska. Craig has a population of 1200 and is the largest community on 
America's third largest island which has a total population of 4,000. 
There are total of ten communities on the island, many of which are 
connected by road to one another as a result of the road system built 
during the better days of timber harvest.
    I mention these roads because my testimony on this bill is about 
the need to evaluate surface transportation access to American sites 
that can supply critical minerals including rare earth minerals. As the 
Committee knows, Alaska is blessed with an abundance of minerals which 
it has supplied to the Nation since it was acquired from Russia in the 
19th century. Southeast Alaska and Prince of Wales have historically 
been part of this tradition, and a number of successful mines have been 
developed on the Island.
    Now, there is a great prospect for development of new mines on 
Prince of Wales Island. One of these is a potential rare earth mineral 
mine which could provide a lot of rare earth minerals to our nation's 
economy and security. That mine is called the Bokan-Dotson Ridge 
project.

          ``The Bokan property is particularly enriched with heavy rare 
        earth elements, including the critical elements Dysprosium, 
        Terbium and Yttrium. Approximately 40 percent(by weight) of the 
        rare earth elements contained on the Dotson Ridge property are 
        heavy rare earths elements, as disclosed in the Company's NI43-
        101 compliant resource estimate, released in March of 2011.'' 
        See http://ucore.com/projects/bokan-mountain-alaska/project-
        overviewSo and attachment

    So, the development of this property has great potential for the 
nation and is just what Sen. Murkowski and the cosponsors of this bill 
intend that the study authorized by this bill evaluate. The City of 
Craig strongly supports the Bokan--Dotson Ridge project and has 
requested the Alaska Congressional delegation to sponsor a bill, S.181, 
to allow surface transportation access to the mine site. As I said 
above, Prince of Wales has an extensive road system, more than most 
places in rural Alaska. However, even though the Bokan-Dotson Ridge 
project is located on Prince of Wales Island, there is no road 
connecting the project site with the rest of the POW road system. Even 
more frustrating is the fact that the current state of federal land 
management most likely prevents construction of a road without specific 
legislation action by this Committee because much of the area on which 
a road could be sited is now located in a Roadless area since over 90 
percent of Southeast Alaska has been declared'' roadless'' by an ill-
advised federal court decision which voided a long standing out of 
court settlement that had exempted Southeast Alaska from the rest of 
the nation's roadless issues.

    We urge this committee to do two things:

    1. Please include a study of transportation issues for critical 
minerals , particularly rare-earth minerals in this bill. This bill is 
intended to identify how the United States may find and develop a 
secure, domestic supply of these critical minerals. However, if the 
minerals exist but federal land management policy prevents or 
substantially retards the ability to develop and transport these 
mineral to a logical production site, then this policy needs to be 
identified in this report and needs to be adjusted to accommodate these 
needs.
    The Study should identify these access problems and recommend 
specific changes to allow these critical/rare earth minerals to be 
developed with logical and economic access.
    2. Please schedule a hearing on S.181 which provides a solution for 
this specific surface transportation problem for the critical rare 
earth minerals at Bokan-Dotson Ridge. That bill is a bipartisan bill 
which was introduced by Ranking Member Murkowski and Sen. Begich almost 
a year ago, January 30, 2013, Yet, there has been no hearing on this 
bill. There has been a hearing on the companion bill, HR. 587 in the 
House Natural Resources Committee and we are hoping that the bill will 
be marked up soon.
    The bills are identical and are very simple-they provide an 
exception to the Roadless Rule To permit construction of a road between 
the Bokan- Dotson Ridge project and another precious metals mine. The 
bill does not authorize and funding for construction. The bill seeks 
only to solve the Roadless problem. It is not an earmark for road 
construction. The mine's sponsors understand and support this bill. 
They are not looking for federal subsidy but the mine needs this 
surface access to make its transportation more viable and to allow 
Prince of Wales Island residents to work as employees.
    Additionally, this would allow local residents of the island to 
obtain year round employment at the mine. Right now the only access is 
by boat which is just not very practical for daily commuting from 
communities on the Island which has an annual unemployment rate of 12.8 
percent through November 2013..
    Attached for the record are many letters and resolutions of support 
from all over the State and region. This project is supported by local 
communities which form the Prince of Wales Community Advisory Council 
and encompass most of the communities on the Island as well as the 
Southeast Conference and Ketchikan and Alaska State Chambers of 
Commerce. In summary, the Bokan-Dotson Ridge mineral prospect has a 
real chance to make a difference in America's rare earth mineral 
supply. But the Committee and the Congress need to look directly at the 
surface transportation issues affecting this and other mineral 
properties.
    Thank you for the opportunity to submit testimony on this important 
bill. I hope that I will have the opportunity soon to testify at a 
similar hearing on S.181, and hopefully in person.

                                    

      
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