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RARE EARTH MINERALS AND

21ST CENTURY INDUSTRY

HEARING

BEFORE THE

SUBCOMMITTEE ON INVESTIGATIONS AND 

OVERSIGHT 

COMMITTEE ON SCIENCE AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

MARCH 16, 2010

Serial No. 111–86

Printed for the use of the Committee on Science and Technology

(

Available via the World Wide Web: http://www.science.house.gov 
(II)

COMMITTEE ON SCIENCE AND TECHNOLOGY 

HON. BART GORDON, Tennessee, Chair 

JERRY F. COSTELLO, Illinois 

EDDIE BERNICE JOHNSON, Texas 

LYNN C. WOOLSEY, California 

DAVID WU, Oregon 

BRIAN BAIRD, Washington 

BRAD MILLER, North Carolina 

DANIEL LIPINSKI, Illinois 

GABRIELLE GIFFORDS, Arizona 

DONNA F. EDWARDS, Maryland 

MARCIA L. FUDGE, Ohio 

BEN R. LUJA ́ N, New Mexico 

PAUL D. TONKO, New York 

STEVEN R. ROTHMAN, New Jersey 

JIM MATHESON, Utah 

LINCOLN DAVIS, Tennessee 

BEN CHANDLER, Kentucky 

RUSS CARNAHAN, Missouri 

BARON P. HILL, Indiana 

HARRY E. MITCHELL, Arizona 

CHARLES A. WILSON, Ohio 

KATHLEEN DAHLKEMPER, Pennsylvania 

ALAN GRAYSON, Florida 

SUZANNE M. KOSMAS, Florida 

GARY C. PETERS, Michigan 

JOHN GARAMENDI, California 

VACANCY 

RALPH M. HALL, Texas 

F. JAMES SENSENBRENNER JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

DANA ROHRABACHER, California 

ROSCOE G. BARTLETT, Maryland 

VERNON J. EHLERS, Michigan 

FRANK D. LUCAS, Oklahoma 

JUDY BIGGERT, Illinois 

W. TODD AKIN, Missouri 

RANDY NEUGEBAUER, Texas 

BOB INGLIS, South Carolina 

MICHAEL T. MCCAUL, Texas 

MARIO DIAZ-BALART, Florida 

BRIAN P. BILBRAY, California 

ADRIAN SMITH, Nebraska 

PAUL C. BROUN, Georgia 

PETE OLSON, Texas 

SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT

HON. BRAD MILLER, North Carolina, Chair 

STEVEN R. ROTHMAN, New Jersey 

LINCOLN DAVIS, Tennessee 

CHARLES A. WILSON, Ohio 

KATHY DAHLKEMPER, Pennsylvania 

ALAN GRAYSON, Florida 

BART GORDON, Tennessee 

PAUL C. BROUN, Georgia 

BRIAN P. BILBRAY, California 

VACANCY 

RALPH M. HALL, Texas 

DAN PEARSON Subcommittee Staff Director 

JAMES PAUL Democratic Professional Staff Member 

KEN JACOBSON Democratic Professional Staff Member 

TOM HAMMOND Republican Professional Staff Member 
(III)

C O N T E N T S 

March 16, 2010

Page 

Witness List ............................................................................................................. 2

Hearing Charter ...................................................................................................... 3

Opening Statements

Statement by Representative Bart Gordon, Chairman, Committee on Science 

and Technology, U.S. House of Representatives ............................................... 11

Written Statement ............................................................................................ 12

Statement by Representative Brad Miller, Chairman, Subcommittee on Investigations and Oversight, Committee on Science and Technology, U.S. House 

of Representatives ................................................................................................ 11

Written Statement ............................................................................................ 14

Statement by Representative Paul C. Broun, Ranking Minority Member, Subcommittee on Investigations and Oversight, Committee on Science and 

Technology, U.S. House of Representatives ....................................................... 15

Written Statement ............................................................................................ 15

Witnesses:

Dr. Stephen Freiman, President, Freiman Consulting, Inc. 

Oral Statement ................................................................................................. 17

Written Statement ............................................................................................ 21

Biography .......................................................................................................... 24

Dr. Steven J. Duclos, Chief Scientist and Manager, Material Sustainability, 

General Electric Global Research 

Oral Statement ................................................................................................. 25

Written Statement ............................................................................................ 26

Biography .......................................................................................................... 30

Dr. Karl A. Gschneidner, Jr., Anson Marston Distinguished Professor, Department of Materials Science and Engineering, Iowa State University 

Oral Statement ................................................................................................. 30

Written Statement ............................................................................................ 33

Biography .......................................................................................................... 46

Mr. Mark A. Smith, Chief Executive Officer, Molycorp Minerals, LLC 

Oral Statement ................................................................................................. 47

Written Statement ............................................................................................ 49

Biography .......................................................................................................... 61

Mr. Terence Stewart, Esq., Managing Partner, Stewart and Stewart 

Oral Statement ................................................................................................. 62

Written Statement ............................................................................................ 63

Biography .......................................................................................................... 68

Discussion 

Early Warning for Material Supply Problems ................................................... 68

How to Compete With China .............................................................................. 70

Prioritizing Responses to Shortage ..................................................................... 70

Role of Federal Agencies ...................................................................................... 71

Improving Research Infrastructure .................................................................... 73

Funding for Rare Earth Research ...................................................................... 73

Domestic Sources of Rare Earths ....................................................................... 74

Expanding U.S. Workforce .................................................................................. 75

Dependence on Foreign Products ........................................................................ 75
Page

IV

Maintaining a Complete Supply Chain .............................................................. 76

Keeping Manufacturing in the U.S. ................................................................... 77

Balancing Private and Public Needs .................................................................. 78

Chinese Industrial Strategy ................................................................................ 78

Funding Models for Materials Research ............................................................ 78

Timeframe for Re-Starting Domestic Production .............................................. 79

Appendix: Answers to Post-Hearing Questions

Dr. Stephen Freiman, President, Freiman Consulting, Inc. ................................ 82

Dr. Steven J. Duclos, Chief Scientist and Manager, Material Sustainability, 

General Electric Global Research ....................................................................... 83

Dr. Karl A. Gschneidner, Jr., Anson Marston Distinguished Professor, Department of Materials Science and Engineering, Iowa State University ............... 85

Mr. Mark A. Smith, Chief Executive Officer, Molycorp Minerals, LLC .............. 87

Mr. Terence Stewart, Esq., Managing Partner, Stewart and Stewart ................ 88
(1)

RARE EARTH MINERALS AND 21ST CENTURY 

INDUSTRY 

TUESDAY, MARCH 16, 2010

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT, 

COMMITTEE ON SCIENCE AND TECHNOLOGY, 

Washington, DC.

The Subcommittee met, pursuant to call, at 2:01 p.m., in Room 

2318 of the Rayburn House Office Building, Hon. Brad Miller 

[Chairman of the Subcommittee] presiding.
2
3

1These minerals were named ‘‘Rare Earths’’ at the time of their discovery as they were originally found in the form of oxides (bound together with oxygen; compounds were called ‘‘earths’’ 

by scientists in the late 18th Century). ‘‘Rare’’ reflected the fact that the Swedish scientists who 

originally separated the various compounds had not encountered them before. Today, the name 

is somewhat misleading in that ‘‘. . . even the two least abundant, thulium and lutetium, are 

nearly 200 times as abundant as gold . . ..’’ Committee on Critical Mineral Impacts on the U.S. 

Economy, Minerals, Critical Minerals and the U.S. Economy (Washington: National Research 

Council, 2008); p. 133 (hereafter cited as NRC Report). 

HEARING CHARTER

Purpose

The United States, as part of its strategy to reduce emissions from electricity generation and transportation, is investing significant funds in renewable energy technologies such as wind power and hybrid vehicles. The American Recovery and Reinvestment Act provides $2.3 billion for advanced energy manufacturing facilities, including wind turbine manufacturing plants. The Act further makes available $2 billion ‘‘. . . for Advanced Battery Manufacturing grants to support the manufacturing 

of advanced vehicle batteries and components . . .’’ Yet these investments may fail 

to prompt the desired outcome—a buoyant industry producing renewable energy 

systems—for lack of rare earth minerals.1

The United States finds itself dependent on the People’s Republic of China for a 

commodity without which it would be hard to compete in high-technology industries. 

With a near-monopoly in supplies of rare earths, the Chinese government threatens 

to limit exports and tries to induce manufacturing firms to locate their facilities in 

Inner Mongolia. The main American supplier is seeking funding to restart its mining operation, which closed in 2002, having suffered from low prices as China expanded into the market and from a late start on renewing its environmental permits 

in California. Support for research has diminished. 

This hearing by the Subcommittee on Investigations and Oversight will examine 

these intertwined threads to determine ways of redressing the expected imbalance 

between available supplies of rare earths and the Nation’s need for them. The hearing will also ask why the policy structure put in place thirty years ago precisely to 

identify and respond to situations like this before they became acute bottlenecks 

failed to do its job.

Witnesses

Dr. Stephen W. Freiman

President, Freiman Consulting, Inc. 

Member, National Research Council Committee on 

Critical Mineral Impacts on the U.S. Economy

Dr. Freiman will present the findings and recommendations of the most recent 

National Research Council study evaluating potential responses to fluctuations in 

the supply-demand balance for minerals and materials. The Council included rare 

earth minerals among the cases analyzed, concluding that there are sufficient supply risks for rare earths to be classified as a critical resource. Dr. Freiman, a materials scientist, served as Chief of the Ceramics Division and Director of the Materials Science and Engineering Laboratory during a career at the National Institute 

of Standards and Technology that spanned 28 years. A specialist in the fracture of 

brittle materials, he has published more than 150 scientific papers.

Dr. Steven Duclos 

Chief Scientist and Manager, Material Sustainability 

General Electric Global Research

Dr. Duclos will testify on the process underlying General Electric’s Materials Sustainability Initiative, which assesses the company’s businesses for risks posed by 

lack of raw materials. If a problem is identified, are there steps to reduce that risk 

by finding substitutes, reducing the need for the material or recycling? Terbium, one 

of the rare earths, was identified as a high risk for GE by the Initiative. Dr. Duclos 

managed the company’s Optical Materials Laboratory, working with GE units to develop advanced materials. He came to GE from a post-doctorate position at the 

AT&T Bell Labs studying superconductivity in buckminsterfullerene, the form of 

carbon popularly known as ‘‘buckyballs.’’

Dr. Karl A Gschneidner, Jr. 

Anson Marston Distinguished Professor 

Department of Materials Science and Engineering 

Iowa State University
4

2Stan Correy. ‘‘Background Briefing: Rare Earths and China.’’ Australian Broadcasting Corporation transcript, November 15, 2009. Accessed at http://www.abc.net.au/rn/

backeroundbriefing/stories/2009/2738774.htm, January 28, 2010. 3Strategic Materials: Technologies to Reduce U.S. Import Vulnerability (Washington, DC: U.S. 

Congress, Office of Technology Assessment, OTA–ITE–248, May 1985); p.3. 

Dr. Gschneidner’s testimony will focus on current studies of rare earths and the 

processes needed to convert the ores into industrially-useful materials. He has also 

been asked for comments to recommend improvements in the existing U.S. research 

program. In addition to his professorship at Iowa State University, Dr. Gschneidner 

holds the position of Senior Metallurgist at the Ames National Laboratory of the Department of Energy. He has researched the properties of rare earth minerals, has 

served as the Senior Editor of the Handbook of the Physics and Chemistry of Rare 

Earths since 1976 and was for years Director of the Ames Laboratory Rare Earth 

Information Center. Dr. Gschneidner is currently funded by DOE to design a refrigerator using magnets to control temperatures. He was elected to the National Academy of Engineering in 2007.

Mr. Mark Smith 

Chief Executive Officer 

Molycorp Minerals, LLC

Mr. Smith’s company is focused on restarting the mine in Mountain Pass, California, holding the primary source of rare earth minerals in the United States. The 

mine was previously owned by the mining subsidiary of the Chevron Corporation, 

which acquired it as part of its purchase of the Union Oil Company of California. 

Mr. Smith, who served as head of Chevron’s mining subsidiary, left to become President and CEO of Molycorp in April 2006 and negotiated to buy the Mountain Pass 

mine from his old company in 2007. Operations at the mine were halted after accidental spills and failure to complete environmental permits required by the State 

of California. Mr. Smith has been asked to describe his plan for restoring mining 

operations and for expanding the company into the production of magnets for nextgeneration wind turbine generators.

Mr. Terence Stewart, Esq. 

Managing Partner 

Stewart and Stewart

Mr. Stewart has an extensive history in international trade and customs law. He 

is a leading expert on the World Trade Organization and has assisted industry and 

labor groups with trade issues. Given China’s outsized role in the rare earths market and its efforts to increase its influence in high-technology industries, Mr. Stewart has been invited to present his insights into China’s policies and actions on resource issues and into their ramifications for U.S. industry and the economy.

Background

In November 2009, the Australian Broadcasting Corporation summarized the rare 

earths issues quite succinctly:

The rare earth metals story is one lens through which we can view changing 

world economics, the ways and the pitfalls of how China integrates with the 

capitalist world, and global trade. China provides more than 90% of the world’s 

supply of rare earths. The business media in particular is full of stories of how 

if the Chinese hold back on their supply of rare earths, your iPhone won’t work. 

And more, much more. Climate change comes into it, too, because the green 

technologies are very dependent on rare earths.2

The current issues relating to rare earths supply and demand represent the latest 

instance of a continuing story in which what was an obscure, commodity mineral 

or material suddenly assumes outsized importance. Industry finds new uses that 

strain supplies, and American firms find that there are no domestic suppliers. In 

1985, the Office of Technology Assessment (OTA) published Strategic Materials: 

Technologies to Reduce U.S. Import Vulnerability in response to concerns that

Three nations, South Africa, Zaire, and the U.S.S.R., account for over half of 

the world’s production of chromium, cobalt, manganese, and platinum group 

metals. These metals are essential in the production of high-temperature alloys, 

steel and stainless steel, industrial and automotive catalysts, electronics, and 

other applications that are critical to the U.S. economy and the national defense 

. . ..3
5

4 NRC Report, p. 131.

5 James B. Hedrick, ‘‘Rare Earths,’’ in Mineral Commodity Summaries 2009 (Reston, VA: 

United States Geological Survey; January 2010); pp. 128–129. 6 Ibid., p. 128. 7 Ibid., p. 129. 8 Ibid.

9Leo Lewis, ‘‘Greenland Challenge to Chinese Over Rare Earth Minerals,’’ London Times, October 5, 2009; p. 39. 10Keith Bradsher, ‘‘China Tightens Grip on Rare Minerals,’’ New York Times, September 1, 

2009; p. B1. See also Ambrose Evans-Pritchard, ‘‘World Faces Hi-Tech Crunch as China Eyes 

Ban on Rare Metal Exports,’’ Telegraph.co.uk on August 24, 2009 at 5:58 PM BST. Accessed 

Continued

At that time, OTA identified the following as options for the Federal Government 

to pursue: increase exploration for domestic sources, find new overseas suppliers, 

find substitutes or reduce the need. Many of these same options apply to the case 

of rare earth minerals—although the unique properties that make these elements 

valuable may not be found in any substitute materials or minerals.4

The Global Rare Earths Playing Field

The United States Geological Survey’s Minerals Information Team annually publishes Mineral Commodity Summaries, collecting information on supply, demand 

and market activity on some 90 minerals and materials, among them the rare 

earths. In January 2010, the most recent summary for the rare earths was issued, 

with data current to 2008.5 USGS reported there that the United States was completely dependent on imports: between 2005 and 2008, 91% of its consumption came 

from China, 3% from France, 3% from Japan, 1% from Russia and 2% from other 

sources. The estimated cost of processed ore suitable for extracting rare earths rose 

from $6.61 to $8.82 per kilogram between 2007 and 2008, then dropped back to 

$5.73 during 2009.6

USGS issued the following assessment of global rare earths supply: 7

Actions by the Chinese government (see the next section) and growing world investment in renewable energy equipment have reinvigorated efforts to identify new 

sources for rare earths. Molycorp restarted its separation plant in 2007 and is processing residual materials from its mine tailings. Australia has begun production at 

its Mt. Weld deposit. Evaluation of the economic viability of producing in Canada 

and Malawi is underway.8 An Australian mining company is also studying a deposit 

in Greenland that could satisfy some 25% of world needs over the next fifty years.9

Still, as Mr. Smith of Molycorp notes, it takes significant funding and time to bring 

new mines into production, and volatility in a commodity market can upset even 

well-laid plans. 

China and the Global Market

Indications that China intended to reduce exports of the rare earth materials is 

a major reason that this issue has recently gained prominence. Reports last year 

indicated that the Ministry of Industry and Information Technology had submitted 

the draft of a six-year plan to the State Council of China that contemplated deepening existing cuts in shipments of minerals like dysprosium.10 The ministry stated 
6

at http://www.telegraph.co.uk/finance/commentlambroseevans¥pritchard/6082464/Worldfaces-hi-tech-crunch-as-China-eves-ban-on-rare-metal-exports.html, October 15, 2009. 11Feiwen Rong and Xiao Yu, ‘‘Shortage of Rare Earths Used in Hybrids, TVs May Loom in 

China,’’ Bloomberg News on September 3, 2009 at 4:54 AM EDT. Accessed at http://

www.bloomberg.com/apps/news?pid=20601080&sid=afn.hOk6eEHq, October 17, 2009. 12Ministry of Economy, Trade and Industry, ‘‘Announcement of ’Strategy for Ensuring Stable 

Supplies of Rare Metals,’’ July 28, 2009. Accessed at http://www.meti.go.jp/english/press/

data/20090728¥01.html, October 15, 2009. 13 A similar plan is in place for the country’s seven ‘‘Strategic’’ industries: armaments; power 

generation and distribution; oil and petrochemicals; telecommunications; coal; civil aviation; and 

shipping. The firms in this sector are to be subject to ‘‘absolute control’’ by the government, 

while, in the ‘‘Heavyweight’’ sphere, the government is looking for no more than a ‘‘dominant 

presence.’’ U.S.-China Economic and Security Review Commission, Hearing on China’s Industrial Policy and its Impact on U.S. Companies, Workers, and the American Economy, testimony 

of George Haley, March 24, 2009. 14 ‘‘Rare Earth: An Introduction,’’ Baotou National Rare Earth Hi-Tech Industrial Development Zone, accessed at http://www.rev.cn/en/int.htm, January 29, 2010. 15 Chuin-Wei Yap, ‘‘Will China Tighten ‘Rare Earth’ Grip?,’’ Wall Street Journal, September 

3, 2009; p. C12. 16 Bradsher, loc. cit. 17 U.S.-China Economic and Security Review Commission, 2009 Report to Congress (Washington: U.S. Government Printing Office, November 2009); p. 43. 

that it was concerned that China lacked enough of the minerals to meet its own 

needs.11 The Japanese Ministry of Economy, Trade and Industry had earlier developed a ‘‘Strategy for Ensuring Stable Supplies of Rare Metals’’ after the threat that 

China might limit supplies came to the attention of the Cabinet in Tokyo.12

The rare earths issue showcases two major elements of China’s strategy for economic development:

• the targeting of critical industries that are to be kept under government control; and

• the use of subsidies and other incentives to attract foreign investment that 

will result in moving China’s production up the value chain, bringing advanced technology into the country, and generating sophisticated exports.

Non-ferrous metals, the category into which rare earths fall, represent one of six 

industries that the Chinese government considers most central to economic performance and growth. The other five of these ‘‘Heavyweight Industries’’ are machinery; 

automobiles; information technology; construction; and iron and steel. Plans to keep 

the nation’s economy under control call for state ownership of the three largest 

firms in each industry.13

China’s government has long been aware of its rare earths deposits’ potential 

value and thought of them in strategic terms. An official publication quotes a 1992 

statement by then-Paramount Leader Deng Xiaoping that ‘‘there is oil in the Middle 

East; there is rare earth in China.’’ In conjunction with a 1999 visit to Inner Mongolia, where China’s largest deposit of rare earth minerals is located, then-President 

Jiang Zemin wrote: ‘‘Improve the development and applications of rare earth, and 

change the resource advantage into economic superiority.’’ 14

Although China has reportedly abandoned a provision in its Rare Earths Industry 

Development Plan 2009–15 that would have placed an absolute ban on the export 

of five of the 17 rare earths, a ban on exports of raw ores continues, as does the 

progressive lowering of exports quotas on other forms of the materials that began 

in 2006. Officials in China make no secret of their desire to bring the manufacturing 

of the high-value-added products containing rare earths into China. ‘‘We want rareearth industries to locate in Inner Mongolia,’’ Zhao Shuanglin, vice chairman of 

Inner Mongolia Autonomous Region, stated in September 2009.15 At around the 

same time, Zhang Peichen, the deputy director of Baotou Rare Earth Research Institute in Inner Mongolia, predicted: ‘‘Rare earth usage in China will be increasingly 

greater than exports.’’ 16

While its current near-monopoly in rare earths gives it a potent stick, China has 

had outstanding success in using the carrot to enlist foreign-based corporations’ help 

in building up its economy. For the past 15 years or more, multinational companies 

have shown themselves eager to establish a presence in China to gain access to the 

country’s potentially huge market. But that is not the only reason they have sited 

production and, more recently, research capacity there. ‘‘China has attracted the 

world’s largest manufacturers by offering discounted land, energy, and taxes to relocate in China and to use China as a global export platform,’’ according to the U.S.-

China Economic and Security Review Commission. As a result, ‘‘more than half of 

China’s exports originate from foreign-invested manufacturing enterprises located in 

China.’’ 17
7

18 ‘‘Preferential Policies,’’ Baotou National Rare Earth Hi-Tech Industrial Development Zone, 

accessed at http://www.rev.cn/en/pre.htm, January 29, 2010. 19 ‘‘Catalog,’’ Baotou National Rare Earth Hi-Tech Industrial Development Zone, accessed at 

http://www.rev.cn/en/pro.htm, January 29, 2010. 20The first chain reaction, initiated December 2, 1942, used natural uranium, which is very 

low in the fissionable isotope U–235. When a U–235 atom splits, rare earths may be among the 

resulting fragments. Because these might soak up the excess neutrons in the reactor that would 

sustain the chain reaction, research was needed on how to separate rare earths from uranium 

and plutonium. Iowa State succeeded in developing separation methods that could produce rare 

earths that were sufficiently purified to permit the needed research program. Harry J. Svec, 

‘‘Prologue,’’ in Gschneidner and Eyring, eds., Handbook on the Physics and Chemistry of the 

Rare Earths, Vol. 11 (Amsterdam: Elsevier Science Publishers, BV, 1988); p. 15. In 1947, the 

newly-formed Atomic Energy Commission chose the school as the home for the Ames National 

Laboratory and appointed Dr. Frank Spedding as its first director. Spedding, a leader in rare 

earth chemistry, improved his original processing methods to the point where Ames became the 

major supplier to the scientific community and the AEC laboratories. Spedding oversaw an extensive basic research effort characterizing the properties of rare earths in solutions and continued to develop industrial-scale processing for these materials. Ibid., p. 16. 21 Communication from Iver Anderson, Senior Metallurgist, Ames National Laboratory, January 7, 2010. 22Lt. Col Carl Buhler, USAF et al. Strategic Materials: AY 2005–2006 Industry Study Final 

Report. Industrial College of the Armed Forces, National Defense University, Ft. McNair, Washington, D.C., 2006. (hereafter cited as ICAF Report) 

‘‘Preferential Policies’’ designed to attract foreign firms to the Baotou National 

Rare Earth Hi-Tech Industrial Development Zone, located less than 100 miles from 

China’s huge rare earths mine at Bayan Obo in Inner Mongolia, include both funding mechanisms and significant tax incentives. For example, ‘‘hi-tech enterprises’’ 

and venture capital companies are exempt from income tax for their first five years 

operating in the Zone, then pay at only half of the regular 15 percent rate during 

a second five-year period. They receive breaks on VAT and operations taxes as 

well.18 The Baotou Industrial Development Zone’s Web site lists 25 options on a 

page titled ‘‘Projects Seeking Investment,’’ many of them focusing on rare earths 

and several of them in the area of ‘‘green technologies.’’ Among these projects are: 

• ‘‘Nickel Hydrogen Power Battery Polar Plate’’;

• ‘‘Hydrogen-Store Alloy Powder Cathode Material of Ni-Hydrogen Power Battery’’;

• ‘‘Industrialization of Rare Earth Ceramic Piston Ring’’;

• ‘‘Production Line of Rare Earth Giant Magnetostrictive Alloy’’;

• ‘‘The Technology of Special Rare Earth Ceramic Thermocouple Tube’’;

• ‘‘Industrialization of Nanometer Crystal Rare Earth Alloy Magnetic Powder’’; 

and

• ‘‘Annual Production of 200000 Units of Magnet Motor for Electric Bicycle.19

Reviving Research

Iowa State University (ISU) became a hub of rare earth research as its contribution to the Manhattan Project.20 Dr. Gschneidner carries on the tradition in rare 

earth research, focusing today on the behavior of rare earths at low temperatures 

or in high magnetic fields. He is currently receiving funds from the Department of 

Energy to build a refrigerator that achieves cooling by magnetism, employing 

magnets containing rare earths. Dr. William McCallum has recently begun seeking 

a cheaper or more readily available substitute for the rare earths incorporated into 

the permanent magnet used in a hybrid vehicle’s generator. If his project is successful, a potential bottleneck for hybrid vehicle manufacturers will be eliminated. 

These are elements of the broader effort on magnet development at the Lab.21 Both 

Drs. Gschneidner and McCallum served as director for the Rare Earth Information 

Center at Ames. Established as an information clearinghouse on the minerals by the 

Atomic Energy Commission in 1966, it was closed in 2002. 

In discussing the needs for research in minerals and materials, the NRC Committee on Critical Mineral Impacts on the U.S. Economy drew heavily on a 2006 

industry study by the Industrial College of the Armed Forces.22 That analysis 

placed rare earths in a category recommended for government support to develop 

materials offering superior properties for defense and commercial applications. Designers and engineers prefer materials with well-understood properties, but this 

conservative tendency can stymie innovation by limiting the opportunity to improve 

performance or efficiency. Agencies like NASA and the Department of Defense invest in studies of materials to put real-world data into the handbooks that program 

managers consult when writing system specifications. The decision to employ a new 
8

23 Ibid., pp. 6–9. 24 NRC Report, p. 195. 25 Ibid., p. 192. 26 30 U.S.C. 1602(2). 27 30 U.S.C. 1601(a)(6). 28 30 U.S.C. 1602. 29 30 U.S.C. 1603. 30 ‘‘National Materials and Minerals Program Plan and Report to Congress,’’ April 1982. 31 30 U.S.C. Chapter 30. 32 ‘‘New budget to cut NCMC, R&D at Mint and land purchases,’’ Metals Week, January 16, 

1989; p. 3. 33Marilyn Werber, ‘‘Senator Blasts Plan to Abolish NCMC,’’ American Metal Market, April 6, 

1989; p. 2. 

material often requires reworking existing production methods or introducing entirely new processes. Perfecting these can consume years, and the government may 

be alone in its willingness to support a project lasting that long.23

The NRC report notes: ‘‘Many government efforts specifically focus on innovative 

research in materials specialties. These efforts support a variety of worthwhile research in materials science. However, individual agencies award many of these 

grants on an individual or somewhat ad hoc basis that is not the product of a coordinated research strategy. In particular, they rarely address mineral information 

needs or consider mineral supply and demand data or criticality, either short or long 

term.’’ 24 The panel therefore calls for: 

• Theoretical geochemical research to better identify and quantify virgin stocks 

that are potentially minable;

• Research on extraction and processing technology to improve energy efficiency, decrease water use, and enhance material separation;

• Research on remanufacturing and recycling technology, key components in increasing the rate and efficiency of material reuse; and

• The characterization of stocks and flows of materials, especially imports and 

exports, as components of products, and of losses upon product discard. This 

lack of information impedes planning on many levels.25

This proposed program is consistent with the research effort required by the National Materials and Minerals Policy, Research and Development Act of 1980.26

The Policy Framework

Thirty years ago, the National Materials and Minerals Policy, Research and Development Act was enacted because

. . . [T]he United States lacks a coherent national materials policy and a coordinated program to assure the availability of materials critical for national 

economic well-being, national defense, and industrial production, including 

interstate commerce and foreign trade . . ..27

The Congress declared it the President’s responsibility to coordinate a plan of research and other actions that would ‘‘. . . promote an adequate and stable supply 

of materials necessary to maintain national security, economic well-being and industrial production with appropriate attention to a long-term balance between resource 

production, energy use, a healthy environment, natural resources conservation, and 

social needs.28 Our current situation with rare earth minerals indicates that successive Administrations failed to carry out this policy. 

The 1980 Act directed development of a plan that would, among other outcomes, 

produce continuing assessments of demand for minerals and materials in the economy; conduct a ‘‘vigorous’’ research and development effort; collect, analyze and disseminate information; and cooperate with the private sector and other nations.29 In 

April 1982, President Reagan delivered a response to that directive.30

Dissatisfied with the plan and its implementation, Congress decided in the National Critical Materials Act of 1984 to establish a National Critical Materials Council in the Executive Office of the President to serve as the focal point for critical 

materials policy. The Council was tasked to assist the President in carrying out the 

requirements of the 1980 Act.31 Yet by 1989, as the first Bush Administration took 

office, reports indicated that the Council was effectively moribund and that President Reagan’s final budget request recommended that it be eliminated.32 Senator 

Harry Reid took strong exception to the view of Acting Council Chairman Thomas 

Moore ‘‘. . . that there is no need for a centralized agency like the council because 

other agencies already are authorized to address critical material issues.’’ 33 The 

Council survived that brush with extinction, but ultimately succumbed to a rec-
9

34 Ex. Ord. 12881, ‘‘Establishment of the National Science and Technology Council,’’ November 

23, 1993; 58 Fed. Reg. 62491. Dr. Gibbons tied the reorganization both to President Clinton’s 

decision to reduce staff within the White House and to the National Performance Review conducted by Vice President Gore. Bill Loveless, ‘‘Gibbons to Propose Formation of Science and 

Tech Council,’’ Federal Technology Report, September 2, 1993; p. 1. 35Public Law 103–123, October 28, 1993. 36 30 U.S.C. 1604(b)(2) and (3). 37 As scandium and yttrium fail within the same period (column) on the Periodic Table, they 

are often counted as rare earths. The actinide series (the elements between actinium and 

lawrencium) can also be included, but they are noted mostly for their radioactive properties and 

are not the subject of the hearing. 38 James D. Hedrick, 2007 Minerals Yearbook. Rare Earths (Reston: U.S. Geological Survey, 

2009); p. 60.1.

ommendation by President Clinton’s science advisor, Director of the Office of Science 

and Technology Policy (OSTP) Dr. John Gibbons, to terminate the Council and 

transfer its responsibilities to the National Science and Technology Council (NSTC) 

established within OSTP by Executive Order 12881.34 Funding for the Critical Materials Council was dropped in the Fiscal Year 1994 General Government Appropriation Act.35

In 1995 and 1996, the NSTC published reports on The Federal Research and Development Program in Materials Science and Technology. No equivalent report has 

been produced since, however, and inquiries made of OSTP failed to locate the 

‘‘long-range assessments of materials needs related to scientific and technological 

concerns’’ or ‘‘scientific and technical changes over the next five years’’ whose annual 

preparation the statute requires.36 It empirically demonstrates the failure to implement the responsibilities assigned by Congress in the 1980 Act through multiple administrations. The Committee has learned that the situation with rare earth supplies has galvanized OSTP to convene a group of senior officials and subject-matter 

experts from a number of Federal agencies to discuss the potential utility of White 

House coordination in the matter. The Committee has decided to revisit policy 

issues it thought it had settled decades ago to determine how to avoid finding ourselves in similar straits in the future. 

Appendix: The Value of Rare Earth Minerals

The subject of today’s hearing is the 15 elements found in the so-called lanthanide 

series of the Periodic Table.37 The U.S. Geological Survey describes them as ‘‘iron 

gray to silvery lustrous metals that are typically soft, malleable, ductile, and usually 

reactive, especially at elevated temperatures or when finely divided.’’ 38
10

39 NRC Report, p. 133.

These elements are normally obtained as byproducts from mining for other materials. The chemical properties of these elements are quite similar, which complicates 

separating them; the production process must be tailored to the composition of the 

ore extracted from a given deposit. 

Industry tends to divide these into ‘‘light’’ and ‘‘heavy’’ elements, moving from lanthanum to the right along the row. The ‘‘heavy’’ elements tend to have greater economic value. One aspect of the supply problem for the United States is that the 

Mountain Pass deposit lacks many of the heavier elements, whereas the major Chinese producer, the Bayan Obo mine, can provide the more valuable dysprosium and 

terbium. 

Rare earths contribute to a number of industries, usually incorporated into metal 

alloys to enhance electrical or magnetic capabilities. The hearing today will consider 

their major contributions to renewable energy applications. Electrical generators 

need magnets; a smaller magnet producing a stronger field can reduce the final size 

of a wind turbine even as its power output increases. Combining neodymium with 

iron and boron, or samarium with cobalt, can produce these more efficient components. Hybrid automobiles, such as Toyota’s Prius or the new Chevrolet Volt, depend on rechargeable batteries. Incorporating lanthanum into the nickel-metal-hydride battery electrolyte enhances the power output, resulting in increased vehicle 

range even as the battery itself gets smaller and lighter. 

The following chart gives some sense of the breadth of other uses:

Having applied the criticality matrix developed as part of their study, the NRC 

committee concluded:

The relatively high composite weighted score for REs [rare earths] of 3.15 . . . 

[on a scale of 1–4] reflects the diversity of applications for the RE family, the 

importance of those applications, and the steady growth in consumption and has 

led our committee to suggest that disruptions in the availability of REs would 

have a major negative impact on our quality of life . . .. In our view, most of 

the applications are somewhat to very important since substitutes are generally 

less effective.39
11

1Keith Bradsher. ‘‘China Tightens Grip on Rare Minerals.’’ New York Times, September 1, 

2009; pp. B1, B4. 2Public Law 96–499, the National Materials and Minerals Policy, Research and Development 

Act of 1980; enacted October 21, 1980. 

Chairman MILLER. This hearing will now come to order. Good 

afternoon. Welcome to today’s hearing entitled Rare Earth Minerals 

and 21st Century Industry. 

Before we begin, we have a request from the gentleman from 

Colorado, Mr. Coffman, to join the Subcommittee for this hearing, 

and unless there is an objection—hearing none, I would like to invite him to join us on the dais, which he is already there. You may 

remain where you are, and I will remind folks that non-committee 

members are only recognized for questions after all committee 

members have been recognized—which will not be that much of a 

problem today, it does not look like. 

We will now recognize Mr. Gordon is here, and I understand that 

he has votes in another committee shortly, so we will recognize him 

first so he may go to vote. 

Chairman GORDON. Thank you, Chairman Miller, and Ranking 

Member Broun for having this hearing, and I want to thank the 

staff for doing a good job in gathering this material. I do want to 

attend as much as I can. I will be back after these votes. 

Last September, I saw an article on this issue 1 that raised a 

number of questions in my mind about whether the committee—

this committee and Congress were doing enough to support American business and American jobs. 

Rare earth minerals are an essential component of a wide array 

of emerging industries: clean energy, telecommunications, and our 

defense industry. And I noticed that one country, and we are not 

here to beat up on that one country, but nature made one country 

seem to have about 90 percent of these rare earth materials, and 

they seem to be trying to capture the rest of—or a large part of 

that other ten percent, which gives me pause. 

This is not the first time the committee has been concerned with 

the competitive implications of materials such as rare earths. In 

1980, 30 years ago, this committee established a national minerals 

and materials policy.2 One core element in that legislation was the 

call to support for a vigorous, comprehensive and coordinated program for the materials research and development. 

Unfortunately, over successive administrations, the effort to keep 

the program going fell apart. Now, it is time to ask whether we 

need to revive and coordinate an effort to level the playing field on 

rare earths. 

In particular, I want to learn if there is a need for increased research and development to help address this Nation’s rare earth 

shortage or if we need to re-orient the research we already have 

underway. 

Based on my review of the written submissions, it appears that 

we could benefit from more research both in basic and applied materials. 

The rare earths are not the only materials in which the United 

States is largely or exclusively dependent on foreign sources. Ac-
12

3 U.S. Geological Survey. Mineral Commodity Summaries 2009 (Washington: Government 

Printing Office, 2009; p. 6. 

cording to the U.S. Geological Survey, there are 18 other minerals 3

and materials where the United States is completely dependent on 

foreign sources. 

And a bit of a collateral subject that I would like for you to address is, there are those minerals and elements that aren’t rare or 

close to being rare, but go through periods of time where they are 

being very vogue in using manufacturers. So they can become—or 

our resources can become strained during those periods of time. 

And then a new manufacturing process comes in and they may go 

down. Do we need to have some kind of inventory? Do we need to 

be watching out for those other? 

So Mr. Chairman and Mr. Broun, thank you for having this hearing. I think this is going to be very informative and hopefully can 

lead us to some potential legislation that would be good for our national defense and our national competitiveness. 

[The prepared statement of Chairman Gordon follows:]

PREPARED STATEMENT OF CHAIRMAN BART GORDON

I’d like to thank Chairman Miller for calling this hearing. Last September, I saw 

an article on this issue that raised a number of questions in my mind about whether 

the Committee and the Congress were doing enough to support American business 

and American jobs. 

Rare earths are an essential component in a wide array of emerging industries. 

This is not the first time the Committee has been concerned with the competitive 

implications of materials such as rare earths. In 1980—30 years ago—this Committee established a national minerals and materials policy. One core element in 

that legislation was the call to support for ‘‘a vigorous, comprehensive and coordinated program of materials research and development.’’

Unfortunately, over successive administrations, the effort to keep that program 

going fell apart. Now, it is time to ask whether we need to revive a coordinated effort to level the playing field in rare earths. 

In particular, I want to learn if there is a need for increased research and development to help address this Nation’s rare earth shortage, or if we need to re-orient 

the research we already have underway. 

Based on my review of the written submissions, it appears that we could benefit 

from more research both in basic and applied materials sciences. 

Rare earths are not the only materials in which the U.S. is largely or exclusively 

dependent on foreign sources. According to the U.S. Geological Survey, there are 

eighteen other minerals and materials where the United States is completely dependent on foreign sources. 

Someone needs to be telling us what’s going on with those before we read about 

it in the New York Times. Legislation may be the best way to institutionalize a renewed focus and expanded commitment to identifying shortages and needs before 

they become a crisis. 

Again, Mr. Chairman, I appreciate you holding this hearing and expect a stimulating discussion. I yield back my time.

Chairman MILLER. Thank you, Mr. Gordon. I neglected to mention in my quick introduction that this is an issue in which Mr. 

Gordon has shown a great interest and that this hearing is at Mr. 

Gordon’s urging. It is one of the habits of highly effective subcommittee chairs to pay attention to what the Full Committee 

Chair urges, and I have done so in this case. 

The usual order would be Democrat, Republican, Democrat, so 

you want me to go? All right. 

Well, I also want to welcome everyone to this hearing on something that most of us have either never heard of or promptly forgot 

after our test on the periodic table in high school chemistry. Dr. 
13

Broun may have taken it up in medical school, but for me, if I was 

exposed to it at all, it was some considerable time ago. 

Today we will be discussing rare earth elements, which really 

aren’t all that rare, but rare earth elements are crucial to making 

the magnets and batteries needed for the energy industry of the 

21st century. With a little of one of those elements you can get a 

smaller, more powerful magnet, or an aircraft engine that operates 

at higher temperatures or a fiber-optic cable that can carry your 

phone call much greater distances. 

The United States, not so long ago, was the world leader in producing and exporting rare earths. Today, Mr. Gordon delicately 

said another nation—or one nation—controlled much of the world’s 

market. I will be less delicate and name the nation. China is the 

world’s leader. We are having this hearing in part to recognize that 

the Chinese have some different ideas about how to get the greatest benefit from this suddenly valuable commodity beyond simply 

digging it up and selling it to those who want to use it in their 

high-tech manufacturing. China appears to view rare earths as one 

of the incentives they can offer a technology firm scouting for a 

new plant location. How do we compete in attracting and retaining 

manufacturing high-tech firms that need access to rare earth elements in light of China’s current near monopoly and their willingness to use their monopoly power to our disadvantage? 

The most immediate step would be to get some competition back 

into the supply of rare earths. One of our witnesses, Mr. Mark 

Smith, is proposing to do just that. His company owns a mine that 

could produce, has in the past, many rare earth elements if it were 

to reopen. He will describe today not only what it would take to 

restart the mine but also his intent to augment America’s capability to produce the magnets needed for electrical generators in 

wind turbines. 

From what he has told us in preparation for the hearing, he has 

found it hard to get help in making his vision a reality. If we intend to rebuild America’s capability to supply our own needs in 

rare earth materials, if we intend to foster a home-grown capability 

to make the devices that provide wind energy, we can’t succeed unless Mr. Smith and others like him succeed. 

Further, are we investing enough in research, as Mr. Gordon 

said, looking into ways to recover and recycle those materials and 

looking for alternatives or synthetic options? Are there efficiencies 

that could be gained in the use of rare earth minerals? For example, if you work with rare earths at the nanoscale level, could you 

get the same improvements in material performance using 

micrograms where today you need kilograms? There aren’t a lot of 

places where people are currently working to answer those questions even as the answers could go far in helping the United States 

compete in the alternative energy technology industries springing 

up around the world. 

This is not the first time this committee has wrestled with rare 

earth and critical materials issues. It is the first time in my service 

here but not the first time the committee has struggled with the 

issue. 

Our committee established a national policy in minerals and materials three decades ago. That 1980 law requires a continuing as-
14

4See Title II of Public Law 98–373, the National Critical Materials Act of 1984; enacted July 

31, 1984. 5See Executive Order 12881; November 23, 1993 (58 Fed. Reg. 226, pp. 62491–62492). 

sessment of mineral and materials markets to alert us to looming 

problems such as supply disruptions, price spikes and the like. 

Four years later we followed up by establishing the Critical Materials Council 4 to assure that someone was minding the store. 

However, you won’t find the Critical Materials Council in the 

White House organization chart today. It disappeared into the National Science and Technology Council in 1993,5 and the high level 

attention to rare earths, and other materials, dropped off as a priority. 

While preparing for this hearing, we have learned that the Office 

of Science and Technology has recently organized a new interagency committee to respond to our rare earth problems. An obvious question arises. If the Critical Materials Council had been 

maintained, might we be in a better position now to protect our 

Nation’s interests in a strong rare earths industry? How can we reverse the result of that history of neglect? 

The Subcommittee thanks the witnesses for helping us address 

these issues, and I anticipate an interesting discussion when the 

questions begin. 

[The prepared statement of Chairman Miller follows:]

PREPARED STATEMENT OF CHAIRMAN BRAD MILLER

Welcome to our hearing this afternoon on something most of us have never heard 

of at all, or promptly forgot after our test on the Periodic Table in high school chemistry. Today we will be discussing rare earth elements, which aren’t really all that 

rare. Rare earth elements are crucial to making the magnets and batteries needed 

for the energy industry of the 21st Century. With a little of one of these elements 

you can get a smaller, more powerful magnet, or an aircraft engine that operates 

at higher temperatures or a fiber-optic cable that can carry your phone call much 

greater distances. 

The United States, not so long ago, was the world leader in producing and exporting rare earths. Today, China is the world’s leader. We’re having this hearing in 

part to recognize that the Chinese have some different ideas about how to get the 

greatest benefit from this suddenly-valuable commodity beyond simply digging it up 

and selling it to those who want to use it in their high-tech manufacturing. China 

appears to view rare earths as one of the incentives they can offer a technology firm 

scouting for a new plant location. How do we compete in attracting and retaining 

manufacturing firms that need access to rare earth elements in light of China’s current near monopoly, and their willingness to use their monopoly power to our disadvantage? 

The most immediate step would be to get some competition back into the supply 

of rare earths. One of our witnesses, Mr. Mark Smith, is proposing to do just that. 

His company owns a mine that could produce many rare earth elements if it were 

to reopen. He will describe today not only what it will take to restart the mine, but 

also his intent to augment America’s capability to produce the magnets needed for 

electrical generators in wind turbines. From what he has told us in preparation for 

the hearing, he’s found it hard to get help at making his vision a reality. If we intend to rebuild America’s capability to supply its own needs in rare earth materials, 

if we intend to foster a home-grown capability to make the devices that provide 

wind energy, we can’t succeed unless he and others like him succeed. 

Further, are we investing enough in research looking into ways to recover and recycle these materials and looking for alternatives or synthetic options? Are there efficiencies that could be gained in the use of rare earth materials? For example, if 

you work with rare earths on the nanoscale level, could you get the same improvements in material performance using micrograms where today you need kilograms? 

There aren’t a lot of places where people are currently working to answer these 

questions even as the answers could go far in helping America compete in the alternative energy technology industries springing up around the globe. 
15

This is not the first time the Committee has wrestled with rare earth and critical 

materials issues. 

Our Committee established a national policy in minerals and materials three decades ago. That 1980 law required a continuing assessment of mineral and materials 

markets to alert us to looming problems such as supply disruptions, price spikes 

and the like. 

Four years later we followed up by establishing the Critical Materials Council to 

assure that someone was minding the store. However, you won’t find the Critical 

Materials Council in the White House organization chart today; it disappeared into 

the National Science and Technology Council in 1993 and high level attention to 

rare earths, and other materials, fell away as a priority. 

While preparing for this hearing, we have learned that the Office of Science and 

Technology Policy has recently organized a new interagency committee to respond 

to our rare earth problems. An obvious question arises: if the Critical Materials 

Council had been maintained might we be in a better position to protect our nation’s 

interests in a robust rare earths industry? How can we reverse the result of that 

history of neglect? 

The Subcommittee thanks the witnesses for helping us address these issues and 

I anticipate an interesting discussion later. I now recognize Dr. Broun, our Ranking 

Member, for his opening remarks.

Chairman MILLER. I should let everyone be on notice that the 

rule in this Subcommittee is that current Members of the Committee can take credit for all the work of our predecessors, but we 

get none of the blame for any mistakes that they have made. 

I now recognize Dr. Broun, our Ranking Member, for his opening 

statement. 

Mr. BROUN. Thank you, Mr. Chairman. Let me welcome our witnesses here today, and I thank you all for participating. 

The topic of today’s hearing, Rare Earth Minerals, is timely and 

important. Rare earths are slated to play an increasingly important 

role as we seek to meet our future energy needs, to remain competitive in the international marketplace and to continue to defend 

our Nation. Rare earths are essential elements in renewable technologies, such as wind turbine magnets, compact fluorescent light 

bulbs and hybrid vehicle batteries. They are also used in technologies critical to national security like lasers, aircraft engines, 

and fiber optics. After the closure of the Mountain Pass Mine in the 

1990s, the United States became dependent upon foreign sources 

for rare earths with China currently producing roughly 95 percent 

of the world’s supply. They have created a near monopoly and are 

actively exploiting that advantage. 

While China recently eased its export quotas for rare earths, over 

the past three years, they have steadily cut export quotas saying 

they need additional supplies to develop their own domestic clean 

energy in high-tech sectors. 

I hope today’s hearing will call attention to the current state of 

dependence that our Nation finds itself in. We have assembled an 

experienced panel to provide insight into how we can ensure that 

we have access to rare earths in the future. What industrial information is needed to guarantee continued availability of critical 

minerals, what role the Federal Government should play, and what 

further research and development needs to be done in that area. 

With that, Mr. Chairman, I yield back my time so that we can 

hear from this esteemed panel. 

[The prepared statement of Mr. Broun follows:]

PREPARED STATEMENT OF REPRESENTATIVE PAUL C. BROUN

Thank you Mr. Chairman. 
16

Let me welcome our witnesses here today and thank them for appearing. 

The topic of today’s hearing—Rare Earth Minerals—is timely and important. Rare 

Earths are slated to play an increasingly important role as we seek to meet our future energy needs, remain competitive in the international marketplace, and continue to defend our Nation. 

Rare Earth Minerals are essential elements in renewable technologies such as 

wind turbine magnets, compact fluorescent light bulbs, and hybrid vehicle batteries. 

They are also used in technologies critical to national security like lasers, aircraft 

engines, and fiber-optics. 

After the closure of the Mountain Pass mine in the 90s, the United States became 

dependent upon foreign sources for rare earths. With China currently producing 

roughly 95% of the world’s supply, they’ve created a near monopoly and are actively 

exploiting that advantage. While China recently eased its export quotas for Rare 

Earths, over the past three years they have steadily cut export quotas, saying they 

need additional supplies to develop their own domestic clean energy and high-tech 

sectors. I hope today’s hearing will call attention to the current state of dependence 

our nation finds itself in. 

We have assembled a superb panel to provide insight into how we can ensure that 

we have access to Rare Earths in the future, what industrial information is needed 

to guarantee continued availability of critical minerals, what role the Federal Government should play, and what further research and development needs to be done 

in the area. 

With that Mr. Chairman, I yield back my time so that we can hear from this esteemed panel.

Chairman MILLER. Thank you, Dr. Broun. At the time of Mr. 

Gordon’s opening statement and mine, China controlled 90 percent 

of rare earths, and by the time of Dr. Broun’s, it had grown to 95 

percent. That should give us a sense of the urgency with which we 

need to address this issue. 

I now ask unanimous consent for any additional opening statements submitted by members to be included in the record. Without 

objection, that is so ordered. 

It is now my pleasure to introduce our witnesses. First, Dr. Stephen Freiman is currently a member of the National Research 

Council Committee on Critical Mineral Impacts on the U.S. Economy. Dr. Steve Duclos is Chief Scientist and Manager of Material 

Sustainability at General Electric Global Research. Dr. Duclos 

managed GE’s optical materials laboratory where he worked to develop advanced materials. Dr. Karl Gschneidner is Anson Marston 

Distinguished Professor at the Department of Materials Science 

and Engineering at Iowa State University and a Senior Metallurgist at the Ames National Laboratory. And Mr. Terence Stewart 

is a managing partner at the law firm of Stewart and Stewart, specializing in international trade and customs issues. 

I would now like to recognize the gentleman from Colorado, Mr. 

Coffman, to introduce our final witness today. Mr. Coffman? 

Mr. COFFMAN. Thank you, Mr. Chairman. Chairman Miller and 

Ranking Member Broun, thank you for allowing me to introduce 

Mark Smith today. I first became aware of the looming crisis of the 

rare earth mineral supply and manufacturing capability last year. 

In my subsequent study on the problem, I quickly learned that the 

greatest concentration of rare earth minerals, now known as the 

Mountain Pass Mine in California, and the company working that 

mine is headquartered in my district, in Greenwood Village, Colorado. That company is Molycorp Minerals, Limited Liability Corporation, and I spoke about the rare earth supply chain problem 

with Chief Executive Officer Mark Smith. 
17

Prior to Molycorp, Mr. Smith was the President and Chief Executive Officer of Chevron Mining, Incorporated. Mr. Smith was appointed President and Chief Executive Officer in April 2006. Prior 

to this appointment, Mr. Smith was the Vice President for Unocal 

Corporation where he was responsible for managing the real estate 

remediation and mining divisions. Mr. Smith worked for Unocal for 

over 22 years. 

Mr. Smith received his Bachelor of Science degree in agricultural 

engineering from Colorado State University in 1981 and his Juris 

Doctorate from Western State University College of Law in 1990. 

He is a registered professional engineer and an active member of 

the State Bar of California and Colorado. Mr. Smith and his wife 

live in Denver, Colorado. 

As he will testify, the U.S. has significant rare earth resources 

at Molycorp’s rare earth mine at Mountain Pass, California. However, the U.S. no longer possesses the manufacturing capability to 

convert its raw rare earth minerals into the critical metals and 

magnets that power so many key technologies. I hope we can work 

with industry through knowledgeable leaders such as Mr. Smith to 

address the crucial need for rare earth mineral supply and industrial capability. 

Mr. Chairman, I yield back. 

Chairman MILLER. Thank you, Mr. Coffman. As our witnesses 

should know, you will each have five minutes for your spoken testimony, your oral testimony. Your written testimony will be included 

in the record for the hearing. When all have completed your spoken 

testimony, we will begin with questions, and each member will 

have five minutes to question the panel. 

This committee is a Committee on Investigations and Oversight, 

although this hearing is more really like a legislative than investigative hearing, but it is our practice to receive testimony under 

oath. Do any of you have any objection to taking an oath? The 

record should reflect that all nodded in the negative, they had no 

objection. 

You also have the right to be represented by counsel. Do any of 

you have counsel here? And the record should reflect that all 

nodded in the negative with the exception of Mr. Smith who said 

no. And we ask you these questions to put you at ease. 

If you would now please stand and raise your right hand. Do you 

swear to tell the truth and nothing but the truth? The record 

should reflect that all the witnesses said yes and have taken the 

oath. Let us now begin with Dr. Stephen Freiman. Dr. Freiman, 

you are recognized for five minutes. 

STATEMENT OF DR. STEPHEN FREIMAN, PRESIDENT, 

FREIMAN CONSULTING, INC. 

Dr. FREIMAN. Thank you, Mr. Chairman. I retired as Deputy Director of the Materials Science Engineering Laboratory at the National Institutes of Standards and Technology to start a small consulting business. I served on the Committee on Critical Mineral 

Impacts on the U.S. Economy of the National Research Council and 

am testifying in place of the Committee Chairman, Dr. Roderick 

Eggert, who could not be present today. 
18

6 National Research Council. Committee on Critical Mineral Impacts on the U.S. Economy. 

Minerals, Critical Minerals, and the U.S. Economy (Washington: National Academy Press, 

2008). 

As you observed, mineral-based materials are ubiquitous—aluminum in jet aircraft, steel in bridges and buildings, and lead in 

batteries to name but a few examples. 

[The information follows:]

The slide that you see illustrates the expanded use of new minerals over the years in important technologies such as computer 

chips. 

The emergence of new technologies and engineered materials creates the prospect of rapid increases in demand for some minerals 

previously used in relatively small quantities in a small number of 

applications such as lithium in automotive batteries, rare earth elements in permanent magnets and compact fluorescent light bulbs 

and indium and tellurium in photovoltaic solar cells. 

At the same time the supplies of some minerals seemingly are 

becoming increasingly fragile due to more fragmented supply 

chains, increased U.S. import dependence, export restrictions by 

some nations on primary raw materials, and increased industry 

concentration. 

It was in this light that the Standing Committee on Earth Resources of the National Research Council initiated a study and established an ad hoc committee to examine the range of issues important in understanding the evolving role of non-fuel minerals in 

the U.S. economy and the potential impediments to the supplies of 

these minerals to domestic users. The U.S. Geological Survey and 

the National Mining Association sponsored the study, the findings 

of which appear in the volume Minerals, Critical Minerals, and the 

U.S. Economy.6
19

In my testimony today, I highlight two parts of the report, its analytical framework and empirical findings and its recommendations. 

The analytical framework begins by defining critical minerals as 

those that are both essential in use—that is, difficult to substitute 

away from, and subject to supply risk. The idea is illustrated in the 

slide that you see, a criticality matrix. The horizontal axis represents the degree of supply risk associated with a particular mineral, which increases from left to right. Supply risk is higher, the 

greater the concentration of production in a small number of companies, mines, et cetera. The smaller the existing market, the 

greater the reliance on byproduct production of a mineral and the 

smaller the reliance on post-consumer scrap as the source of supply. 

Import dependence by itself is a poor indicator of supply risk. 

Rather it is import dependence combined with concentrated production and perhaps geopolitical risk, the first of the four factors 

above, that lead to supply risk. 

[The information follows:]

In the next slide, the hypothetical mineral A is subject to greater 

supply than mineral B. So the overall risk of criticality increases 
20

as one moves from the lower-left to the upper-right corner of the 

diagram. 

Implementing the framework requires specifying a prospective 

timeframe. From the perspective of a mineral-using company, for 

example, will likely be different than that of a national government. The degree of criticality in the short to medium term, one 

to a few years, up to a decade, depends on existing technologies 

and production facilities. Substituting one material for another in 

a product typically is difficult in the short term, due to constraints 

imposed by existing product designs and production equipment. In 

contrast, over the longer term, the degree of criticality depends 

much more importantly on technological innovation and investments in new technology and equipment on both the demand side 

and the supply side. 

Taking the perspective of the U.S. economy overall and in the 

short to medium term, the Committee evaluated 11 minerals or 

mineral families. It did not assess the criticality of all important 

non-fuel minerals due to limits on time and resources. 

[The information follows:]

Slide three summarizes the Committee’s evaluations, and I am 

sure you have trouble seeing it, but of the 11 minerals those 

deemed most critical, those that plot in the upper-right portion of 

the diagram, are indium, magnesium—manganese, rather—niobium, platinum group metals and rare earth elements. 

A final point: criticality is dynamic. A critical mineral today may 

become less critical either because substitutes of new sources of 

supply are developed. Conversely, a less critical mineral today may 
21

become more critical in the future because of a new use or change 

in supply risk. Such could be the case with lithium which the committee did not evaluate as one of the more non-critical minerals. 

It should be recognized, however, that this analysis tool can be 

no better than the quality and timeliness of the date used to create 

it. And in the interest of time, the committee had several recommendations which you have in your written document, and I 

don’t think I need to read them to you. I would just say, however, 

that my personal opinion that research and development in topics, 

such as recycling of specialty materials used in small quantities in 

emerging uses as well as enhanced coordination of research efforts 

between departments and agencies as suggested in the National 

Materials and Minerals Policy Research and Development Act of 

1980 would also be very beneficial. 

Thank you for allowing me to testify today, and I will be happy 

to answer any questions the Subcommittee may have. 

[The prepared statement of Dr. Freiman follows:]

PREPARED STATEMENT OF STEPHEN FREIMAN

Good afternoon, Mr. Chairman and members of the Committee. My name is Dr. 

Stephen Freiman. A few years ago I retired as Deputy Director of the Materials 

Science and Engineering Laboratory at the National Institute of Standards and 

Technology to start a small consulting business. I served on the Committee on Critical Mineral Impacts on the U.S. Economy of the National Research Council (NRC). 

The Research Council is the operating arm of the National Academy of Sciences, National Academy of Engineering, and the Institute of Medicine of the National Academies, chartered by Congress in 1 863 to advise the government on matters of 

science and technology. 

Mineral-based materials are ubiquitous—aluminum in jet aircraft; steel in bridges 

and buildings, and lead in batteries, to name but a few examples. The emergence 

of new technologies and engineered materials creates the prospect of rapid increases 

in demand for some minerals previously used in relatively small quantities in a 

small number of applications—such as lithium in automotive batteries, rare-earth 

elements in permanent magnets and compact-fluorescent light bulbs, and indium 

and tellurium in photovoltaic solar cells. At the same time, the supplies of some 

minerals seemingly are becoming increasingly fragile due to more fragmented supply chains, increased-U.S. import dependence, export restrictions by some nations 

on primary raw materials, and increased industry concentration. 

It was in this light that the U.S. Geological Survey (USGS) and the National Mining Association sponsored a National Research Council study to examine the range 

of issues important in understanding the evolving role of nonfuel minerals in the 

U.S. economy and the potential impediments to the supplies of these minerals to 

domestic users. The study was conducted under the purview of the NRC’s standing 

Committee on Earth Resources. The findings of the study are contained in the volume Minerals, Critical Minerals, and the U.S. Economy (National Academies Press, 

2008). 

In my testimony today, I highlight two parts of the report: its analytical framework and empirical findings, and its recommendations. In addition, I provide answers to the questions you posed in your letter of invitation to me.

Analytical Framework

The analytical framework begins by defining critical minerals as those that are 

both essential in use (difficult to substitute away from) and subject to supply risk. 

The idea is illustrated in Figure 1, a ‘criticality matrix.’ The horizontal axis represents the degree of supply risk associated with a particular mineral, which increases from left to right. Supply risk is higher (1) the greater the concentration of 

production in a small number of mines, companies, or countries, (2) the smaller the 

existing market (the more vulnerable a market is to being overwhelmed by a rapid 

increase in demand due to a large new application), (3) the greater the reliance on 

byproduct production of a mineral (because the supply of a byproduct is determined 

largely by the economic attractiveness of the associated main product), and (4) the 

smaller the reliance on post-consumer scrap as a source of supply. Import depend-
22

1When considering security of petroleum supplies, rather than minerals, the primary concern 

is costs and resulting impacts on the macroeconomy (the level of economic output). The mineral 

and mineral-using sectors, in contrast, are much smaller, and thus we are not concerned about 

macroeconomic effects of restricted mineral supplies. Rather the concern is both about higher 

input costs for mineral users and, in some cases, physical unavailability of an important input. 

ence, by itself, is a poor indicator of supply risk; rather it is import dependence combined with concentrated production and perhaps geopolitical risk (the first of the 

four factors above) that lead to supply risk. In Figure I, the hypothetical mineral 

A is subject to greater supply risk than mineral B.

Figure I. The Criticality Matrix. Source: Minerals, Critical Minerals, and the U.S. 

Economy (National Academies Press, 2008). 

The vertical axis represents the impact of a supply restriction, which increases 

from bottom to top. Broadly speaking, the impact of a restriction relates directly to 

the ease or difficulty of substituting away from the mineral in question. The more 

difficult substitution is, the greater the impact of a restriction (and vice versa). The 

impact of a supply restriction can take two possible forms: higher costs for users 

(and potentially lower profitability), or physical unavailability (and a ‘‘no-build’’ situation for users).1

The overall degree of criticality increases as one moves from the lower-left to the 

upper-right corner of the diagram. The hypothetical mineral A would be relatively 

more critical than mineral B. 

Implementing the framework requires specifying a perspective and time frame. 

The perspective of a mineral-using company, for example, will likely be different 

than that of a national government. The degree of criticality in the short to medium 

term (one or a few years, up to a decade) depends on existing technologies and production facilities. Substituting one material for another in a product typically is difficult in the short term due to constraints imposed by existing product designs and 

production equipment. Short-term supply risks are a function of the nature and location of existing production. In contrast, over the longer term (a decade or more), 

the degree of criticality depends much more importantly on technological innovation 
23

and investments in new technology and equipment on both the demand side (material substitution) and the supply side (mineral exploration, mining and mineral 

processing, and associated technologies). 

Taking the perspective of the U.S. economy overall and in the short to medium 

term, the committee evaluated eleven minerals or mineral families. It did not assess 

the criticality of all important nonfuel minerals due to limits on time and resources. 

Figure 2 summarizes the committee’s evaluations. Of the eleven minerals, those 

deemed most critical—that is, they plot in the upper-right portion of the diagram—

are indium, manganese, niobium, platinum-group metals, and rare-earth elements.

Figure 2. Criticality Evaluations for Selected Minerals or Mineral Families. 

Source: Minerals, Critical Minerals, and the U.S. Economy (National Academies 

Press, 2008). 

A final point: criticality is dynamic. A critical mineral today may become less critical either because substitutes or new sources of supply are developed. Conversely, 

a less-critical mineral today may become more critical in the future because of a 

new use or a change in supply risk. Such could be the case with lithium, which the 

committee did not evaluate as one of the more-critical minerals in its analysis two 

years ago (Figure 2); if demand for lithium in batteries increases significantly and 

new sources of supply are in politically risky locations, then lithium could plot in 

the more-critical region of the figure in the future.

Recommendations

The committee made three recommendations, which I quote below:

1. The Federal Government should enhance the types of data and information 

it collects, disseminates, and analyzes on minerals and mineral products, especially as these data and information relate to minerals and mineral products that are or may become critical.

2. The Federal Government should continue to carry out the necessary function 

of collecting, disseminating, and analyzing mineral data and information. 

The USGS Minerals Information Team, or whatever Federal unit might later 

be assigned these responsibilities, should have greater authority and autonomy than at present. It also should have sufficient resources to carry out its 

mandate, which would be broader than the Minerals Information Team’s current mandate if the committee’s recommendations are adopted. It should establish formal mechanisms for communicating with users, government and 

nongovernmental organizations or institutes, and the private sector on the 
24

types and quality of data and information it collects, disseminates, and analyzes. It should be organized to have the flexibility to collect, disseminate, 

and analyze additional, nonbasic data. and information, in consultation with 

users, as specific minerals and mineral products become relatively more critical over time (and vice versa).

3. Federal agencies, including the National Science Foundation, Department of 

the Interior (including the USGS), Department of Defense, Department of 

Energy, and Department of Commerce, should develop and fund activities, 

including basic science and policy research, to encourage U.S. innovation in 

the area of critical minerals and materials and to enhance understanding of 

global mineral availability and use.

Questions from the Subcommittee on Investigations and Oversight

What are the major gaps in current Federal policy for minerals and materials?

The committee report does not address this broad question. It does identify gaps 

in minerals information and recommends enhanced collection, dissemination and 

analysis of those parts of the mineral life cycle that are under-represented at 

present including: reserves and subeconomic resources, byproduct and coproduct primary production, stocks and flows of materials available for recycling, in-use stocks, 

material flows, and materials embodied in internationally traded goods. The committee report recommends periodic analysis of mineral criticality over a range of 

minerals.

Which aspects of research and development in minerals and materials require enhanced Federal support, and what form should this support take?

See Recommendation 3 above. As part of its detailed discussion of this recommendation, the committee report also recommends funding scientific, technical, 

and social-scientific research on the entire mineral life cycle. It recommends cooperative programs involving academic organizations, industry, and government to enhance education and applied research.

How should the Federal Government improve the collection of information on minerals and materials markets?

See Recommendation 2 above. As part of its more detailed discussion of this recommendation, the committee report suggests that the Federal Government consider 

the Energy Information Administration, which has status as a principal statistical 

agency, as a potential model for minerals information, dissemination, and analysis. 

Whatever agency or unit is responsible for minerals information, it needs greater 

autonomy and authority than at present.

Facing dynamic changes in supply and demand for particular minerals and materials in a global economy, what are the most useful contributions the Federal 

Government can employ to assist industry?

My personal opinion is that Federal. minerals and materials policy should focus 

on: (1) encouraging undistorted international trade, (2) ensuring that policies and 

procedures for domestic mineral development appropriately integrate commercial, 

environmental, and social considerations, (3) facilitating provision of information on 

which private and public decisions are made, and (4) facilitating research and development, including on recycling of specialty materials used in small quantities in 

emerging uses. 

Thank you for the opportunity to testify today. I would be happy to address any 

questions the subcommittee may have.

BIOGRAPHY FOR STEPHEN FREIMAN

Dr. Freiman graduated from the Georgia Institute of Technology with a B. ChE. 

and a M. S. in Metallurgy. After receiving a Ph.D. in Materials Science and Engineering from the University of Florida in 1968, Dr. Freiman worked at the IIT Research Institute and the Naval Research Laboratory. He joined NIST (then NBS) 

in 1978. From 1992 to 2002 Dr. Freiman served as Chief of the Ceramics Division 

at NIST. Prior to his leaving NIST in 2006 to start a consulting business (Freiman 

Consulting Inc.), Dr. Stephen Freiman served for four years as Deputy Director of 

the Materials Science and Engineering. 

Dr. Freiman has published over 200 scientific papers focusing primarily on the 

mechanical properties of brittle materials. He was the first Chairman of the ASTM 
25

Subcommittee addressing brittle fracture and a past Chair of the Steering Committee of the Versailles Project for Advanced Materials and Standards. Dr. Freiman 

served as Treasurer, and President of the American Ceramic Society, and is a Fellow and Distinguished Life Member of the Society.

Chairman MILLER. Thank you, Dr. Freiman. Dr. Steven Duclos. 

STATEMENT OF DR. STEVEN J. DUCLOS, CHIEF SCIENTIST 

AND MANAGER, MATERIAL SUSTAINABILITY, GENERAL 

ELECTRIC GLOBAL RESEARCH 

Dr. DUCLOS. Chairman Miller, Ranking Member Broun, and 

Members of the Committee, it is my privilege to share with you 

GE’s thoughts on how we manage shortages of materials critical to 

our manufacturing and what steps the government can take to help 

industry minimize the risk associated with these shortages. 

This hearing addresses an issue that is critical to the future 

wellbeing of U.S. manufacturing. Without development of new supplies and focused research in materials and manufacturing, such 

supply challenges could undermine efforts to meet the Nation’s future needs in defense, energy, health care and transportation. 

I would like to share with you GE’s strategy to address its material needs as well as outline a series of recommendations for how 

the government can strengthen its support of industry in this area. 

GE uses 70 of the first 83 elements on the periodic table. As 

Chief Scientist and Manager of Material Sustainability at GE Global Research, is it my job to understand the latest trends in materials and to work with our businesses to manage our materials 

needs in a sustainable way. 

To evaluate risks associated with material shortages, GE uses a 

modification of the assessment tool developed by the National Research Council in 2008. Risks are quantified by element in two categories, price and supply risk and impact of a restricted supply to 

GE. Those elements deemed to have high risk in both categories 

are identified as materials needing further study and a detailed 

plan to mitigate supply risks. For this assessment, we extensively 

used data from the U.S. Geological Survey’s mineral information 

team as well as in-house knowledge of supply dynamics. 

There is a broad spectrum of strategies that can be implemented 

to minimize the risk of those elements identified as being at high 

risk. These include, number one, improvements in the global supply chain, including the development of alternate sources, longterm supply agreements and development of inventory of materials. 

Number two, improvements of material utilization in manufacturing and reduction of manufacturing waste. Number three, development of recycling technologies that extract at-risk elements from 

both end-of-life products and manufacturing yield loss. This includes the design of products that are more easily recycled and 

service which improves materials service life. Number four, development of materials and systems technologies that either greatly 

reduce or even eliminate the need for the element altogether. Several examples of these are discussed in my written testimony 

where GE has successfully taken this approach. This includes the 

replacement of helium with boron in neutron detectors and the reduction by a factor of two in the use of rhenium content in superalloys for our jet engines, a development that leveraged past re-
26

search programs supported by DARPA, the Air Force, the Navy 

and NASA. 

And finally, number five, reassessment of the entire system. 

Often more than one technology can address a customer’s need, 

and each will use a different subset of the periodic table. The solution to the materials constraint can involve using a new or alternate technology. An example is the development of energy-efficient 

LED lighting technologies as supported by the Department of Energy that offer a 70-times reduction in the use of rare earth elements for lighting. 

Attention needs to be paid to all five of these solutions outlined 

above. The shorter term sourcing and manufacturing solutions are 

critical to buy time for the more optimal recycling and material 

substitution solutions. They tend to be longer term, higher risk and 

require risk mitigation strategies involving parallel paths. The government can help by enabling public/private collaborations that 

provide both materials understanding and resources that enable 

these material substitution approaches. Anticipated growth in the 

use of rare earths for efficient energy and transportation technologies mandates that we develop the full range of five solutions 

outlined above. 

We make the following recommendations for the government to 

strengthen its support of efforts to minimize the increasing risk associated with material shortages. 

Number one, appoint a lead agency with ownership of early risk 

assessment and authority to fund the five solutions. The government needs to enhance its ability to monitor, assess and coordinate 

a response to identified issue. 

Number two, sustained funding for research focusing on material 

substitutions to lay the foundation upon which solutions are developed. Collaborative efforts between academia, government laboratories and industry will help ensure that manufacturing compatible 

solutions are available to industry in time to avert disruptions in 

U.S. manufacturing. 

Number three, with global economic growth resulting in increased pressure on material stocks, it is imperative that there be 

a sustained support of the government to develop the full set of solutions outlined in this testimony, new material sources, recycling 

technologies, manufacturing efficiency, alternate materials and new 

system solutions. 

In closing, we believe a more coordinated approach and sustained 

investment from the government in materials and manufacturing 

technologies is needed to provide industry with the flexibility that 

makes U.S. manufacturing less vulnerable to material shortages. 

Thank you for your time, and I look forward to answering your 

questions. 

[The prepared statement of Dr. Duclos follows:]

PREPARED STATEMENT OF STEVEN J. DUCLOS

Introduction

Chairman Miller and members of the Committee, it is a privilege to share with 

you GE’s thoughts on how we manage shortages of precious materials and commodities critical to our manufacturing operations and what steps the Federal Government can take to help industry minimize the risks and issues associated with these 

shortages.
27

Background

GE is a diversified global infrastructure, finance, and media company that provides a wide array of products to meet the world’s essential needs. From energy and 

water to transportation and healthcare, we are driving advanced technology and 

product solutions in key industries central to providing a cleaner, more sustainable 

future for our nation and the world. 

At the core of every GE product are the materials that make up that product. To 

put GE’s material usage in perspective, we use at least 70 of the first 83 elements 

listed in the Periodic Table of Elements. In actual dollars, we spend $40 billion annually on materials. 10% of this is for the direct purchase of metals and alloys. In 

the specific case of the rare earth elements, we use these elements in our 

Healthcare, Lighting, Energy, Motors, and Transportation products. 

Nowhere in the company is our understanding of materials more evident than at 

GE Global Research, the hub of technology development for all of GE’s businesses. 

Located just outside of Albany NY, GE scientists and engineers have been responsible for major material breakthroughs throughout our 110-year history. One of GE’s 

earliest research pioneers, William Coolidge, discovered a new filament material, 

based on ductile tungsten, in 1909, which enabled us to bring the light bulb to every 

home. Just four years later, he developed a safe x-ray tube design for medical imaging. In 1953, GE scientist Daniel Fox developed LEXAN plastic, which is used in 

today’s CDs and DVDs. It was even used in the helmets that U.S. astronauts Neil 

Armstrong and Buzz Aldrin wore when they walked on the moon. More recently, 

GE scientists created a unique scintillator material, called Gemstone, which is the 

key component in GE Healthcare’s newest High-Definition Computed Tomography 

(CT) medical imaging scanner that enables faster and higher resolution imaging. 

Because materials are so fundamental to everything we do as a company, we are 

constantly watching, evaluating, and anticipating supply changes with respect to 

materials that are vital to GE’s business interests. On the proactive side, we invest 

a great deal of time and resources to develop new materials and processes that help 

reduce our dependence on any given material and increase our flexibility in product 

design choices. 

We have more than 35,000 scientists and engineers working for GE in the U.S. 

and around the globe, with extensive expertise in materials development, system design, and manufacturing. As Chief Scientist and Manager of Material Sustainability 

at GE Global Research, it’s my job to understand the latest trends in materials and 

to help identify and support new R&D projects with our businesses to manage our 

needs in a sustainable way. 

Chairman Miller, I commend you for convening this hearing to discuss an issue 

that is vital to the future well being of U.S. manufacturing. Without development 

of new supplies and more focused research in materials and manufacturing, such 

supply challenges could seriously undermine efforts to meet the nation’s future 

needs in energy, healthcare, and transportation. What I would like to do now is 

share with you GE’s strategy to address its materials needs, as well as outline a 

series of recommendations and indeed, a framework, for how the Federal Government can strengthen its support of academia, government, and industry in this area.

Comments and Recommendations

The process that GE uses to evaluate the risks associated with material shortages 

is a modification of an assessment tool developed by the National Research Council 

in 2008. Risks are quantified element by element in two categories: ‘‘Price and Supply Risk’’, and ‘‘Impact of a Restricted Supply on GE’’. Those elements deemed to 

have high risk in both categories are identified as materials needing further study 

and a detailed plan to mitigate supply risks. The ‘‘Price and Supply Risk’’ category 

includes an assessment of demand and supply dynamics, price volatility, geopolitics, 

and co-production. Here we extensively use data from the U.S. Geological Survey’s 

Minerals Information Team, as well as in-house knowledge of supply dynamics and 

current and future uses of the element. The ‘‘Impact to GE’’ category includes an 

assessment of our volume of usage compared to the world supply, criticality to products, and impact on revenue of products containing the element. While we find this 

approach adequate at present, we are working with researchers at Yale University 

who are in the process of developing a more rigorous methodology for assessing the 

criticality of metals. Through these collaborations, we anticipate being able to predict with much greater confidence the level of criticality of particular elements for 

GE’s uses. 

Once an element is identified as high risk, a comprehensive strategy is developed 

to reduce this risk. Such a strategy can include improvements in the supply chain, 

improvements in manufacturing efficiency, as well as research and development into 
28

new materials and recycling opportunities. Often, a combination of several of these 

may need to be implemented. 

Improvements in the global supply chain can involve the development of alternate 

sources, as well as the development of long-term supply agreements that allow suppliers a better understanding of our future needs. In addition, for elements that are 

environmentally stable, we can inventory materials in order to mitigate short-term 

supply issues. 

Improvements in manufacturing technologies can also be developed. In many 

cases where a manufacturing process was designed during a time when the availability of a raw material was not a concern, alternate processes can be developed 

and implemented that greatly improve its material utilization. Development of nearnet-shape manufacturing technologies and implementation of recycling programs to 

recover waste materials from a manufacturing line are two examples of improvements than can be made in material utilization. 

An optimal solution is to develop technology that either greatly reduces the use 

of the at-risk element or eliminates the need for the element altogether. While there 

are cases where the properties imparted by the element are uniquely suitable to a 

particular application, I can cite many examples where GE has been able to invent 

alternate materials, or use already existing alternate materials to greatly minimize 

our risk. At times this may require a redesign of the system utilizing the material 

to compensate for the modified properties of the substitute material. Let’s look at 

a few illustrative recent examples. 

The first involves Helium-3, a gaseous isotope of Helium used by GE Energy’s 

Reuter Stokes business in building neutron sensors for detecting special nuclear materials at the nation’s ports and borders. The supply of Helium-3 has been diminishing since 2001 due to a simultaneous increase in need for neutron detection for 

security, and reduced availability as Helium-3 production has dwindled. GE has addressed this problem in two ways. The first was to develop the capability to recover, 

purify and reuse the Helium-3 from detectors removed from decommissioned equipment. The second was the accelerated development of Boron-10 based detectors that 

eliminate the need for Helium-3 in Radiation Portal Monitors. DNDO and the Pacific Northwest National Lab are currently evaluating these new detectors. 

A second example involves Rhenium, an element used at several percent in super 

alloys for high efficiency aircraft engines and electricity generating turbines. Faced 

with a six-fold price increase during a three-year stretch from 2005 to 2008 and concerns that its supply would limit our ability to produce our engines, GE embarked 

on multi-year research programs to develop the capability of recycling manufacturing scrap and end-of-life components. A significant materials development effort 

was also undertaken to develop and certify new alloys that require only one-half the 

amount of Rhenium, as well as no Rhenium at all. This development leveraged past 

research and development programs supported by DARPA, the Air Force, the Navy, 

and NASA. The Department of Defense supported qualification of our reduced Rhenium engine components for their applications. 

By developing alternate materials, we created greater design flexibility that can 

be critical to overcoming material availability constraints. But pursuing this path 

is not easy and presents significant challenges that need to be addressed. Because 

the materials development and certification process takes several years, executing 

these solutions requires advanced warning of impending problems. For this reason, 

having shorter term sourcing and manufacturing solutions is critical in order to 

‘‘buy time’’ for the longer term solutions to come to fruition. In addition, such material development projects tend to be higher risk and require risk mitigation strategies and parallel paths. The Federal Government can help by enabling public-private collaborations that provide both the materials understanding and the resources 

to attempt higher risk approaches. Both are required to increase our chances of success in minimizing the use of a given element. 

Another approach to minimizing the use of an element over the long term is to 

assure that as much life as possible is obtained from the parts and systems that 

contain these materials. Designing in serviceability of such parts reduces the need 

for additional material for replacement parts. The basic understanding of life-limiting materials degradation mechanisms can be critical to extending the useful life 

of parts, particularly those exposed to extreme conditions. It is these parts that tend 

to be made of the most sophisticated materials, often times containing scarce raw 

materials. 

A complete solution often requires a reassessment of the entire system that uses 

a raw material that is at risk. Often, more than one technology can address a customer’s need. Each of these technologies will use a certain subset of the periodic 

table—and the solution to the raw material constraint may involve using a new or 

alternate technology. Efficient lighting systems provide an excellent example of this 
29

type of approach. Linear fluorescent lamps use several rare earth elements. In fact, 

they are one of the largest consumers of Terbium, a rare earth element that along 

with Dysprosium is also used to improve the performance of high-strength permanent magnets. Light emitting diodes (LEDs), a new lighting technology whose development is being supported by the Department of Energy, uses roughly one-hundredth the amount of rare earth material per unit of luminosity, and no Terbium. 

Organic light emitting diodes (OLEDs), an even more advanced lighting technology, 

promises to use no rare earth elements at all. In order to ‘‘buy time’’ for the LED 

and OLED technologies to mature, optimization of rare earth usage in current fluorescent lamps can also be considered. This example shows how a systems approach 

can minimize the risk of raw materials constraints. 

In addition to high efficiency lighting, GE uses rare earth elements in our medical 

imaging systems and in wind turbine generators. Rare earth permanent magnets 

are a key technology in high power density motors. These motors are vital to the 

nation’s vision for the electrification of transportation, including automobiles, aircraft, locomotives, and large off-road vehicles. The anticipated growth in the use of 

permanent magnets and other rare earth based materials for efficient energy technologies mandates that we develop a broad base solution to possible raw material 

shortages. These solutions require the development of the sourcing, manufacturing 

efficiency, recycling, and material substitution approaches outlined above. 

Based on our past experience I would like to emphasize the following aspects that 

are important to consider when addressing material constraints:

1) Early identification of the issue—technical development of a complete solution can be hampered by not having the time required to develop some of 

the longer term solutions.

2) Material understanding is critical—with a focus on those elements identified 

as being at risk, the understanding of materials and chemical sciences enable acceleration of the most complete solutions around substitution. Focused 

research on viable approaches to substitution and usage minimization greatly increases the suite of options from which solutions can be selected.

3) Each element is different and some problems are easier to solve than others—typically a unique solution will be needed for each element and each 

use of that element. While basic understanding provides a foundation from 

which solutions can be developed, it is important that each solution be compatible with real life manufacturing and system design. A specific elemental 

restriction can be easier to solve if it involves few applications and has a 

greater flexibility of supply. Future raw materials issues will likely have increased complexity as they become based on global shortages of minerals 

that are more broadly used throughout society.

Given increasing challenges around the sustainability of materials, it will be critical for the Federal Government to strengthen its support of efforts to minimize the 

risks and issues associated with material shortages. Based on the discussion above, 

we make the following recommendations for the Federal Government:

1) Appoint a lead agency with ownership of early assessment and authority to 

fund solutions—given the need for early identification of future issues, we 

recommend that the government enhance its ability to monitor and assess 

industrial materials supply, both short term and long term, as well as coordinate a response to identified issues. Collaborative efforts between academia, 

government laboratories, and industry will help ensure that manufacturing 

compatible solutions are available to industry in time to avert disruptions in 

U.S. manufacturing.

2) Sustained funding for research focusing on material substitutions—Federal 

Government support of materials research will be critical to laying the foundation upon which solutions are developed when materials supplies become 

strained. These complex problems will require collaborative involvement of 

academic and government laboratories with direct involvement of industry to 

ensure solutions are manufacturable.

3) With global economic growth resulting in increased pressure on material 

stocks, along with increased complexity of the needed resolutions, it is imperative that the solutions discussed in this testimony: recycling technologies, 

development of alternate materials, new systems solutions, and manufacturing efficiency have sustained support. This will require investment in 

long-term and high-risk research and development—and the Federal Government’s support of these will be of increasing criticality as material usage 

grows globally.
30

Conclusion

In closing, we believe that a more coordinated approach and sustained level of investment from the Federal Government in materials science and manufacturing 

technologies is required to accelerate new material breakthroughs that provide businesses with more flexibility and make us less vulnerable to material shortages. 

Chairman Miller and Members of the Committee, thank you for your time and the 

opportunity to provide our comments and recommendations.

BIOGRAPHY FOR STEVEN J. DUCLOS

Steven Duclos is a Chief Scientist at the General Electric Global Research Center 

in Niskayuna, New York, and manages GE’s Material Sustainability Initiative. The 

Material Sustainability initiative addresses GE’s risks in the availability and sustainability of the company’s raw material supply, by developing technologies that reduce the use, support the recycling, and enable substitution of lower-risk materials. 

From 2000 to 2008 Dr. Duclos managed the Optical Materials Laboratory, also at 

GE GRC. The laboratory is responsible for development of advanced materials for 

a broad spectrum of GE businesses, including its Lighting and Healthcare businesses. From 1994 to 2004 Dr. Duclos served on the Executive Committee of the 

New York State Section of the American Physical Society. Prior to joining the GE 

Global Research Center in 1991 he was a post-doc at AT&T Bell Laboratories in 

Murray Hill, New Jersey. 

Dr. Duclos received his B.S. degree in Physics in 1984 from Washington University in St. Louis, M.S. degree in Physics from Cornell University in Ithaca, New 

York in 1987, and Ph.D. in Physics from Cornell in 1990. He is the recipient of an 

AT&T Bell Laboratories Pre-doctoral Fellowship and the 1997 Albert W. Hull 

Award, GE Global Research’s highest award for early career achievement.

Chairman MILLER. Thank you, Dr. Duclos. Dr. Gschneidner. 

STATEMENT OF DR. KARL A. GSCHNEIDNER, JR., ANSON 

MARSTON DISTINGUISHED PROFESSOR, DEPARTMENT OF 

MATERIALS SCIENCE AND ENGINEERING, IOWA STATE UNIVERSITY 

Dr. GSCHNEIDNER. Good afternoon, Mr. Chairman, members of 

the Subcommittee, ladies and gentlemen. I am pleased to have this 

opportunity to present my views on the rare earth crisis and what 

can be done to alleviate this situation. 

My brief responses to your questions are as follows. More detailed information will be found in my written statement. 

The first question was, how has rare earth research at the Ames 

Laboratory changed over time? Rare earth science and technology 

at Ames Laboratory, the U.S. Department of Energy, had its beginning in World War II when Iowa State College assisted the war effort by supplying 1/3 of the uranium metal, two tons, necessary to 

make the first nuclear reactor go critical at the University of Chicago in 1942. By the end of the war, two million pounds of uranium 

and 600,000 pounds of thorium were produced for the Manhattan 

Project. 

Work on rare earths was a natural outgrowth of the war effort. 

Initially there was a wide spectrum of research being carried out. 

This includes separation, analytical, solid state chemistry; process, 

physical and mechanical metallurgy; ceramics; and condensed matter physics. Many successes were achieved and technology was 

turned over to industry, but as science matured, programmatic 

changes occurred and a number of research areas were phased out. 

This included separation and—chemistry, process and mechanical 

metallurgy, and ceramics. The remaining areas are still strong, but 

the power person levels have diminished. 
31

However, the establishment of the Materials Preparation Center, 

a DOE Basic Energy Scientist Specialized Research Center, has alleviated some of this degradation in process metallurgy. 

I would like to mention a new and exciting development, the revolutionary method of preparing neodymium master alloy to make 

a neodymium-iron-boron permanent magnet. The cost of this master alloy is about half of that of neodymium. Furthermore, it is a 

very green technology with no byproducts compared to conventional 

processes which have byproducts which need to be disposed of in 

an environmentally safe manner. 

I have in my hand the second neodymium-iron-boron magnet 

made which was just produced within the last month, and so they 

are working with that technology. 

The second question, what would be required to conduct a robust 

program of basic research on rare earths? We are well-aware of the 

impact of Chinese activities in the rare earth market as noted by 

other invited speakers at this House hearing. In addition to forcing 

the United States and rare earth permanent magnet manufacturers out of business, the country now faces a shortage of trained scientists, engineers, technicians and a lack of innovations in a hightech area which are critical to our country’s future needs. 

A research center which alleviates both of these problems is the 

best way to solve this rare earth crisis, an educational institute 

which has a long and strong tradition of carrying out research on 

all aspects of rare earth materials with a strong educational component would be an ideal situation. A National Research Center on 

Rare Earths and Energy should be established with Federal and 

state support, supplemented by U.S. industry as the rare earth industry revitalizes. The center would employ about 30 full-time employees. This research center would be a national resource for rare 

earth science technology and applications and would provide support of research activities at other institutions via subcontracts 

complementing the activities of the center. 

The major emphasis of the center would be directed basic research; proprietary research paid by the organizations that request 

it, would also be a part of the center’s mandate. The center would 

have an advisory board made up of representatives from the university, government, industry and the general public to oversee, 

guide and refocus as needed the research being conducted. 

I would like to suggest to this House committee they consider a 

second national center on research on magnetic cooling. Cooling 

below room temperature accounts for 15 percent of the total energy 

consumed in the United States. Magnetic refrigeration is new, advanced, highly technical, energy efficient, green technology for cooling and climate control, for refrigerating and freezing. See Section 

6.5 of my written response. It is about 20 percent more efficient as 

a green technology because it eliminates harmful gases and reduces 

energy consumption. If we were able to switch all cooling process 

to magnetic refrigeration at once, we would reduce the energy consumption by five percent. There are a lot of hurdles that need to 

be overcome, and the United States needs to put together a strong, 

cohesive effort to retain our disappearing leadership in this technology by assembling a National Center for Magnetic Cooling. 
32

Europe and China are moving rapidly in this area. Denmark has 

assembled a Magnetic Refrigeration National Research Center at 

Riso, so far the only one in the world. This center should be structured similar to what has been posed for the National Research 

Center on Rare Earths and Energy. The question is, are we going 

to give up our lead position and be a second-rate country or will 

we lead the rest of the world? I hope and pray that our answer is 

that we are going to show the world that we are number one. 

Question three, how can knowledge on rare earth be transferred 

to domestic companies? Knowledge is exported from research institutes, universities to industry through transfer of intellectual property and know-how. Research findings are disseminated as published articles in journals, presentations at conferences and electronic media and, if exciting enough, via news conferences, press 

releases, assuming the new results are not patentable. If research 

has some potential commercial value, this new information should 

be made available as soon as possible after filing a patent disclosure. However, before a patent disclosure is filed, one could disseminate the results to companies that might be interested by contacting them to say, one, if they are interested, two, if they would 

sign a nondisclosure agreement, and if they answer yes to both one 

and two, then the information could be disclosed to them. 

The second highly effective route is the transfer of the skills and 

knowledge gained by university students to their industrial employers after graduation. 

The fourth and last question is, how actively are U.S. scientists 

researching extraction, processing, substitution, recycling, and how 

is this compared to other countries? Rare earth research in the 

USA—and mineral extraction, rare earth separation, processing of 

oxides into metal, metallic alloys, and other useful forms, substitution, recycling is virtually zero. Today, some work is carried out 

at various DOE laboratories on rare earth and actinide separation 

chemistry directed toward treating waste nuclear products and environmental clean-up of radioactive minerals in the soils. This research may be beneficial to improving the rare earth separation 

processes on a commercial scale. 

Some research at various universities might be considered to be 

useful in finding substitutes for a given rare earth metal in a hightech application, but generally the particular rare earth properties 

are so unique it is difficult to find another substitute. And finally, 

the Chinese have two large research laboratories which have significant research and development activities that are devoted to the 

above topics. They are the General Research Institute for Nonferrous Metals in Beijing, and the Baotou Research Institute of 

Rare Earth in Baotou, Inner Mongolia. The former is a much larger 

organization than the Baotou group, but the rare earth activity is 

smaller. The Baotou Research Institute is the largest rare earth research group in the world. Baotou is located about 120 miles from 

the large rare earth deposit in Inner Mongolia. 

Thank you for allowing me to participate in this House committee hearing this afternoon. Thank you. 

[The prepared statement of Dr. Gschneidner follows:]
33
34
35

a Coined by Chemical and Engineering News in the 1970s. 

b At that time ISU was known as Iowa State College, but I will use ISU in this presentation. 

The name change officially occurred in 1959. 

PREPARED STATEMENT OF KARL A. GSCHNEIDNER, JR. 

1. Introduction

The Ames Laboratory (AL) is the smallest of DOE’s (Department of Energy) seventeen national laboratories. It is a single-program laboratory with about 78% of 

DOE’s funding from the Office of Basic Energy Sciences (BES). Additional non-DOE 

income of about $7M is derived from contracts, grants, Cooperative Research and 

Development Agreements (CRADAs) and Work for Others (WFO) arrangements. 

The AL is fully integrated with Iowa State University (ISU) and its buildings are 

right on the campus and several are directly connected with ISU buildings. All AL 

personnel are ISU employees, and many of the lead scientists (23) have joint appointments with various academic departments. There are about 140 scientists and 

engineers, 260 graduate and undergraduate students, another 240 visiting scientists, facility users, and associates, and 180 support personnel, for a total of about 

440 employees (or about 300 full-time equivalent employees) and 410 associates 

(non-payroll). Of the scientific staff about 20% are directly involved in rare earth 

research and development activities, including materials science, condensed matter 

physics, and materials chemistry.

2. A Brief History—How Did Rare Earths get to Ames?

Many persons may wonder how the Mecca of rare earths a ever ended up on the 

picturesque ISU campus—an oasis amongst the corn and soy bean fields of central 

Iowa. The story begins in late 1930s when Frank H. Spedding was searching for 

a permanent academic position after receiving his Ph.D. from the University of California in 1929 under G.N. Lewis. His Ph.D. thesis dealt with the physical properties 

of rare earth materials at low temperature. He spent a number of years in temporary jobs, including two years in Europe, where he worked with several Nobel 

prize winners, including Niel Bohr. In 1937, while he was occupied at Cornell University working with a future Nobel prize winner, Hans Bethe, he was offered a permanent position at ISU b as an associate professor, and he remained at ISU until 

he retired in 1972. Frank Spedding was primarily a spectroscopist, but he had to 

separate and purify his rare earth samples from the other rare earth elements in 

order to carry out his optical measurements, which are very sensitive to the presence of other rare earth impurities. Based on his experience with rare earth (or 4f) 

chemistry he was asked by A.H. Compton of the University of Chicago to work with 

actinide (or 5f) materials to assist the team of physicists to build the first nuclear 

reactor under the stands of Stagg Field at the University of Chicago. Spedding was 

appointed the Director of Chemistry in the Chicago Project. One of the main goals 

of the Project was to purify uranium from its ores and then to convert the oxide 

to the metal—six tons were needed, which seemed like mission impossible since only 

a few grams of uranium metal had been produced before World War II. By late summer in 1942 the delivery of the uranium was behind schedule and Frank Spedding 

offered to use a different approach to make the metal via a metallothermic reduction 

of uranium tetrafluoride, UF4. It was successful, and as an added bonus it was 

purer than the metal produced by other organizations. By November, the ISU team 

sent two tons of uranium cylinders (2′′ diameter × 2′′ long) to Chicago. The addition 

of these two tons to the four tons delivered previously allowed the reactor to go critical on December 2, 1942. This stellar contribution to the Manhattan Project was 

recognized when ISU and Spedding’s team were awarded the ‘‘Army and Navy E 

for Effort with four stars’’ pennant on October 12, 1945; the only university (college) 

in the country to receive this prestigious honor. Since the Ames ingots were purer 

and less expensive to produce, the Manhattan District asked three companies to 

take over the Ames fluoride process and make large amounts of uranium for the 

Oak Ridge and Hanford reactors. But since it took time to get the facilities up and 

running the ISU group was asked to continue to produce uranium metal. More than 

two million pounds were produced by the end of World War H, and by December 

1945 industry took over. The Ames process, albeit somewhat modified, is still in use 

today [1]. 

Soon thereafter, a new requirement arose in the war effort. Thorium metal was 

needed for another type of reactor, and Spedding and his co-workers were asked to 

develop a process for making thorium metal. Again they were successful and the 

Ames thorium process was turned over to industry. In the meanwhile, 600,000 

pounds of thorium were produced [1]. 
36

During the late war years, research on developing methods of separating the rare 

earth elements was begun at several Manhattan District laboratories because some 

of the rare earth elements were among fission products which would absorb neutrons because of their high neutron capture cross-section and eventually would 

cause the reactor to shut down. Also the pure rare earth elements were needed to 

study their chemical and metallurgical behaviors to help actinide chemists and 

physicists understand the trans-uranium elements because of the expected similarities in the properties of the two series of elements. It was during these years that 

Spedding and co-workers developed the ion exchange method for separating rare 

earths, which was in commercial use for many years after World War H, until displaced by liquid-liquid extraction procedures. The ion exchange process is still in use 

today to obtain the very highest purity rare earth elements (99.9999% pure), which 

are primarily used in optical applications such as lasers and optical signal multipliers [1]. 

On May, 17, 1947 the Ames Laboratory became one of the Atomic Energy Commission (AEC) laboratories to promote the peaceful uses of atomic energy and to do 

research to increase our understanding and knowledge of the chemistry, physics, 

and nuclear behavior of the lesser known and uncommon elements, including the 

rare earths [1]. 

Additional information about the Ames Laboratory and Frank H. Spedding during 

World War II and the early post-World War II years can be found in several articles 

authored by I.E. Goldman [2,3,4] and papers by J.D. Corbett [5] and by S.R. Karsjen 

[6].

3. The Golden Age of Rare Earth Research

The time span of the 1950s through the 1970s was the golden age of rare earth 

research at the Ames Laboratory. At that time there was a very wide spectrum of 

research being carried out ranging from separation chemistry to analytical chemistry to process and physical metallurgy to solid state experimental physics to theoretical first principle calculations.

3.1 Separation Chemistry

The discovery of using ion exchange chromatography to separate and purify the 

rare earths was further refined and improved in the 1950s through the 1960s. A 

large pilot plant was set up to supply researchers at the Ames Laboratory and other 

organizations, including many of the AECs national laboratories, with high purity 

individual rare earths, to carry out fundamental and applied research on various 

chemical compounds and the pure metals (see §§ 3.3–3.6). In addition these ion exchange columns were used to separate the other rare earths from yttrium (also a 

rare earth element) which was to be used in the nuclear aircraft (see § 3.3).

3.2 Analytical Chemistry

In order to verify the chemical purity of the separated products new and more 

sensitive chemical and physico-chemical analytical methods were developed to detect 

impurities of both rare earth and other non-rare earth elements at the part per million level. This included wet chemistry, atomic emission and atomic absorption spectroscopy, laser ion mass spectrometry, vacuum and inert gas fusion, and combustion 

analysis. This research also led to the development of inductively coupled plasma 

(ICP)-atomic emission (AE) in the late 1970s, and ICP-mass spectrometry (MS), 

which occurred in the early 1980s. The ICP–MS technology was turned over to industry and today is still one of the most versatile and utilized analytical techniques, 

see § 5.

3.3 Process Metallurgy

This was one of the strengths of the Ames Laboratory in this time period. The 

pure rare earth elements, after separating them on the ion exchange columns, were 

converted to their respective rare earth oxides. The oxide was converted to the fluoride which was then reduced to the pure metal by calcium metal. These two processes were the critical steps for preparing high purity metals with low concentration 

of interstitial impurities, especially oxygen, carbon, nitrogen, and hydrogen. The reduced metals were further purified by a vacuum casting step and for the more volatile rare earth metals further purification was carried out by distillation or sublimation. Generally, kilogram (2.2 pounds) quantities were prepared at the Ames Laboratory. Industry adopted the Ames process with some minor modifications to prepare commercial grade rare earth metals, and it is still in use today. This method 
37

is still being carried out at the AL under the auspices of the Materials Preparation 

Center (MPC), see § 6.1. 

In the late 1950s the AEC asked the Ames Laboratory to prepare pure yttrium 

metal for the proposed nuclear aircraft. A nuclear reactor would be used to heat 

gases to propel an airplane much like a jet engine. This aircraft would carry atomic 

weapons for months at a time without landing. The yttrium was to be hydride to 

form YH2 which is used to absorb the neutrons produced by the fission of uranium 

protecting the crew from radiation. As part of this project the AL produced 65,000 

pounds of YF3 and 30,000 pounds of yttrium metal. The yttrium metal was cast into 

85 pound, 6 inch diameter ingots to ship to the General Electric Co. facilities in Cincinnati, Ohio. 

In the mid-1950s, Spalding and A.H. Daane and their colleagues developed a new 

technique for preparing high purity metals of the four highly volatility rare earths—

samarium, europium, thulium, and ytterbium—by heating the respective oxides 

with lanthanum metal and collecting the metal vapors on a condenser. This process 

has also been turned over to industry and is used by AL’s Materials Preparation 

Center today (§ 6.1).

3.4 Physical Metallurgy

Research in the physical metallurgy area encompassed: determining melting 

points, crystal structures, vapor pressures, low temperature heat capacities, elastic 

constants, and magnetic properties of the pure metals and various intermetallic 

compounds; and phase diagram and thermodynamic properties studies; crystal 

chemistry analyses; and alloying theory of rare earth-based materials. This was another strong focus area in the AL in the 1950s–70s era which is still active today 

but at reduced level. 

Closely related, but not strictly physical metallurgy, was research on the mechanical behavior (tensile and yield strengths, ductility, and hardness) of the metals and 

some of their alloys, and also oxidation and corrosion studies, especially yttrium in 

conjunction with the nuclear aircraft project. From the information gained from the 

mechanical property measurements, processes were developed to fabricate the rare 

earth metals and their alloys at room and elevated temperature into a variety of 

shapes and forms, e.g. rolled sheets.

3.5 Materials and Solid State Chemistry, and Ceramics

The chemical activity, in addition to separation and analytical chemistry § 3.1 and 

§ 3.2) was another area in which the AL was considered to be world class, even 

though the manpower levels were smaller than above noted areas of analytical 

chemistry, process and physical metallurgy. Research was focused on the sub-stoichiometric rare earth halides, and interstitial impurity stabilized compounds including the halides. X-ray crystallography was an important tool in this focus area to 

characterize these compounds. John D. Corbett was the lead scientist and is still 

active today. 

Investigations of ceramic materials were important in many of the studies and advances in process and physical metallurgy, not only for their refractory properties, 

but also because of the need to contain the molten metals without contamination. 

Rare earth oxides and sulfides, because of their intrinsic stability, were candidate 

materials to contain the molten rare earths, uranium, thorium and other non-rare 

earth metals.

3.6 Condensed Matter Physics

The AL was very strong in this area from the very beginning and still is today. 

Research under the leadership of Sam Legvold was concentrated on the magnetic 

behavior of the metals and the intra-rare-earth alloys. This work was strongly coupled with neutron scattering studies at both the Ames Laboratory and Oak Ridge 

National Laboratory, and also with the theorists. The theoretical efforts included 

first principle calculations (Bruce Harmon) and phenomenological approaches (Sam 

Liu). Superconductivity was also another active topic of research, but most of the 

effort was concentrated on non-rare-earth compounds.

3.7 Interdisciplinary Research

Two of the main strengths of the Ames Laboratory are magnetism and X-ray crystallography of rare earth and related materials. In part this is due to cooperative 

research efforts that cut across the disciplines of physics, materials science, and 

chemistry. Frank Spedding was one of the leaders in this approach to scientific research, which was rare in the 1950s.
38

4. Interactions with Industry

As mentioned above in § 3 much of the research and development efforts were 

turned over to industry—the uranium and thorium metal production, the ion exchange separation processes, and the analytical techniques (especially ICP–MS). In 

addition, K.A. Gschneidner, Jr. established the Rare-earth Information Center (RIC) 

in 1966 with the initial support of the forerunner of BES, and later by industry 

(starting in 1968), which totaled about 100 companies world-wide in 1996. RIC’s 

mission was to collect, store, evaluate and disseminate information about new scientific discoveries, industrial developments, new commercial products, conferences, 

books and other literature, honors received by rare earthers, and to answer information inquiries. RIC published two newsletters—a quarterly (available free) and a 

monthly (available to supporters of RIC), and occasional reports. In 1996 the directorship was turned over to R.W. (Bill) McCallum. But RIC ceased operation in August 2002—when industry support dwindled significantly as China forced many 

companies out of the rare earth markets with extreme price reductions and, simultaneously, a down-turn in the economy dried up state and Federal support. 

Because of the expertise of individual AL scientists and/or some unique AL analytical or processing capability, many organizations, including industrial companies, 

asked the AL to perform applied research as Work for Others projects or CRADAs. 

Many of these non-DOE projects include the rare earths. One of these cases is discussed in more detail in § 6.5. In addition to these individual interactions, the AL 

established the Materials Preparation Center (MPC) in 1981 to provide unique metals, alloys and compounds to worldwide scientific and industrial communities; and 

to perform unusual processes for fabricating materials which could not be done elsewhere, see § 6.1. The functions carried out by the MPC over the nearly 30 years of 

its existence are an outstanding example of AL-industry interactions. 

Over the years various industrial organizations have sent their staff scientists 

and engineers to work at Ames Laboratory getting firsthand experience on a particular technology. These arrangements may be part of CRADAs or Work for Others 

projects. 

In 2009 ISU became a research member of the Rare Earth Industry and Technology Association (REITA) to implement rare earth technology and promote commercialization of the rare earths for military and civilian applications.

5. Technology Transfer and Patents

The Ames Laboratory (AL) has been awarded 300 patents, of which about 45 are 

concerned with rare earth materials. Ten patents deal with the rare earth-base permanent magnets and four with magnetic refrigeration materials. Before the passage 

of the Stevenson-Wydler Technology Innovation Act of 1980 (P.L. 96–480) and the 

Dayh-Dole Act of 1980 (P.L. 96–517) all patent rights were turned over to the U.S. 

Government. After the Acts became law, the AL (a GOCO—government owned, contractor operated laboratory) began to license the various technologies developed at 

the AL via the Iowa State University Research Foundation (ISURF). 

The combination of inductive coupled plasma with atomic emission spectroscopy 

in 1975 and later with mass spectrometry in 1984 was a quantum jump in increasing the sensitivity for detecting and determining trace elements in various materials. The two analytical methods were developed at the AL to improve the speed 

and lower the limits of detecting various rare earth impurity elements in a given 

rare earth matrix. This technique was soon applied to other impurities in a variety 

of non-rare-earth materials, e.g. detection of poisons such as mercury and arsenic 

in drinking water. The ICP–MS and ICP–AE technologies were turned over to industry and are now a standard analytical tool in over 17,000 analytical laboratories 

worldwide. It is a rapid and accurate method for 80 elements, and in some cases 

allows the detection of an impurity down to the parts per trillion level. Today there 

are at least six companies that manufacture ICP–MS instruments. 

In addition to the various technology transfers noted in the previous paragraph 

and in sections 2, 3.1–3.3, one of the more recent success stories is concerned with 

Terfenol. Terfenol is a magnetic iron-rare-earth (containing dysprosium-terbium) 

intermetallic compound which has excellent magnetostrictive properties. When a 

magnetic field is turned on Terfenol will expand and when the magnetic field is removed it relaxes to its original shape and size. There are many applications for this 

material including sonar devices for detecting submarines, oil well logging, vibration 

dampers, audio speakers, etc. The magnetostrictive properties were discovered in 

the early 1970s at the Naval Ordinance Laboratory in Maryland. Shortly thereafter 

the Navy contracted the AL to grow single crystals and Terfenol samples with preferred orientations. The AL was successful and designed a procedure for making the 

orientated material to maximize the amplitude of the magnetostrictive effect. Pat-
39

ents were issued and in the late 1980s ISURF licensed the processing technology 

to Etrema, a subsidiary of Edge Technologies, Inc. in Ames, Iowa. Today Etrema 

is a multimillion dollar business.

6. Where We are Today 1980–2010

With the Ames Laboratory’s successes, some of the golden-age research was no 

longer deemed to be basic research and funding dried up. In addition key personnel 

started to retire. As a result of these two events a number of AL capabilities were 

phased out completely. These include: analytical chemistry, separation chemistry, 

process metallurgy, and ceramics. The excellent analytical capabilities were slowly 

reduced and completely lost by the 2000s, except for inert gas fusion and combustion 

analysis. The rare earth research activities in physical metallurgy and condensed 

matter physics areas have also suffered some downsizing to about half the level of 

what it was in the pre-1980 era, but what is left is still first class state-of-the-art 

basic research. 

In the following sections important activities that are still ongoing are described. 

Other research that had been completed in the 1980s and may play in important 

role in the future activities of a new national rare earth research center, is also 

noted.

6.1 Materials Preparation Center

As an outgrowth of the Ames Laboratory’s interactions with industry, other DOE 

laboratories, universities, other research organizations, the Materials Preparation 

Center (MPC) was established in 1981 to provide high purity metals (including the 

rare earths, uranium, thorium, vanadium, chromium); and intermetallics, refractory, 

and inorganic compounds, and specialty alloys; none of which are available commercially in the required purity or form/shape needed by the request or on a cost recovery basis. The MPC is a BES specialized research center with unique capabilities 

in the preparation, purification, processing, and fabrication of well-characterized 

materials for research and development. The Center is focused on establishing and 

maintaining materials synthesis and processing capabilities crucial for the discovery 

and development of a wide variety of use-inspired, energy-relevant materials in both 

single crystalline and polycrystalline forms, spanning a range of sizes with well-controlled microstructures. There are four functional sections within the MPC: (1) high 

purity rare earth metals and alloys; (2) general alloy preparation; (3) single crystal 

synthesis; and (4) metallic powder atomization. Each area is provided scientific and 

technical guidance by a Principal Investigator (PI) whose individual expertise is 

aligned with the function of each section. The original director was F. (Rick) A. 

Schmidt who retired in 1993 and turned over the directorship to Larry L. Jones. 

In 2008 the MPC filled 183 external materials requests from 111 different scientists at 88 academic, national and industrial laboratories worldwide. Internally 

the Center provided materials, and services for 53 different research projects that 

totaled 1092 individual requests.

6.2 Nd2Fe14B Permanent Magnets

The announcement of the simultaneous discovery of the high strength permanent 

magnet materials based on Nd2Fe14B by scientists at General Motors in the USA 

and at Sumitomo Special Metals. Co., Ltd. in Japan in November of 1983 set off 

a flurry of activities everywhere. The lead scientist at General Motors was John 

Croat (an ISU graduate), who was Frank Spedding’s last graduate student. DOE/

BES funding for research on these materials at the AL started in 1986 and lasted 

through 1998. U.S. Department of Commerce (DOC) funding for gas atomization 

processing work on Nd2Fe14B alloys, through the ISU Center for Applied Research 

and Technology, was received from 1988 through 1993. Funding was renewed at the 

AL in 2001 under the auspices of DOE/EERE’s Vehicle Technology (formerly 

FreedomCar) program. 

Notable achievements in the BES funded project included: (1) demonstrating that 

the Nd2Fe14B compound can be prepared by a thermite reduction process that is 

competitive with other methods of the permanent magnet material; (2) developing 

methods for controlling the solidification microstructure of melt spun Nd2Fe14B 

which leads to large energy products (the larger the energy product the better the 

permanent magnet properties); (3) proposing a model for the rapid solidification of 

a peritectic compound to explain the solidification microstructure of melt spun 

Nd2Fe14B; and (4) developing a model for hysteresis in exchange coupled 
40

cOther team members were K. Dennis, M. Kramer and Dan Branagan, who moved to DOE’s 

INEEL laboratory. 

nanostructure magnets. In 1996 the AL team headed by R.W. (Bill) McCallum c re- ceived the DOE Materials Science Award for ‘‘Significant Implications for DOE Related Technologies, Metallurgy and Ceramics’’ (items 2 and 3 above). A year later 

this same team won an R&D–100 Award for Nanocrystalline Composite Coercive 

Magnet Powder (see § 7.1). In the DOC funded project, an alternative rapid solidification process, gas atomization, was developed for making fine spherical Nd2Fe14B 

powders, for which the AL (Iver Anderson and Barbara Lograsso) received an R&D–

100 award in 1991 (see § 7.1). They also received the Federal Laboratory Consortium 

Award for Excellence in Technology Transfer for gas atomization processing of 

Nd2Fe14B to enable improved molding of bonded magnets. The AL thermite reduction process (item 1), which was developed by F. (Rick) A. Schmidt, J.T. Wheelock 

and Dave T. Peterson under MPC research, was selected for one of the 1990 IR–

100 (changed to ‘‘R&D 100’’ in 1991) Awards for new innovative research for potential commercialization. 

The Vehicle Technology research funded by SERE is on-going and includes design 

of improved Nd2Fe14B permanent magnets which can operate at high temperature, 

enabling more powerful and more efficient motors. This project also is developing 

further the high temperature RE magnet alloys for powder processing, intended for 

injection molded bonded magnets for mass production of hybrid and electrical vehicles. Based on initial success with both aspects of the RE magnet project, in 2009 

SERE expanded their support into the high risk task of identifying non-rare-earth 

magnet alloys with sufficient strength for vehicle traction motors.

6.3 Nd2Fe14B Scrap Recovery

As manufacturers began to make the Nd2Fe14B material, it soon became apparent 

there was a great deal of waste magnet material being generated because grinding, 

melting and polishing the magnets into a final form/shape. Much of the magnet material is mixed with oils and other liquids used in these operations—this material 

is known as ‘‘swarf’’. The team of scientists at AL headed by F. (Rick) A. Schmidt 

developed two different processes to recover the neodymium metal: a liquid metal 

extraction process to treat the solid materials; and an aqueous method for treating 

the swarf. Both processes were patented, but the patents have since expired.

6.4 High Temperature Ceramic Oxide Superconductors

In the mid-1980s another major discovery occurred and had an enormous impact 

on the rare earths as well as science and technology in general—the discovery of 

the oxide superconductor with transition temperatures greater than that of liquid 

nitrogen 77 K (∼195° C). One of the key superconductors was YBa2Cu3O7, also 

known as ‘‘1:2:3’’. It is utilized today in electrical transmission lines, electrical leads 

in low temperature high magnetic field apparati and other superconducting applications. The AL had a strong tradition in superconducting research well before this 

discovery, and when they learned of it the condensed matter physicists and materials scientists immediately began research on these ceramic oxide superconductors. 

A National Superconducting Basic Information Center was established at AL in 

1987 with financial support from DOE’s BES. It was headed by John R. Clem, a 

theorist who continues to consult with American Superconductor. The experimentalists worked diligently on various aspects of the 1:2:3 and other oxide superconductors to understand the processes by which they are formed and to prepare 

high purity well characterized materials for physical property studies, which would 

assist the theorists to understand the fundamental nature of these superconductors. 

This work laid the ground work for the development of a method of fabricating the 

rare earth 1:2:3 materials into filaments and flexible wires. Most of the research on 

these oxide superconductors at AL has stopped and most of the know-how has been 

turned over to industry. However, AL scientists are still at the forefront of the field 

studying the new high temperature superconductors: the rare-earth-arsenic-ironoxide-fluoride and the MgB2 materials.

6.5 Magnetic Cooling

Magnetic cooling is new, advanced, highly technical, energy efficient, green technology for cooling and climate control of buildings (large and homes), refrigerating 

and freezing food (supermarket chillers, food processing plants, home refrigerator/

freezers). The AL team headed by K.A. Gschneidner, Jr. and V.K. Pecharsky has 

been involved with magnetic cooling since 1990, when Astronautics Corporation of 
41

America (ACA) asked Gschneidner to develop a new magnetic refrigerant material 

to replace the expensive GdPd refrigerant they were using for hydrogen gas liquefaction (a DOE sponsored research effort). The AL team was successful and showed 

that a (Dy0.5Er0.5)Al2 alloy was about 1000 times cheaper and 20% more efficient 

than GdPd. A patent was issued for this new magnetic refrigerant material. This 

work was recognized as the best research paper presented at the 1993 Cyrogenic 

Engineering Conference. A few years later AL teamed up with ACA and designed, 

constructed and tested a near room temperature magnetic refrigerator. In 1997 they 

demonstrated that near room temperature magnetic refrigeration is competitive 

with conventional gas compression cooling technology and is about 10% more efficient, and is a much greener technology because it does not employ ozone depleting, 

or greenhouse, or hazardous gases [7]. This work was funded by BES’s Advanced 

Energy Project program. Additional research on magnetocaloric materials was supported by BES after the Advanced Energy Project ended in 1998. But in 2005 BES 

funding for this research was terminated because they thought it was no longer 

basic research, i.e. it was too applied. Since then some work has continued on 

magnetocaloric materials under a work for others subcontract with ACA who has 

a Navy contract to build shipboard cooling machines, and a few SBIRs which are 

being funded by EERE. 

This research on magnetic cooling is a good example of AL’s response to a problem 

encountered by industry which was successfully solved, and then later, this work 

led to a whole new cooperative AL-industry project on near room temperature magnetic refrigeration.

6.6 Neutron Scattering

Neutron scattering is a powerful tool in determining magnetic structures of magnetic materials and it compliments magnetic property measurements made by 

standard magnetometers. The rare earth research at AL has benefited from interactions with the neutron scatterers. In the early 1950s Frank Spedding and Sam 

Legvold of the AL had a close relationship with the neutron scattering group headed 

by Wally Koeller at Oak Ridge National Laboratory neutron scattering facility and 

furnished single crystals of the rare earth metals. Recognition and demand for neutron scattering resulted in a 5MW reactor being constructed locally for Ames Laboratory. Scientists used this reactor for extensive measurements of the electronic 

interactions in rare earth and other magnetic materials. Because of a large jump 

in the cost of operating and fueling this reactor, it was shut down in 1978. The relationship with the neutron scattering effort at Oak Ridge was enhanced and continued for many years up to about 1980, shortly before the death of the three scientists 

in 1983–84. To this day a dedicated neutron scattering facility, run by AL scientists, 

operates at the Oak Ridge High Flux Isotope Reactor (HFIR). It is still of great benefit to AL scientists studying rare earth materials.

6.7 X-ray Magnetic Scattering 

X-ray magnetic scattering is a fairly new tool, which was developed in the early 

1990s, to study magnetic structures. It is fortunate that this new tool became available because a few of the rare earth elements, especially gadolinium, readily absorb 

neutrons and neutron scattering measurements are very difficult if impossible to 

make. Thus, X-ray magnetic scattering has been especially useful in determining 

the magnetic structures of gadolinium compounds. 

In more recent years scientists have improved the X-ray magnetic scattering technique, which is called X-ray magnetic circular dischroism (XMCD). The AL scientists 

have been on the forefront by applying the latest experiments and theoretical tools 

to help elucidate complex electronic interactions underlying bulk magnetic properties. The AL team, led by Alan Goldman (experiment) and Bruce Hannon (theory), 

has been pioneers in the development and application of XMCD on rare earth materials. This tool gives valuable and direct information about the itinerant electrons 

responsible for coupling the individual localized magnetic moments of each rare 

earth atom in a solid. The stronger the microscopic coupling the stronger the bulk 

magnet, and the more useful it can be in applications. Such experiments and powerful computers are essential for helping AL scientists in their latest ‘‘materials discovery’’ initiative to accelerate the discovery of new magnetic materials for industry.

6.8 Emerging Technologies

One of the new and exciting, ongoing developments at Ames Laboratory is a revolutionary method of preparing rare earth-based master alloys for energy and other 

applications. In addition to lowering costs of the starting material, the processing 

technique also reduces energy consumption by 40 to 50% and is a very green tech-
42

nology. The work on preparing Nd2Fe14B magnet material began about a year ago 

with financial support from AL patent royalties, and it has been reduced to practice—we have prepared a state-of-the-art permanent magnet on February 5, 2010, 

see attached figure. It is a one step process going from the neodymium oxide to the 

neodymium master alloy, and since the end-products are completely utilized, there 

are no waste materials to dispose of. The conventional process also starts with the 

neodymium oxide but takes two steps to obtain the neodymium metal, and there are 

waste products associated with both steps which need to be disposed of in an environmentally friendly manner. The step to prepare the Nd2Fe14B magnet material is 

essentially the same in either case. This processing technique was invented by F. 

(Rick) A. Schmidt and K.A. Gschneidner, Jr. A provisional patent has been filed. 

A modification of this process should enable us to prepare a lanthanum master 

alloy to prepare lanthanum nickel metal hydride batteries, which are used in hybrid 

and electrical vehicles. Likewise, we believe this process can be used to make magnetic rare earth refrigerant alloys (see § 6.5).

7. Kudos

The Ames Laboratory scientific achievements and their science/engineering leaders have been recognized by several organizations including DOE.

7.1 R&D–100 Awards (former IR–100 Awards)

Industrial Research magazine annually identifies the nation’s top 100 technological innovations, called the ER–100 Awards before 1991 and now are called the 

R&D–100 Awards. These awards are also known as the ‘‘Oscars of Science’’. Over 

the past 25 years AL has received 17 R&D–100 Awards. Of these three are involved 

with rare earths, in particular the Nd2Fe14B permanent magnet materials. These 

are listed below.

1990: ‘‘Thermite Reduction Process to Make Rare-earth Iron Alloys’’ F. (Rick) 

A. Schmidt, John T. Wheelock and Dave T. Peterson

1991: ‘‘HPGA (High Pressure Gas Atomization)’’ Iver Anderson and Barbara 

Lograsso

1997: ‘‘Nanocrystalline Composite Coercive Magnet Powder’’ R.W. (Bill) 

McCallum, Kevin Dennis, Matt Kramer, and Dan Branagan
43

Left: Our KAA–1–34 composition. 60/40 by vol. Nd2Fe14B/PPS (poly(phenylene sulfide). Hot pressed at 300° C and magnetized with a 2T electromagnet. The second 

bonded permanent magnet prepared. 

Center: Practice magnet of similar composition. The surface is boron nitride coating from the die used to compact the Nd2Fe14B particles in the polymer. 

Right: First Bond permanent magnet. 30/70 by vol. Nd2Fe14B/diallyl phthalate 

sample mounting material. Hot pressed and sealed with thin layer of epoxy.

7.2 National Academies Members

Six Ames Laboratory scientists have been named to the National Academy of 

Sciences and the National Academy of Engineering. Frank H. Spedding was elected 

in 1952 and John D. Corbett in 1992 to the National Academy of Sciences. The four 

National Academy of Engineering members are: Donald O. Thompson—1991, Dan 

Schechtman—2000, R. Bruce Thompson—2003, and Karl A. Gschneidner, Jr.—2007. 

Of the six three (Spedding, Corbett and Gschneidner) were heavily involved in the 

rare earth science and technology of rare earths during their careers. Corbett and 

Gschneidner are still actively engaged in research and development activities. 

Spedding died in 1984 but was still active until shortly before his passing.

7.3 Department of Energy Awards

Scientists at AL have won several DOE, (mostly from BES) awards for their scientific achievements. These are listed below.

1982 K.A. Gschneidner, Jr. and K. Ikeda for quenching of spin fluctuations

1991 I.E. Anderson and B.K. Lograsso received the Federal Laboratory Consortium Award for Excellence in Technology Transfer for high pressure gas 

atomization of rare earth permanent magnet alloys

1994 B.J. Beaudry for thermoelectric materials characterization from DOE’s 

Radioisotope Power Systems Division

1995 J.D. Corbett for sustained outstanding research in materials chemistry
44

1995 A.I. Goldman, M.J. Kramer, T.A. Lograsso, and R.W. McCallum for sustained outstanding research in solid state physics

1996 D. Branagan, K.W. Dennis, M.J. Kramer, R.W. McCallum for studies on 

the solidification of rare earth permanent magnets

1997 K.A. Gschneidner, Jr. and V.K. Pecharsky for contributions to the advancement of magnetic refrigeration

2001 K.A. Gschneidner, Jr. and V.K. Pecharsky received the ‘‘Energy 100 

Award’’ for research on magnetic refrigeration as one of the 100 discoveries between 1997 and 2000 that resulted in improvements for American 

consumers.

Acknowledgements

The author wishes to thank his colleagues and associates for assisting him in putting this report together. They are: A.H. King, Director, Ames Laboratory; and K.A. 

Ament, I.E. Anderson, J.D. Corbett, D.L. Covey, K.B. Gibson, B.N. Harmon, S.L. 

Joiner, S.R. Karsjen, L.L. Jones, T.A. Lograsso, R.W. McCallum, V.K. Pecharsky, 

F.A. Schmidt, and C.J. Smith.

References

1. H.J. Svec, pp. 1–31 ‘‘Prologue’’ in Handbook on the Physics and Chemistry of Rare 

Earths, vol. 11, K.A. Gschneidner, Jr. and L. Eyring Eds., Elsevier Science Publishers (1988).

2. J.A. Goldman, ‘‘National Science in the Nation’s Heartland. The Ames Laboratory 

and Iowa State University, 1942–1965’’, Technology and Culture 41, 435–459 

(2000).

3. J.A. Goldman, ‘‘Mobilizing Science in the Heartland: Iowa State College, the State 

University of Iowa and National Science during World War II’’, The Annals of 

Iowa 59, 374–397 (Fall 2000).

4. J.A. Goldman, ‘‘Frank Spedding and the Ames Laboratory: The Development of 

a Science Manager’’, The Annals of Iowa 67, 51–81 (Winter 2008).

5. J.D. Corbett, ‘‘Frank Harold Spedding 1902–1984’’, Biographical Memories 80, 1–

28 (2001); The National Academy Press, Washington, DC.

6. S.R. Karsjen, ‘‘The Ames Project: History of the Ames Laboratory’s Contributions 

to the Historic Manhattan Project, 1942–1946’’, published by Ames Laboratory 

Public Affairs, Iowa State University, Ames, Iowa (2003).

7. K.A. Gschneidner, Jr. and V.K. Pecharsky, ‘‘Thirty Years of Near Room Temperature Magnetic Cooling: Where we are Today and Future Prospects’’, Intern. J. 

Refrig. 31, 945–961 (2008).

QUESTION 2: BASIC RESEARCH PROGRAM

In the 1990s the Chinese flooded the marketplace with low priced raw rare earth 

products (mixed and separated rare earth oxides) and as a result, not only did the 

primary rare earth producers in the United States and the rest of the world shut 

down, but technical personnel with expertise in rare earth mining, refining, extraction, etc. found employment in other industries. Soon thereafter the Chinese began 

manufacturing higher value rare earth products, including rare earth permanent 

magnet materials, and in time, all of the Nd2Fe14B magnet manufacturers in the 

United States also went out of business. This also resulted in a brain drain of scientists and engineers in this field, and also in all high-tech areas involving other 

rare earth products, such as high energy product permanent magnet materials, metallic hydrogen storage and rechargeable battery materials. Some of these experts 

have moved on to other industries, others have retired, and others have died, basically leaving behind an intellectual vacuum. 

In the late 2000s the Chinese game plan changed, and they have started to exercise export controls on a variety of rare earth products, and signaled that they intend to consume all the rare earths mined in China internally in the next three to 

five years. This change will allow the rare earth producers and manufacturers to 

supply the needed products, but this presents several problems which have been 

cited by others at this House Committee hearing. One of these is the shortage of 

trained scientists, engineers, and technicians. Another need is innovations in the 

high tech areas which are critical to our country’s future energy needs. A research 

center which alleviates both of these problems is the best way to work our way 

through the rare earth crisis facing the USA. An educational institution which has 

a long and strong tradition in carrying out research on all aspects of rare earth ma-
45

terials—from mining and purification to basic discovery and applications over a 

number of disciplines (i.e. chemistry, materials, physics, and engineering) with a 

strong educational component (undergraduate, graduate and post doctoral students) 

would be the ideal solution. A National Research Center on Rare Earths and Energy 

should be established at such an institution initially with Federal and, possibly, 

state support, and as the U.S. rare earth industry matures in five to ten years, supplemented by industrial financial support. The center would employ about 30 full 

time employees—group leaders; associate and assistant scientists and engineers; 

post docs, graduate and undergraduate students; and technicians plus support staff. 

This research center will be a national resource for the rare earth science, technology and applications, and therefore, it would also provide broad support of research activities at other institutions (universities, national laboratories, non-profit 

research centers, and industry) who would supply intellectual expertise via subcontracts to complement the activities at the center. 

The major emphasis of the center would be goal oriented basic research, but proprietary research directly paid by the organizations that request it would also be 

part of the center’s mandate. The center would have an advisory board to oversee, 

guide and refocus as needed the research being conducted. The advisory board 

would be made up of representatives from the university, government, industry and 

the general public. 

I would like to suggest to this House subcommittee that they consider .a second 

national center, the National Research Center for Magnetic Cooling. Cooling below 

room temperature accounts for 15% of the total energy consumed in the USA. As 

noted in my response to the first question, magnetic refrigeration is a new advanced, highly technical, energy efficient green technology for cooling and climate 

control of buildings,-ships, aircraft, and refrigerating and freezing (§ 6.5). We have 

shown that magnetic cooling is a refrigeration technology competitive with conventional gas compression cooling. Magnetic cooling is 10 to 20% more efficient, and it 

is a very green technology because it eliminates hazardous and greenhouse gases, 

and reduces energy consumption. If we were able to switch all of the cooling processes to magnetic refrigeration at once we would reduce the nation’s energy consumption by 5%. But there are a lot of hurdles that need to be overcome and the 

USA needs to put together a strong, cohesive effort to retain our disappearing leadership in this technology, by assembling a National Research Center for Magnetic 

Cooling. Europe and China are moving rapidly in this area, and Denmark has assembled a magnetic refrigeration national research center at Riso—so far the only 

one in the world. The U.S. Center should be structured similar to what has been 

proposed in the above paragraphs for the National Research Center on Rare Earth 

and Energy. The question is, are we going to give up our lead position and be a 

second rate country, or will we be leading the rest of the world? I hope and pray 

that the answer is, we are going to show the world that we are number one.

QUESTION 3: KNOWLEDGE TRANSFER

Knowledge is transferred from a research organization to industry through two 

primary routes. The first is the transfer of intellectual property. Research findings 

carried out at universities, colleges, non-profit organizations, and DOE and other 

Federal laboratories are disseminated as published articles in peer-reviewed journals and in trade journals, presentations at national and international conferences, 

electronic media, or their organization’s web site, and if exciting enough, via news 

conferences and press releases assuming the new results are not patentable. If, however, the research has some potential commercial value, this new information/data 

should be made available as soon as feasibly possible after filing a patent disclosure. 

However, before the patent is filed one could disseminate the results to companies 

that might be interested by contacting them directly to see: (1) if they are interested, (2) if they would sign a non-disclosure agreement, and (3) if they answer yes 

to both (1) and (2) then the information could be disclosed to them. However, all 

the companies must be treated equally and fairly. 

The second route is highly effective when the research organization is connected 

with a university. This is exemplified by Ames Laboratory and Iowa State University. AL employs a significant number of ISU students in part time positions either 

as graduate research assistants or undergraduate research helpers. These science 

and engineering students, particularly at the bachelors and masters levels, transfer 

the skills and process the knowledge gained in working in the laboratory to their 

employers after they graduate.
46

QUESTION 4: U.S. RESEARCH ON RARE EARTH MINERALS

Rare earth research in the USA on mineral extraction, rare earth separation, 

processing of the oxides into metallic alloys and other useful forms (i.e. chlorides, 

carbonates, ferrites), substitution, and recycling is virtually zero. As is well-known, 

research primarily follows money; but prestige and accolades are other drivers; or 

when someone serendipitously comes up with an exciting idea for a research project. 

The lack of money and excitement accounts for the low level of research on the 

above topics. 

Today some work on rare earth and actinide separation chemistry is directed toward treating waste nuclear products and environmental clean-up of radioactive 

materials in soils is being carried out at various DOE laboratories. This research 

may be beneficial to improving rare earth separation processes on a commercial 

scale. 

Some research at various universities might be considered to be useful in finding 

substitutes for a given rare earth element in a high tech application. But generally 

the particular rare earth’s. properties are so unique it is difficult to find another 

element (rare earth or non-rare earth) as a substitute. 

The Chinese have two large research laboratories which have significant research 

and development activities devoted to the above topics. They are the General Research Institute for Nonferrous Metals (GRINM) in Beijing, and the Baotou Research Institute of Rare Earths (BRIRE) in Baotou, Inner Mongolia. GRINM is a 

much larger organization than the Baotou group, but the rare earths activity is 

smaller than what is carried out at BRIRE. The Baotou Research Institute of Rare 

Earths is the largest rare earth research group in the world. Baotou is located about 

120 miles from the large rare earth deposit in Inner Mongolia and is the closest 

large city to the mine. This is the reason why BRIRE is located in Baotou.

BIOGRAPHY FOR KARL A. GSCHNEIDNER, JR. 

Karl A. Gschneidner, Jr. was born on November 16, 1930 in Detroit, Michigan, 

and received his early education at St. Margaret Mary grade school and St. Bernard 

high school. He attended the University of Detroit, 1948–1952 and graduated with 

B.S. in Chemistry. He went to graduate school at Iowa State College (became Iowa 

State University in 1959) and in 1957 obtained a Ph.D. degree in Physical Chemistry studying under Distinguished Professor Frank H. Spedding and Professor Adrian H. Daane. He then worked in the plutonium research group at the Los Alamos 

Scientific Laboratory from 1957 through 1963. In 1963 he joined the Department 

of Metallurgy as an Associate Professor, and jointly as a group leader at the Ames 

Laboratory of Iowa State University. He was promoted to a full professor in 1967, 

and named a Distinguished Professor in 1979. In 1966 he founded the Rare-earth 

Information Center and served as its Director for 30 years. He was also the Program 

Director for Metallurgy and Ceramics at the Ames Laboratory from 1974 to 1979. 

He taught mostly graduate level courses, including x-ray crystallography, the physical metallurgy of rare earths, and alloying theory. 

Gschneidner, sometimes known as ‘‘Mr. Rare Earths’’, is one of the world’s foremost authorities in the physical metallurgy, and the thermal, magnetic and electrical behaviors of rare earth materials, a group of chemically similar metals naturally occurring in the earth’s crust. His work lately has taken him into the field of 

magnetic refrigeration, a developing technology that has the potential for significant 

energy savings with fewer environmental problems than existing refrigeration systems. 

Gschneidner has over 450 refereed journal publications and nearly 300 presentations to leading scientific gatherings worldwide to his credit. Holder of more than 

a dozen patents, he has been honored with numerous awards by governmental, professional, and industrial bodies, including recognition for his Ames Lab team’s research in magnetic refrigeration by the U.S. Department of Energy in 1997 and with 

an Innovative Housing Technology Award in 2003. 

In addition to the National Academy of Engineering, Gschneidner is also a Fellow 

of the American Society for Materials-International, The Minerals, Metals and Materials Society, and the American Physical Society. In 2005, he was honored for 53 

years of outstanding contributions to his field with a symposium at Iowa State that 

was attended by some of the world’s leading experts in rare earth materials, many 

of them his former students or collaborators. He maintains an active research program with Ames Laboratory.

Chairman MILLER. Thank you, Dr. Gschneidner. Mr. Smith for 

five minutes. 
47

STATEMENT OF MR. MARK A. SMITH, CHIEF EXECUTIVE 

OFFICER, MOLYCORP MINERALS, LLC 

Mr. SMITH. Thank you. Chairman Miller, Ranking Member 

Broun, other distinguished Members of the Subcommittee. I would 

like to thank you for the opportunity to be here today. 

This is the first committee to hold a hearing specifically on this 

issue, and I want to commend you for your leadership in this regard. 

It has been remarkable, in my 25 years in this business, to see 

the use of rare earths literally explode in front of our eyes. However, while rare earth-based technologies have become more and 

more essential and more and more a part of our everyday lives, the 

United States—as well as the rest of the world—has become almost 

completely dependent on China for access to the rare earth resources and the metals, alloys and magnets that derive from them. 

A combination of three factors should make this situation one of 

urgent concern to policymakers: first, the indispensability of rare 

earths in clean energy and defense technologies; two, the almost 

complete dominance of rare earth production by China; and three, 

China’s accelerating consumption of their own rare earth resources. 

[The information follows:]

On the screen in front of you is a slide that just touches the surface of some of the uses of rare earths in the world today. On the 

clean energy side, rare earths are used in the advanced nickel hydride batteries for hybrid cars as well as the rare earth permanent 

magnets that power the highly efficient next generation of wind 

turbines and the electric and hybrid vehicle motors and generators. 

Rare earth phosphors are what illuminate compact fluorescent 

light bulbs which are currently mandated in the European Union. 
48

On the defense side, missile guidance systems, electronics, communications and surveillance equipment, just to name a few applications, all require rare earths. None, let me repeat, none of these 

technologies will work without rare earths, and yet each is tied directly to some of the Nation’s highest national priorities today. 

[The information follows:]

On the screen in front of you now I have provided a simplified 

version of a wind turbine supply chain from a rare earth perspective. With the exception of our historic rare earth mineral production at the very start, none of the capabilities in the green box really exist in the United States today. The result is a supply chain 

capability gap in the United States that has the potential to become a very serious strategic and economic disadvantage. Today, 

China actually produces over 97 percent of the world’s rare earth 

oxides. They produce almost 100 percent of the associated metals 

and 80 percent of the rare earth magnets. For the last 15 years, 

China’s production has been able to satisfy their own internal 

needs as well as those of the rest of the world. However, it is predicted that rapid Chinese demand growth, coupled with lower and 

lower Chinese government-controlled export quotas, will continue 

to decrease the amount of rare earths available to the rest of the 

world, thereby creating a serious supply gap. Forecasts conclude 

that this shortage could occur by 2012, and with China’s recently 

announced commitment to be the world’s largest producer of wind 

energy and electric vehicles, this will certainly not help that timeframe. 

In order to truly break our near-total dependence on China, 

Molycorp has developed its mining-to-magnet strategy. Molycorp 

has 57 years of experience in the rare earth industry and has a 

world-class ore deposit at its rare earth facility in Mountain Pass. 

We have invested over $20 million in process technology improvements in advance of our restart project, and the resulting efficiencies will drastically improve our overall cost competitiveness, 

as well as our environmental stewardship. 

We also believe that our mine-to-magnets project could create an 

estimated 900 new direct jobs as well as 700 temporary construction jobs in the United States, not to mention the multiplier effect 

this will have in both green and defense technological industries in 

this country. 
49

Molycorp is the only rare earth company outside of China that 

stands shovel-ready. We are uniquely well-positioned to rebuild the 

rare earth supply chain from mining to magnets, and we can do it 

in the shortest timeframe possible. 

The Federal Government clearly has a role to play. As you consider legislation, there are four areas I think you can have the 

greatest impact on. The first is Federal loan guarantees. We applied for the DOE’s loan guarantee program in the fall of 2009, and 

our application was recently rejected as ineligible. The DOE contends that this project goes too far upstream and that their program was not intended to cover projects that go all the way back 

to mining. Congress will need to provide legislative direction or 

new legislative language clarifying the use of loan guarantees for 

strategically vital supply chain projects. 

Second, the Federal Government and this committee in particular can play a pivotal role in reestablishing our world class rare 

earth knowledge and expertise the way it used to be. 

Number three, as noted earlier, the White House OSTP is working with the Departments of Commerce, Defense and State to lead 

a collaborative interagency effort on this issue. We are very encouraged by this effort, but the imminent global supply and demand 

challenge clearly necessitates more urgency by the Administration 

right now. 

And finally, Federal funding support for competitive grants specifically directed at the rare earth research and technology industry, including recycling, will certainly help to further expand the 

United States’ capabilities in the rare earth world. 

Thank you, Mr. Chairman, for this time today, and I would be 

happy to answer any questions later. 

[The prepared statement of Mr. Smith follows:]

PREPARED STATEMENT OF MARK A. SMITH

Introduction

Chairman Miller, Ranking Member Broun, and Members of the Subcommittee, I 

want to thank you for the opportunity to share my observations, experiences, and 

insights on the subject of rare earths, the critical role they play in the technologies 

that will shape our future, the looming supply challenges that are ahead of us, and 

the work we are doing at our facility at Mountain Pass, California. This is the first 

Committee to hold a hearing specifically on this important topic, and I want to commend you for your leadership and forethought. 

I’m the CEO of rare earths technology company Molycorp Minerals, LLC. 

Molycorp owns the rare earth mine and processing facility at Mountain Pass, California, one of the richest rare earth deposits in the world, and we are the only active 

producer of rare earths in the Western Hemisphere. I have worked with Molycorp 

and its former parent companies, Unocal and Chevron, for over 25 years, and have 

watched closely the evolution of this industry over the past decade. It has been remarkable to watch the applications for rare earths explode. However, as rare earthbased technologies have become more and more essential, the U.S., which invented 

rare earth processing and manufacturing technology, has become almost completely 

dependent on China for access to rare earths and, more’ specifically, the metals, alloys and magnets that derive from them. 

On its face it may not seem any more disconcerting than any other material dependency. However, it is the combination of three key factors that make this situation one of urgent concern to policymakers: 1) the indispensability of rare earths in 

key clean energy and defense technologies; 2) the dominance of rare earth production by one country, China, and 3) China’s accelerating consumption of their own 

rare earth resources, leaving the rest of the world without a viable alternative 

source. 
50

The development of clean energy technology is a top national priority, as these 

innovations are key to our broader national objectives of greater energy security and 

independence, reduced carbon emissions, long term economic competitiveness, and 

robust job creation. Yet all of these crucial national objectives become less achievable if we lack access to rare earth resources. 

Our company has produced rare earths for 57 years, and we are in the process 

of restarting active mining and down-stream processing at Mountain Pass. We are 

redeveloping our facilities to dramatically increase our production, and we are executing a strategy to rebuild the rare earth metal and magnet manufacturing capabilities that our country has lost in the past decade. This effort will help to address 

rare earth access concerns and may help to catalyze clean tech manufacturing, but 

the lingering question is how quickly we can make this happen, as the looming supply concerns seem to accelerate every day. 

Below I offer my perspective on rare earths and their applications, America’s rare 

earth capability gap, the global supply concerns and their implications, our work at 

Molycorp to expand our domestic rare earth access, and the role the Federal Government can play to help address the looming supply concerns.

Rare Earth Elements and Key Applications

Rare earths are a group of 17 elements (atomic numbers 57–71 along with Sc and 

Y) whose unique properties make them indispensable in a wide variety of advanced 

technologies. One rare earth in particular—neodymium (Nd)—is used to create the 

very high powered but lightweight magnets that have enabled miniaturization of a 

long list of consumer electronics, such as hard disk drives and cell phones. While 

high-tech applications such as these have dominated the usage of rare earths over 

the past decade, it is their application in clean energy technologies and defense systems that has brought heightened attention to rare earths. 

Rare earths are indispensable in a wide variety of clean energy technologies. Rare 

earth metals are used in the advanced nickel-metal hydride (NiMH) batteries that 

are found in most current model hybrids; powerful rare earth magnets enable next 

generation wind turbines, electric vehicle motors, and hybrid vehicle motors and 

generators; and rare earth phosphors are what illuminate compact fluorescent light 

bulbs. On the defense side, missile guidance systems, military electronics, communications and surveillance equipment all require rare earths. None of these technologies will work without rare earths, and yet each of these technologies is tied 

closely to some of the nation’s highest national priorities, our energy and national 

security. 

The list of rare earth applications is long and varied, but there are additional applications that are worth noting specifically. The automotive sector is a big user of 

rare earths. Cerium is used to polish glass and provides protection from UV rays. 

In the 1970s, rare earths replaced palladium for use in catalytic converters, and if 

palladium were still used today, cars would be significantly more expensive. They 

are also used in petroleum refining and as diesel additives. 

At Molycorp, we have also found a use for cerium in water filtration. We have 

developed proprietary water filtration technology that has applications in industrial 

wastewater treatment, clean water production in the developing world, and the 

recreation and backpacking market. 

The diagram below offers a broader view of rare earths’ applications:
51

Despite their name, rare earths are not rare. If you were to go outside right now 

and grab a handful of dirt from the ground, it would contain rare earths. However, 

it is far more difficult to find rare earths in a concentration high enough to be mined 

and separated economically. When rare earths are extracted from the ground, the 

ore contains all of the rare earths, and it is through highly complex separation processes that each individual rare earth oxide can be produced. It is this separation 

process that largely drives the cost of rare earth production. Ore bodies that contain 

rare earths at percentages in the low single digits cannot be mined economically 

under current prices for rare earths. 

Thus, today, there are only 3 known and verified locations where a sufficiently 

high concentration of rare earths exists: Baotou, China; Mountain Pass, California, 

where Molycorp’s mine is located; and Mt. Weld, Australia, which has a rich ore deposit but none of the infrastructure necessary to begin extraction, separation, and 

distribution to market. Given these circumstances, Molycorp’s mine at Mountain 

Pass is clearly one of the only rare earth resources in the world that is immediately 

minable, economically viable, and can provide a near-term source of rare earth materials. With supply concerns becoming increasingly imminent, the greatest challenge facing Molycorp is the speed at which we can bring these needed resources 

online. I will discuss this in further detail later in this testimony.

Industrial Supply Chain and America’s Capability Gap

One of the biggest challenges in raising awareness and understanding about rare 

earths is that they are found so early in the industrial supply chain that it is difficult to contemplate their usage in products that we see every day. To illustrate 

this point, consider the example of the new generation of wind turbines, which employ rare earth-based permanent magnet generators with reliability and efficiency 

improvements of 70% over the current industry standard. Below is a simplified supply chain:
52

1 Cox, Clint. (2006, October 10). Rare earth may be China’s checkmate. Retrieved from the Anchor House web site on February 5, 2010 at http://www.theanchorsite.com/2006/10/. 2Moberg, David. (2004, January 23). Magnet Consolidation Threatens Both U.S. Jabs and Security. Retrieved from the In These Times web site on February 5, 2010 at http://

www.inthesetimes.com/article/685/.

Once the rare earths are mined, they are separated and converted to oxides and 

then converted into metals. The metals are then manufactured into alloys and magnet powders. The powders are then bonded or. sintered to form the magnets required for turbine production. The turbine, in turn, is included in the windmill assembly, and the final product is installed. All of the functions within the green box 

are necessary to be able to produce the magnets required for this clean energy technology and so many others. However, other than the rare earth mineral extraction 

and conversion to oxides, the other manufacturing capabilities in the green box no 

longer exist in the United States. The U.S. did at one time possess all of these capabilities, and in fact, these technologies largely originated here. However, over the 

past decade as American manufacturing has steadily eroded, the U.S. has ceded this 

technological ground to competitors in China, Japan and Germany. 

China has become particularly dominant, and some would contend that it has 

been by design. In the early 1990s, China’s Deng Xiaoping was quoted as saying, 

‘‘There is oil in the Middle East; there is rare earth in China.’’ 1 China realized that 

it had a significant natural resource advantage, and through the development of 

new applications in an ever-expanding number of advanced technologies, China 

helped to grow the market for rare earths from 40,000 tons in the early 1990s to 

roughly 125,000 tons in 2008. It is over that same period that, due to a variety of 

factors, the U.S. ceased active mining of rare earths. 

While the U.S. still possesses the technical expertise, we have lost the necessary 

infrastructure to manufacture the rare earth metals and magnets that fuel next 

generation technologies. The last rare earth magnet manufacturer in the U.S. was 

a company called Magnaquench, formerly located in Valparaiso, Indiana, and owned 

by General Motors. Magnaquench and all of its U.S. assets were sold to a Chinese 

company in the early 2000s in an effort to help GM gain access to the Chinese market.2 Two domestic companies can produce small quantities of rare earth based alloys but none can convert the rare earth oxides to metal. The result is a significant 

rare earth ‘‘capability gap’’ in the U.S. that has the potential to quickly become a 

major strategic and economic disadvantage. 

Global Supply Concerns and Implications for the U.S.

Today, the production of rare earths, and the metals and magnets that derive 

from them, is overwhelmingly dominated by China. At present, China produces 97% 

of the world’s rare earth supply, almost 100% of the associated metal production, 

and 80% of the rare earth magnets. Complicating this picture even further, China’s 

national consumption of rare earth resources is growing at an intense pace, consistent with their meteoric GDP growth, and it is leaving the rest of the world with 

less of these critical materials just as the clean energy economy is beginning to gain 

momentum. As the chart below from rare earths research firm, the Industrial Minerals Company of Australia (IMCOA) demonstrates, China’s massive production has 

been able to satisfy both their own internal needs and those of the rest of the world. 

However, as the blue line indicates Chinese demand for its own rare earths will 

soon match, if not eclipse, its own internal supply, and with global demand (in yellow) growing at a parallel pace, there is a significant production gap—around 60,000 

tons—that must be filled in a very short timeframe.
53

IMCOA’s previous forecasts concluded that this critical shortage for the rest of the 

world outside of China would occur by 2012, but China has recently said that it intends to be the world’s largest producer of wind energy and electric vehicles and has 

committed $150 billion and $29 billion to these two respective clean technology sectors (by comparison, the entire amount of stimulus funding under the American Recovery and Reinvestment Act directed at all areas of clean energy deployment was 

$60 billion). The new, more efficient wind turbines that use rare earth permanent 

magnet generators require around 2 tons of rare earth magnets per windmill. The 

rare earth industry has never seen this level of demand. To date, rare earth producers like Molycorp have filled orders by the pound or kilogram, not by the ton. 

If China’s commitment holds true, this will vastly accelerate their consumption of 

rare earths and speed up the date when the rest of the world will find its access 

to rare earths severely limited. 

Around the same time that China was outlining its clean energy investments, it 

also began to consider steps to reduce the availability of its rare earths to the rest 

of the world. As if the demand forecasts weren’t disconcerting enough, China heightened international supply concerns last fall when its Interior Ministry signaled that 

it would further restrict its exports of rare earth resources. China has been steadily 

decreasing its exports by an average of 6% per year since 2002, but these new restrictions portend a more aggressive effort to use its own resources domestically. 

This critical issue was featured on the front page of the New York Time’s business 

section on August 31, 2009, and I’ve included the article for the Committee’s record. 

Finally, in late December, China announced that it will begin to stockpile rare 

earths. It is our estimation that if they are announcing it officially to the rest of 

the world, it is highly likely that the stockpiling has been occurring for some time. 

Regardless, it will have a further depressive effect on global supply.

Energy Security and Global Competitiveness

Disruption in the global supply of rare earths poses a significant concern for 

America’s energy security and clean energy objectives, its future defense needs, and 

its long-term global competitiveness. Rare earths may not be familiar to most people, hidden deep in the industrial supply chain, but they are absolutely indispensable for so many of the advanced technologies that will allow us to achieve critical 

national objectives. 

Efforts to decrease U.S. dependence on foreign oil and develop a clean energy 

economy, as well as the jobs that come with it, have received broad bipartisan support, and few would disagree that the U.S. must diversify its sources of energy and 

slow the demand for fossil fuels. Wind power and electric vehicles (EVs) have 

emerged as technologies that will play important roles in these efforts, and the U.S. 

has indicated it intends to be a leader in both. As noted above, the most efficient 

wind turbines require multiple tons of rare earths, and as the U.S. moves to increase the percentage of power that comes from wind, there will be a commensurate 

increase in domestic demand for rare earths. The American automotive industry is 

expanding the number of hybrid, plug-in hybrid (PHEV), and full electric vehicle 

(EV) models in an effort to produce far more fuel efficient products, and yet many 
54

of the advanced batteries that power hybrids and PHEVs utilize several kilograms 

of rare earth metals in each unit. The motors and generators in these new vehicles 

also use several kilograms of rare earth permanent magnets. Similar implications 

exist for our national defense capabilities. From military communications equipment 

to missile guidance systems, rare earths enable a long list of advanced defense technologies. We have had extensive discussions with the Department of Defense (DOD), 

and they are paying far greater attention to this concern. In fact, the FY 2011 DOD 

Authorization signed into law last October included a provision requiring the Department to submit a report to Congress no later than April 1, 2010, assessing the 

usage of rare earth materials in DOD’s supply chain, looking at projected availability for use by DOD, the extent to which the DOD is dependent on rare earth 

materials, steps that the Department is taking to address any risks to national security, and recommendations for further action. 

Access to rare earths is obviously essential, but without rebuilding the manufacturing capacity to produce rare earth metals and magnets, the U.S. could find itself 

dependent on China for key technological building blocks. But even this scenario 

presumes that the U.S. has the manufacturing capabilities to put Chinese rare 

earth materials to use in final products. Right now, given the current state of U.S. 

manufacturing, it is unfortunately more likely that we would become a raw material 

supplier to Chinese manufacturers. 

Viewed through this lens, the domestic development of rare earth resources and 

manufacturing capabilities is not only a strategic necessity but also a potential catalyst for job growth in the clean energy and advanced technology manufacturing sectors. If these resources and capabilities were built up domestically, it could have a 

multiplier effect on downstream, value added manufacturing. Consider China’s experience. It has to create 10–15 million jobs a year just to accommodate new entrants into its job market, and it has viewed the rare earths industry as a ‘‘magnet’’ 

for jobs. China repeatedly attracted high-tech manufacturers to move to its shores 

in exchange for access to rare earths among other enticements. The U.S. could experience a similar jobs boost by making a concerted effort to rebuild the clean energy 

supply chain, beginning with rare earths, within its borders.

Molycorp Minerals’ Mining to Magnets Strategy

Molycorp Minerals has been in the rare earths business for 57 years, and while 

the company and its facilities have changed ownership over the years, it has remained one of the world’s only viable sources of rare earth minerals. On October 

1, 2008, a group of U.S. based investors, including myself, formed Molycorp Minerals, LLC, and we acquired from Chevron its rare earth assets at Mountain Pass, 

which the U.S. Geological Survey has deemed ‘‘the greatest concentration of rare 

earth minerals now known.’’ From the outset, we have sought to combine this worldclass rare earth deposit with a ‘‘mining to magnets’’ strategy. Our redevelopment 

of Mountain Pass is the starting point of a broader effort to reestablish domestic 

manufacturing of the rare earth metals, alloys and magnets that enable and are indispensable to the clean energy economy and advanced technology manufacturing. 

Our work at Mountain Pass provides a timely, well-planned, and economically viable means to address the rare earth access challenges on the shortest timeline possible. While Molycorp has been processing existing rare earth stockpiles since 2007, 

it has invested $20 million to begin the restart of active mining. Our team matches 

this remarkable natural resource with 57 years of rare earth mining, milling, and 

processing experience. We have obtained the necessary 30-year mine plan permit, 

and the Environmental Impact Report for the mining-to-oxides portion of the redevelopment has been reviewed and approved by all applicable Federal, state, and 

local agencies. Molycorp’s footprint will be limited to its privately-held land, using 

state-of-the-art technologies for water treatment and mineral recovery. Through new 

advances in our production processes, Molycorp will produce 20,000 tons, or 

40,000,000 pounds, of rare earth oxides per year, and our increased production and 

capabilities can potentially create 900 new jobs for the hard hit San Bernardino-Riverside and Henderson-Las Vegas regions of California and Nevada. Molycorp is the 

only domestic rare earth provider that stands ‘‘shovel-ready’’ to create jobs and commence the mining-to-magnets work required to meet multiple customer-specific 

product demands. 

Access to the raw, rare earth minerals is obviously essential, but as noted earlier, 

it resolves only part of the challenge. As part of our mining to magnets development, we will build out the metals, alloying and magnet powder manufacturing capabilities. We would also establish the production of rare earth permanent magnets, 

all here in the United States. Our company is uniquely well-positioned to rebuild 
55

these early steps in the clean energy supply chain and fully extend the value and 

capabilities of the rare earth resources at Mountain Pass.

Environmental Stewardship as a Source of Cost-Competitiveness

Many industry observers question how a U.S. producer of rare earths can ever 

compete with the Chinese, when the possibility always lingers that the Chinese 

could flood the market and dramatically depress rare earth prices, a practice they 

have demonstrated previously. We have spent the better part of the past 8 years 

developing the answer to this question. We changed the orientation of our thinking 

and discovered that by focusing principally on energy and resource efficiency, we 

could make major improvements in our cost competitiveness while at the same time 

advance our environmental stewardship. 

We will incorporate a wide variety of manufacturing processes that are new to the 

rare earth industry, which will increase resource efficiency, improve environmental 

performance, and reduce carbon emissions. Specifically:

• Our overall processing improvements will almost cut in half the amount of 

raw ore needed to produce the same amount of rare earth oxides that we have 

produced historically. This effectively doubles the life of the ore body and further minimizes the mine’s footprint;

• Our extraction improvements will increase the processing facility’s rare earth 

recovery rates to 95% (up from 60–65%) and decrease the amount of reagents 

needed by over 30%;

• Our reagent recycling, through proprietary technology that Molycorp has developed, could lead to even greater decreases in reagent use;

• Our new water recycling and treatment processes reduce the mine’s fresh 

water usage from 850 gallons per minute (gpm) to 30 gpm a 96% reduction;

• Finally, the construction of a Combined Heat and Power (CHP) plant—fueled 

by natural gas—will eliminate usage of fuel oil and propane. This will significantly reduce the facility’s carbon emissions, reduce electricity costs by 50%, 

and improve electricity reliability.

These process improvements fundamentally reverse the conventional wisdom that 

superior environmental stewardship increases production costs. At the same time, 

we significantly distinguish ourselves from the Chinese rare earth industry that has 

been plagued by a history of significant environmental degradation, one that it is 

just beginning to recognize and rectify.

Need for Federal Leadership

Over the past year, I have spent a significant amount of time in Washington 

meeting with Members of Congress and their staffs as well as officials in a variety 

of Federal agencies to direct greater attention to this issue. I’m pleased to report, 

just over one year since we began our efforts, that the Federal Government is beginning to take meaningful steps toward understanding and addressing our rare earth 

vulnerabilities. The question remains, however, if it will be able to make its assessments, determine the required actions, and execute them within a timeline that 

seems to be accelerating daily. 

In each of these meetings, and as this Committee has also inquired, I am asked 

what role the Federal Government should play in tackling this pressing concern, 

and I believe that there are 4 areas where it can have the greatest near- and longterm in impact: 1) federally based financing and/or loan guarantee support for highly capital intensive projects like ours; 2) assistance rebuilding America’s rare earth 

knowledge infrastructure (university-based rare earth research, development of academic curricula and fields of study, training and exposure to the chemical and physical science related to rare earths, etc.); 3) increased interagency collaboration at the 

highest levels on the impact of rare earth accessibility on major national objectives; 

and 4) funding competitive grants for public and private sector rare earth research. 

I’ll explore each in greater depth below:

• Financing support: Given the size, scale, ambition, and necessity of 

Molycorp’s redevelopment efforts, we submitted an application for the Department of Energy’s Loan Guarantee Program (LGP). We believed that the program was well-suited for our project, particularly given that the project’s substantial implications closely match the program’s paramount objectives. Traditional bank financing in the current climate—with very short repayment periods and interest rates near double digits—is not economically feasible. The 

LGP offers longer term financing and lower interest rates and would allow 
56

Molycorp to accelerate development in the near-term while ensuring rare 

earth resource availability in the long term. However, the DOE summarily rejected our application in December, saying that the project did not qualify as 

a ‘‘New or Significantly Improved Technology.’’ We reviewed the relevant portion of the Rule, Section 609.2, and our project meets every one of the stated 

criteria. We requested further discussion with the DOE to understand how it 

came to its conclusion and how Molycorp might proceed. After almost two 

months, the DOE finally responded to our request. During the meeting, the 

DOE contended that this project goes ‘‘too far upstream’’ and that the program was not intended to cover mining projects. We have yet to find the legislative or regulatory language that provides such a limitation. However, it appears we may need to ask Congress for legislative direction or possibly new 

legislative language specifically authorizing the use of loan guarantees for 

strategically important projects like this. Our frustrations with the loan guarantee notwithstanding, I still believe that this kind of financing support is exactly what a project like ours needs. We will be in a very strong position to 

both raise our portion of the capital to execute the project and repay the loan 

well-within the required timeline. We will continue to pursue this financing 

support despite the DOE’s current position.

• Rebuilding the rare earth knowledge infrastructure: The United States 

used to be the world’s preeminent source of rare earth information and expertise, but it has ceded that advantage over the past decade, as its position in 

the industry has become subordinate to China and other countries in East 

Asia. The Federal Government, and the House Science and Technology Committee in particular, can play a pivotal role in reestablishing that institutional knowledge and expertise and sharing it with a wider audience of researchers, scholars, and practitioners here in the U.S. and abroad. At 

Molycorp, we are fortunate to have a team of 17 rare earth researchers and 

technologists who are second to none in the world, but almost all of them had 

no previous expertise in rare earths prior to joining Molycorp. It will be difficult for the U.S. to reestablish its preeminence without a concerted effort to 

attract the brightest scientists and researchers to the field of rare earths. Rebuilding the knowledge infrastructure and the research support will go a long 

way toward that goal. Dr. Gschneidner, who I’m honored to testify with today, 

is regarded as the father of rare earths, and his work at Ames Laboratory 

and Iowa State University as well as the great work being done by Dr. Eggert 

and his colleagues at the Colorado School of Mines can serve as the foundation on which to expand America’s rare earth expertise. As a reminder of the 

rest of the world’s interests and actions in this regard, the Korea Times recently reported that Korea is developing rare earth metals for industrial use 

at a government-funded research center.

• Interagency Cooperation: Over the past several months, we have been 

very pleased to learn about efforts within many Federal agencies to direct 

specific attention to rare earth issues. We have been in direct contact with 

the Departments of Defense, Commerce, and State, and each is examining 

this issue within the unique context of their agencies’ work. It is also worth 

noting that the Commerce Department convened a group of stakeholders from 

both the government and the private sector in December, 2009, which included representatives from DOD, GAO, USTR, and OSTP. We have also had 

multiple discussions with the Office of Science and Technology Policy directly 

and have been very appreciative of their engagement on this issue. In fact, 

OSTP, along with Commerce, is facilitating interagency collaboration going 

forward. While we are encouraged by these recent efforts, it is our hope that 

the agencies and the White House recognize that the global supply-demand 

challenges are approaching at an increasingly rapid pace and that their efforts should reflect the requisite urgency.

• Funding support for rare earth research: Part of China’s success in 

growing and dominating the market for rare earths can be attributed to their 

efforts to find and commercialize new applications for rare earth materials. 

Federal funding support for competitive grants specifically directed at, rare 

earth research will help to expand the U.S.’s ability to do the same. This has 

the potential to broaden the economic impact of rare earths, and contribute 

to the goal mentioned above of reestablishing America’s superior expertise in 

rare earth research.
57

Conclusion

The global rare earth supply concerns facing the U.S. and all other countries outside China are obviously disconcerting, but they are not insurmountable. A combination of geologic good fortune and an accelerated effort to ramp up domestic production and rebuild lost manufacturing capabilities could provide a solution for the U.S. 

and ensure that our leading national objectives are not jeopardized. At Molycorp, 

our ‘‘mining to magnets’’ strategy is far more than an approach to a new business, 

it is a cause with far reaching implications. If executed effectively, it could prove 

to be catalytic for our development of a clean energy economy and the resurgence 

of domestic manufacturing. This project will have meaningful and significant impact 

on leading national priorities, and as such, we stand ready to work with Congress 

and the Administration to find ways to accelerate our work at Mountain Pass and 

bring these needed capabilities online as soon as possible. 

Thank you once again for the opportunity to share my perspective on rare earths, 

and I look forward to working with the Committee in the weeks and months to come 

as it continues to examine this important topic and determine potential actions.
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BIOGRAPHY FOR MARK A. SMITH

Mark A. Smith is Chief Executive Officer, member of the Board of Directors and 

a shareholder of Molycorp Minerals, LLC. Prior to Molycorp Minerals, Mr. Smith 

was the president and chief executive officer of Chevron Mining Inc. a wholly-owned 

subsidiary of Chevron Corporation. Mr. Smith was appointed President and Chief 

Executive Officer in April 2006. Chevron Mining Inc. operated five mines one of 

which was the Mountain Pass, CA Rare Earth mine. 

Prior to this appointment, Mr. Smith was a vice president for Unocal Corporation, 

where he was responsible for managing the real estate, remediation and mining divisions. Mr. Smith worked for Unocal for over 22 years. 

Mr. Smith received his Bachelor of Science degree in agricultural engineering 

from Colorado State University in 1981 and his Juris Doctor, cum laude, from Western State University, College of Law, in 1990. He is a registered professional engineer and an active member of the State Bar of California and Colorado. Mr. Smith 

and his wife live in Denver, Colorado.

Chairman MILLER. Thank you, Mr. Smith. Dr. Broun and I are 

worried what percentage of rare earths the Chinese will control 

by——

Mr. SMITH. It is growing every day. 

Chairman MILLER. —the end of the hearing. 

Mr. SMITH. 97.3 to be precise. 

Chairman MILLER. Mr. Stewart for five minutes. 
62

STATEMENT OF MR. TERENCE STEWART, ESQ., MANAGING 

PARTNER, STEWART AND STEWART 

Mr. STEWART. Mr. Chairman, members of the Subcommittee, 

good afternoon. China’s policy on rare earth minerals is similar to 

that nation’s actions on a large number of other raw materials. The 

general goals seem to be reducing availability of supply for global 

customers as well as making foreign purchases more expensive 

through the imposition of export duties, export licenses and other 

trade-impeding measures. China’s policy encourages foreign investors to move production and investment to China and ensures low 

price supplies for targeted rapid-growth sectors within China. 

Last year the United States filed a WTO case against China’s export restraints on numerous raw materials critical to U.S. manufacturers and workers. The raw materials subject to export restraints are used in some of the key industries identified in China’s 

industrial policies such as steel, aluminum and chemicals. China’s 

most recent 5-year plan, which goes through 2010, continues to 

focus development in certain strategic sectors and to ensure a leading role for state-owned enterprises in many of those sectors. 

Recently the European Chamber in China reviewed the massive 

problems of overcapacity in a number of important industries in 

China including steel, aluminum, cement, chemicals, oil refining, 

wind power equipment, shipbuilding, flat glass and photovoltaics. 

This overcapacity, coupled with export restraints on key raw materials, effectively shifts the burden of adjusting global excess capacity from China to trading partners by limiting access to affordably 

priced key raw materials. Moreover, limiting access to key raw materials can be used to force investment within China. 

According to the 2009 U.S.-China Economic and Security Review 

Commission in an annual report to Congress, China is targeting 

rare earth dependent components of key strategic industries for 

production within China including many of the green technologies 

reviewed earlier. China is attempting to make significant cuts to 

rare earth exports through a combination of export duties and export quotas. These actions are intended to raise prices outside of 

China, and in an indication that commissions reach the common 

number, they found that China currently produces 93 percent of 

rare earth minerals, somewhere between 90 and 97——

Chairman MILLER. The trend is heading in the right direction 

now. 

Mr. STEWART. China’s export restraints have understandably 

caused concern in many countries, including our own. 

So what can be done? First and foremost, the United States and 

its trading partners should bring a second trade action against 

China on the range of export restraints being imposed on rare 

earth minerals. Such restraints are in clear violation of obligations 

that China undertook to become a member of the World Trade Organization in 2001. At that time, China agreed to limit the use of 

export taxes to 84 product categories, none of which included rare 

earth minerals. In 2010, China is imposing export taxes not on 84 

products, but on 329 product categories including 23 rare earth 

mineral categories, a plain violation of their commitments. 

On the domestic front, it is my understanding that both the government and the private sector are taking actions to understand 
63

7Public Law 118–84; enacted October 28, 2009. The study was authorized in Section 843. 

8See GAO Report GAO–10–617R (April 14, 2010). 

the nature of the potential problems as well as looking for alternative sources of supply. For example, the National Defense Authorization Act for Fiscal Year 2010 7 requires the Comptroller 

General to deliver a report by this April 1st on rare earth materials 

in the defense supply chain.8 Obviously, understanding the national security implications of Chinese rare earth policies is critical. 

The Chairman and Members of this Subcommittee might want to 

advocate creation of a similar report for the civilian sector to help 

Members of Congress understand the challenges facing the American economy from the current reliance on China’s supply and what 

legislative approaches might be pursued to safeguard our commercial as well as our military interests. 

A positive trend in recent years has been renewed interest in developing rare earth mineral resources outside of China including in 

North America, obviously the Molycorp example being one of the 

key elements. Reports are encouraging, although cost structures 

with environmental needs versus China remain important challenges. The Government through the Committee on Foreign Investment in the United States must help ensure that mines in the 

United States are not purchased by foreign interests whose governments have limited supply to U.S. users and that any new mines 

receive priority attention in terms of various government licenses 

and reviews. 

Finally, the USGS indicates that for most rare earth minerals 

there are substitute products available, although known substitutes 

are less effective currently than the rare earth minerals themselves. The United States Government can support efforts to develop alternative solutions to current rare earth needs, both 

through publicly financed research and through tax policies and 

other actions to support private sector research. 

Thank you very much. 

[The prepared statement of Mr. Stewart follows:]

PREPARED STATEMENT OF TERENCE STEWART

Mr. Chairman and members of the Subcommittee. Good afternoon. I am pleased 

to appear this afternoon as part of your hearing on rare earth minerals and 21st 

century industry to try to address three questions that I understand are of interest 

to the Subcommittee:

1. How do Chinese actions in the rare earths sector fit into China’s policies on 

strategic industries and economic development?

2. Are there policies that the Federal Government can adopt, or strategies that 

the U.S. private sector can adopt, that can help assure a consistent and sustainable domestic supply of economically and militarily critical materials 

such as rare earths?

3. Are there policies that the Federal Government can adopt, or strategies that 

the U.S. private sector can adopt, that would support firms dependent on 

rare earth elements to retain their manufacturing capacity in the U.S.?

Let me start with some acknowledgments on my limitations as a witness on rare 

earth minerals. First, my background and expertise is on international trade law 

matters, including the World Trade Organization, and manufacturing competitiveness issues. Others on the panel today are the experts on minerals in general or 

rare earth minerals policies. 
64

Our firm, over the years, has looked at many aspects of the U.S.-China relationship and has prepared for the U.S.-China Economic and Security Review Commission various studies looking at the trade and manufacturing impacts of China’s 

practices. For example, on March 24, 2009 I testified at a hearing before the Commission on ‘‘China’s Industrial Policy and its Impact on U.S. Companies, Workers 

and the American Economy.’’

Rare earths are not part of the current WTO challenges brought by the U.S., the 

EU and Mexico of China’s export restraints on various materials. (see WT/DS394/

1, China—Measures Related to the Exportation of Various Raw Materials, request 

for consultations by the United States) Purchasers of rare earths are concerned 

about similar types of restraints imposed by China on rare earth minerals and that 

there have been discussions by the U.S. with key allies about a possible future case. 

Inside U.S.-China Trade, October 21, 2009, ‘‘U.S. and Allies Discuss Rare Earth 

Metals Action at WTO.’’

Now let me turn to the questions of interest to the Subcommittee.

China’s Actions on Rare Earth Minerals

What China is doing on rare earth minerals mirrors what it is doing on a large 

number of other raw materials: reducing availability of supply for global customers 

and/or making purchases more expensive through the imposition of export duties, 

export licenses, etc. The objective can be to encourage foreign investors to move investment to China to produce downstream products in the Middle Kingdom versus 

overseas, or to ensure low priced supplies for sectors in China targeted for rapid industrial growth. 

China’s most recent five-year plan (covering 2006–10) continues to focus development in certain sectors and to ensure a leading role for state-owned enterprises 

(‘‘SOEs’’) in certain sectors. 

Specific guidance regarding SOEs was provided in December 2006 by the National 

Development and Reform Commission (NDRC) when it issued a guiding opinion on 

state-owned assets restructuring. The opinion states that SASAC’s state-owned assets should concentrate on ‘‘important industries and key areas’’ (i.e., strategic industries). The opinion then explained that the ‘‘important industry and key areas’’ 

shall ‘‘mainly include industries that involve national security, large and important 

infrastructures, important mineral resources, important public utilities and public 

services, and key enterprises in the pillar industries and high-tech industries.’’

Seven important industries and key areas were identified: defense, electric power 

and grid, petroleum and petrochemical, telecommunications, coal, civil aviation, and 

shipping. Basic and pillar industries where the state would also maintain an important role included equipment manufacturing, auto, information technology, construction, iron and steel, non-ferrous metals, chemicals, and surveying and design. 

The counterpart to rapid development of key industries is maintaining low prices 

and ready availability of key raw materials. Not surprisingly, the cases filed by the 

US, the EU and Mexico against Chinese export restraints on certain raw materials 

involve raw materials used in some of the key industries identified in China’s industrial policies—steel, aluminum and chemicals. As the USTR press release of November 28, 2009, announcing the panel request against China indicated, ‘‘The materials 

at issue are: bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon 

carbide, yellow phosphorus and zinc, key inputs for numerous downstream products 

in the steel, aluminum and chemical sectors across the globe.’’

A corollary to keeping prices at home low is the ability to force trading partners 

to shutter capacity in downstream industries. For example, a study came out in December 2009, published by the European Chamber, entitled ‘‘Overcapacity in China: 

Causes, Impacts and Recommendations.’’ http://www.europeanchamber.com.cn/

view/static/?sid=6388. The European Chamber in China reviewed the massive 

problems of overcapacity in a number of important industries including steel, aluminum, cement, chemicals, refining, wind power equipment, ship building, flat 

glass, and photovoltaics. While the causes of overcapacity in China are varied as reviewed in the study, when coupled with export restraints on key raw materials, 

China can apply pressure on trading partners to make the adjustments for excess 

capacity created in China by limiting access at affordable prices to key raw materials or preempting development of key new technologies in the U.S. and elsewhere. 

And control of key raw materials can be used to attract foreign investment by limiting access to such materials to those with a local presence. As discussed on one 

Web site, China is apparently offering to give ample supplies of rare earth minerals 

to companies that invest in China, even as China moves to limit or eliminate availability of product for export.
65

Chinese officials have made it very clear: If foreign manufacturing companies 

move their facilities to China, they will be guaranteed a steady supply of rare 

earths. Many technology companies are reluctant to do this because they want 

to protect their intellectual property, but will the temptation of an endless REE 

supply be too much? Companies continue to move operations to China, but the 

tension still exists.

Clint Cox, The Anchor House, Inc. (Research on Rare Earth Elements), December 

17, 2009, http://theanchorhouse.com (page 5). 

When one looks at China, one sees all of the effects and/or purposes behind the 

wide ranging export restraints applied to rare earths and other materials. A series 

of articles in the last four months of 2009 reflects a range of concerns and purposes 

behind the draft ‘‘2009–2015 Rare Earth Industry Development Plan’’ from the Ministry of Industry and Information Technology:

[A]s early as 1998, China has started to limit the export quantities of rare earth 

products, and implemented the differentiating principle of ‘‘forbid, encourage, 

and restrict:’’ forbid the export of rare earth raw materials; restrict oxides and 

metals by using export quota; encourage downstream rare earth products, such 

as high value-added products like magnetic materials and fluorescent powder.

However, under the increasing global demand and China’s increasingly reduced 

number of eligible export companies and export quotas, some companies with large 

quotas started to sell their quotas illegally. In addition, some developed countries’ 

companies started to invest and establish factories in tungsten, antimony, and other 

rare earth reserves areas, bought large quantities of raw materials, processed them 

simply before shipping them overseas for further processing or storage, thereby effectively evaded China’s export control. From 1990 to 2008, China’s rare earth export grew almost 10 times, but the average export price has lowered to about 60% 

of the original price. 

All these demonstrate that China’s rare earth industry has three serious problems: overcapacity, disorderly competition, and cheap export on a large scale. It is 

of great urgency that we protect our rare earth resources and establish our reserve 

system. 

MIIT’s 2009–2015 Plan aims to macro-manage the rare earth industry, strengthen 

the control of strategic resources, and strictly control production capacity, by both 

administrative and market means. In the next six years, no new rare earth mining 

penult will be approved, separation of newly formed rare earth smelting companies 

will be strictly reviewed, and existing rare earth companies will be eliminated [by 

judging their performance] in the three areas of technology and equipment, environmental protection, and management. 

At the same time, industry access standards will be higher, elimination of outdated capacity will be accelerated through ‘‘shut down, pause, merger, transfer.’’ 

Promote merger and reorganization of companies, strengthen and enlarge rare earth 

industry, form leading rare earth companies, establish a ‘‘China Rare Earth OPEC,’’ 

form companies with absolute dominating power in the market so that China can 

be the leader in controlling international market price. 

Of course, to accomplish this, merely depending on controlling resources and export is not enough. More importantly, we must grasp rare earth core technology patents, rare earth application market, rare earth products standards. Therefore, we 

must start from the technology innovation, invest more in technology, and at the 

same time value intellectual property, implement IP strategies, and seize the commanding ground of technology. Break out of the technology restrictions of foreigninvested enterprises, and establish our own rare earth ‘‘high-way’’ industry chain. 

‘‘2009–15 Rare Earth Industry Development Plan’’ Has Been Passed, Hardware 

Business Web site (an electronic business Web site formed by Wenzhou Shengqi 

Internet Technology, Co., Ltd.), November 6, 2009 (unofficial translation). 

China is attempting to make significant cuts to both rare earth exports. China 

has implemented its program to limit foreign availability of rare earths through a 

combination of both export duties and export quotas. These actions will raise prices 

outside of China by curtailing supplies and by raising import prices (with all relevant taxes or duties).

The quota for rare earth materials was 31,300 MTs in 2009, down 8.33% from 

2008. This is the fifth year since China started decreasing its rare earth export.

As a corresponding policy to the annual 35,000 MTs quota from 2009 to 2015 

proposed by MIIT, China will restrict its mineral annual production to 130,000 

to 170,000 MTs and its rare earth smelting products’ production to 120,000 to 

150,000 MTs from 2009 to 2015.
66

‘‘2009–15 Rare Earth Industry Development Plan,’’ China Suppliers’ Web site 

(under the guidance of State Council Information Office, Internet Promotion Division; MOFCOM Department of Market Operation Regulation; National Development 

and Reform Commission, International Cooperation Center), September 4, 2009 (unofficial translation). 

For 2010, the Chinese export duty and quota programs are reviewed in a series 

of documents issued in late 2009. 

Included as Exhibit 1 to this testimony is an unofficial translation of the export 

duty rate chart for 2010, which is an attachment to a notice titled ‘‘State Council 

Customs Tariff Commission’s Notice on the Implementation of the 2010 Tariff 

Schedule,’’ Customs Tariff Commission Pub. [2009] No. 28, December 8, 2009. The 

exhibit shows export duties being assessed on 329 products in 2010 including many 

rare earth items (e.g., items 47, 89–92, 122–139 (export duties of 10–25%)). 

Exhibit 2 to this testimony is an unofficial translation to the Ministry of Commerce of the People’s Republic of China (MOFCOM) Trade Letter [2009] No. 147, 

December 29, 2009, ‘‘2010 1st Batch Export Quota Distribution for Rare-Earth Materials in General Trade.’’ The total quota for the ‘‘1st batch’’ is 16,304 MT, with 

allocations given to twenty-two companies. A month and a half earlier, MOFCOM 

had published ‘‘Notice on Application Criteria and Procedures for 2010 Rare-Earth 

Materials Export Quota.’’ MOFCOM Pub. [2009] No. 94, November 6, 2009. An unofficial translation is included as Exhibit 3. 

The U.S.-China Economic and Security Review Commission (USCC) has done 

great work summarizing the general problem of export restrictions found in China 

as well as the USCC’s understanding of how this problem plays out with rare 

earths. I have quoted the USCC at length because nobody has synthesized this data 

better. A complete excerpt of the USCC’s views from its 2009 Report to Congress 

is available in Exhibit 4. 

Regarding China’s general export restrictions, the USCC states in its 2009 Report 

to Congress,

Export restrictions or export quotas, especially on energy and raw materials, 

have two general effects: First, they suppress prices in the domestic market for 

these goods, which lowers production costs for industries that use the exportrestricted materials; and second, these restrictions increase the world price for 

the raw materials that are affected by limiting the world supply, thereby raising 

production costs in competing countries.

U.S.-China Economic and Security Review Commission (USCC) 2009 Report to 

Congress, at 62. Available at http://www.uscc.gov/annual¥report/2009/annual¥report¥full 09.pdf.

While specifically addressing China’s restrictions on the export of rare earth minerals, the USCC notes,

China appears to be tightening its control over the supply of rare earth elements, valuable minerals that are used prominently in the production of such 

high-technology goods as flat panel screens and cell phones, and crucial green 

technologies such as hybrid car batteries and the special magnets used in wind 

turbines. USCC 2009 Report to Congress, at 63.

This reduction in supply by China is problematic because, according to the USCC, 

‘‘China accounts for the vast majority—93 percent—of the world’s production of rare 

earth minerals, and for the last three years it has been reducing the amount that 

can be exported.’’ 2009 Report to Congress, at 63. China admits that rare earth elements are ‘‘the most important resource for Inner Mongolia,’’ which contains 75 percent of China’s deposits. Id. Accordingly, the USCC cautions that by limiting exports 

and controlling production, the Chinese government is attempting to ‘‘consolidate its 

rare earths industry, with the aim of creating a consortium of miners and processors 

in Inner Mongolia.’’ Id. And according to the USCC, these tighter limits on exports 

of rare earths will place foreign manufacturers at a disadvantage compared to the 

domestic producers, whose access will not be so restricted. Id.

Policies and Solutions for Government and Private Sector Consideration

First and foremost, the U.S. and its trading partners should be considering a second trade action against China on the range of export restraints being imposed on 

rare earths (and possibly other products). The U.S. and others were concerned about 

China’s use of export restrictions during China’s negotiations for accession to the 

World Trade Organization. China agreed to limit the use of export taxes to 84 product categories (none of which included rare earth items) at rates no higher than included in Annex 6 of the Protocol of Accession. The fact that in 2010 China has im-
67

posed export taxes on 329 product categories, including twenty-three rare earth categories, creates a strong case of violation by China on the export taxes alone. Other 

violations from the use of export quotas are likely as well. Hopefully, Congressional 

interest will help move the Administration towards a second case on an expedited 

basis. 

On the domestic front, it is my understanding that both the government and the 

private sector are taking actions to understand the nature of the potential problems 

as well as looking for alternative sources of supply. 

For example, it is my understanding that the National Defense Authorization Act 

for Fiscal Year 2010, Public Law 111–84, requires the Comptroller General to deliver a report to the House and Senate Committees on Armed Services by April 1st 

this year on ‘‘rare earth materials in the defense supply chain.’’ Section 843, 50 USC 

app. 2093 note. The nature of the report suggests that it is likely to provide important options that should be considered by the Government to safeguard the military 

needs of the country moving forward in this area. Section 843(b) is reprinted below:

(b) Matters Addressed.—The report required by subsection (a) shall address at 

a minimum, the following:

(1) An analysis of the current and projected domestic and worldwide availability of rare earths for use in defense systems, including an analysis of 

projected availability of these materials in the export market.

(2) An analysis of actions or events outside the control of the Government 

of the United States that could restrict the access of the Department of Defense to rare earth materials, such as past procurements and attempted 

procurements of rare earth mines and mineral rights.

(3) A determination as to which defense systems are currently dependent 

on, or projected to become dependent on, rare earth materials, particularly 

neodymium iron boron magnets, whose supply could be restricted

(A) by actions or events identified pursuant to paragraph (2); or

(B) by other actions or events outside the control of the Government of 

the United States.

(4) The risk to national security, if any, of the dependencies (current or projected) identified pursuant to paragraph (3).

(5) Any steps that the Department of Defense has taken or is planning to 

take to address any such risk to national security.

(6) Such recommendations for further action to address the matters covered 

by the report as the Comptroller General considers appropriate.

Historically, the U.S. maintained a strategic stockpile of critical materials for national defense. Presumably, one of the issues that will be addressed in the report 

is the extent to which stockpiling rare earth materials is appropriate or feasible. 

The Chairman and Members of this Subcommittee might want to advocate creation of a similar report for the civilian sector. Such a report would obviously be 

helpful to Members of Congress in understanding the challenges facing the American economy from the current reliance on China as the source of supply and what 

legislative approaches might be pursued to safeguard our commercial and military 

interests. 

Press accounts suggest that in recent years there has been renewed interest in 

developing rare earth mineral resources outside of China and that several mines are 

in the process of being reactivated or developed. See, e.g., ‘‘New USGS Rare Earth 

Report Includes Thorium Energy, Inc.,’’ Earth Times, Oct. 8, 2009; http://

www.earthtimes.org/articles/show/new-usgs-rare-earth-report-includes-thorium-energy-inc,991131.shtml; ‘‘Canadian firms set up search for rare-earth metals,’’ New 

York Times, Sept. 9, 2009, http://www.nytimes.com/2009/09/10/business/global/

10mineral.html?r=1&scp=10&sq=br

Possible American sources of rare-earths include a separation plant at Mount 

Pass, CA. Bastnasite concentrates and other rare-earth intermediates and refined 

products continue to be sold from mine stocks at Mountain Pass. Exploration for 

rare earths continued in 2009; however, global economic conditions were not as favorable as in early 2008. Economic assessments continued at Bear Lodge in Wyoming; Diamond Creek in Idaho; Elk Creek in Nebraska; and Lemhi Pass in IdahoMontana. 

Thus, government and the private sector may have additional sources of supply 

of rare earths beyond China, although the challenge may be overall cost of supply, 

particularly in countries like the U.S. or Canada where environmental needs are 

more likely to be addressed at present than in China. 
68

Presumably, the government, under CFIUS, can help ensure that mines in the 

U.S. are not purchased by foreign interests whose governments have limited supply 

to U.S. users and that new mines receive priority attention in terms of various government licenses and reviews. 

I note that the Senate Committee on Energy and Natural Resources held a hearing last summer on mining law reform. The hearing had a number of witnesses who 

talked about the ability to improve the U.S. ability to supply more of its rare earth 

mineral needs and what challenges they faced based on various pending bills. Mining Law Reform, S. Hrg. 111–116, 111th Cong., 1st Sess. (July 14, 2009)(S. 796; S. 

140). Certainly, the Congress will want to be sure that any legislation balances our 

needs for access to critical raw materials with the other concerns prompting legislative modifications. 

Finally, the USGS indicates that for most rare earth minerals there are substitute 

products available, although known substitutes are less effective than the rare earth 

minerals. The U.S. government can support research efforts into the development 

of alternative solutions to current rare earth needs both directly through basic and 

applied research and through tax policies and other actions to support private sector 

research. 

Thank you for the opportunity to appear today. I would be pleased to respond to 

any questions.

BIOGRAPHY FOR TERENCE STEWART

Terry Stewart is the Managing Partner of Stewart and Stewart. Mr. Stewart’s 

practice focuses on international trade matters (litigation, negotiations, policy) and 

customs law. He has worked with various U.S. industries and labor unions to solve 

trade matters in the U.S. and abroad, including representing agricultural, industrial 

and services groups. He is a currently a member of the Advisory Council to the U.S. 

Court of Appeals for the Federal Circuit and a member of the Steering Group of 

the International Trade Committee of the American Bar Association’s International 

Law Section. Mr. Stewart is one of America’s leading academic experts on the WTO 

system and has advised several governments on their WTO accession processes. 

In recent years, Mr. Stewart has written extensively on trade relations with the 

People’s Republic of China, including volumes on the WTO accession commitments 

undertaken and progress made in meeting those commitments over time, a review 

of intellectual property protection within China and steps being taken to address 

problems in enforcement, and reports on subsidies provided to major sectors of the 

Chinese economy. 

Mr. Stewart is the editor of the 2009 book, Opportunities and Obligations: New 

Perspectives on Global and U.S. Trade Policy; and author and editor of numerous 

other publications. Previously, he was best known for editing a four-volume treatise 

on The GATT Uruguay Round: A Negotiating History (1986–92)(Vols. I–III); and The 

End Game (Vol. IV) published in July 1996 by the American Bar Association. 

Mr. Stewart is an adjunct professor at Georgetown University Law Center where 

he currently teaches a graduate seminar on the WTO. He received his law degree 

from Georgetown University, his masters in Business Administration from Harvard 

University, and his bachelors from the College of the Holy Cross.

Chairman MILLER. Thank you, Mr. Stewart. At this point we will 

begin our first round of questions. Typically I would recognize myself, but I would be happy to recognize—well, I will do what is typical then. I will recognize myself for five minutes. 

EARLY WARNING FOR MATERIAL SUPPLY PROBLEMS

The questions are probably somewhat redundant to your oral testimony, but we did pass a law 30 years ago that called upon the 

President to establish early warning systems for material supply 

problems. That didn’t work. That is why we are having this hearing today. What would have been needed to warn us about the 

problems that we have with rare earth, with the Chinese controlling 90, 93, 95, 97, way too much of the earth’s supply, at least 

commercially available rare earths? And how do we keep everyone 

interested in the materials issues when there ceases to be a crisis? 

That is sort of a problem with Congress. There is either complete 
69

inactivity or frenzy, with little in between. How can we keep our 

attention on the need for the necessary supply of rare earths? Any 

of you may begin. Mr. Smith? 

Mr. SMITH. Thank you, Mr. Chairman. I think that the answer 

rests in the ability to look at things from a full supply chain concept. It is very difficult to talk to people about rare earths in the 

world today. We go and talk to defense contractors that work for 

the Department of Defense, and sometimes we have to go down 

nine different tiers before we find the party that actually purchases 

the rare earths. So I don’t think that anybody has done anything 

intentionally here, but these things are very ubiquitous, they only 

use very, very small quantities, and I think we have to continue 

to look at things on a full supply chain basis, not on an elementby-element basis. 

Chairman MILLER. Dr. Freiman? 

Dr. FREIMAN. We argued, in the report that I spoke to, that one 

of the things that was needed—and I spoke to it when you saw the 

diagram—that what is needed is up-to-date data that we can rely 

on. As you hear, technology moves quickly and changes in availability move quickly as well. And we felt that what was needed was 

an agency which had the autonomy and the authority to collect the 

necessary data, rapidly, and to disperse that to the people who 

need it so that you could keep up-to-date on what was really the 

situation with respect to not just rare earths but, in our case, many 

of the critical minerals. 

Chairman MILLER. Dr. Duclos? 

Dr. DUCLOS. I would certainly agree with that, and as I said in 

my verbal testimony, you know, appointing a lead agency that is 

able to do that assessment is absolutely critical—but recognize that 

the assessment itself is just a very start and represents a relatively 

small part of actually solving the problem, which will involve bringing in the research into the various areas that I describe in my 

verbal testimony. 

The issue with the rare earths came on very gradually through 

the ’90s, systematically but gradually, and I think without an agency assessing these things quantitatively over time, you won’t see 

these gradual increases in the crisis level unless you do that. 

Chairman MILLER. Anyone else? Dr. Gschneidner? 

Dr. GSCHNEIDNER. I would just sort of like to recite a little bit 

of history concerning Magnequench—which was established by 

General Motors, of course, to make motors for the magnets and so 

forth. Eventually, the Chinese bought a good percentage of that, 

and they didn’t think too much about it. Then as they got a higher 

percentage of it, the union in Anderson, Indiana, said that they 

were opposed to this thing. The Chinese said, well, we won’t move 

the factory out of Anderson for five years. Well, when the fifth year 

came up, right at the end of the time, they moved everything, lock, 

stock and barrel, out of Anderson, Indiana. So we lost lots of jobs. 

And the reason why I know that is a number of my students and 

post-docs have worked there at Magnequench. And so we know 

what happened to that, and I think the government probably 

should have interfered and said, no, we are not going to allow you 

to sell the whole thing. But again, it is the same thing as the other 
70

gentleman made. How do you get the warning signal out to the 

government to stop this sort of action? 

HOW TO COMPETE WITH CHINA

Chairman MILLER. Thank you, Dr. Gschneidner. Mr. Smith, 

Molycorp has to compete in a market economy. China doesn’t play 

by those rules and are quite willing to subsidize, provide funds, to 

develop, to mine, to make commercially available rare earth minerals to gain a strategic advantage. Is being in a subsidy war the 

only response that we have to the way China plays? 

Mr. SMITH. Absolutely not, Mr. Chairman. I think our best attack 

is actually technology. Molycorp sat for about ten years when the 

Chinese came in and flooded the United States’ rare earth markets 

with lots of product and low prices. We sat there for about ten 

years and whined and cried about the low wages that the Chinese 

had to pay, et cetera. We finally got over that, and we used our 

own American ingenuity to figure out process technologies that 

drastically cut our costs in producing these materials, and we feel 

that with these new technologies, we can in fact be the lowest-cost 

producer in the world. But we do need help in that regard. I have 

17 scientists and engineers that are competing with over 6,000 Chinese scientists, and I can’t find any students from any university 

in the United States that have any rare earth experience or curricula today. 

Chairman MILLER. My time is expired, and I recognize Dr. Broun 

for five minutes. 

PRIORITIZING RESPONSES TO SHORTAGE

Mr. BROUN. Thank you, Mr. Chairman. Today’s testimony highlighted several themes for rare earth research and development. 

We have heard about the need to reconstitute our Nation’s rare 

earth knowledge base and infrastructure. Witnesses have highlighted the need to find new applications and uses for rare earths 

as well as identifying efficiencies in its production. 

We have also heard of the need to find substitutes and technologies that greatly reduce the use of rare earths. We probably 

won’t all agree on how to prioritize these topics as I doubt Mr. 

Smith will want to focus on eliminating the need for a product that 

his company has invested hundreds of millions of dollars in developing. Understanding that you may disagree, how would you 

prioritize these topics and are there any additional areas of focus 

you would suggest? We will start here and go down. Dr. Freiman? 

Dr. FREIMAN. Well, I think prioritizing is quite difficult, and I 

won’t attempt to do that. But one of the main outcomes of our committee was a recognition that what we can do in helping not just 

rare earth but other critical minerals is, as I mentioned earlier, is 

to know well in advance what the change in the availability will 

be, and I think that is a critical point. 

We also emphasized the need for more research and development 

and more coordination between agencies in what is going on so we 

understand what each other is doing. As most of you know, there 

was this coordination present, certainly I know in the materials 

area, for many years and it sort of has disappeared at the OSTP 
71

level. And putting that back together again and developing that 

kind of agency coordination in research and development, certainly 

in rare earths, and we hear that that is starting to go on now, but 

in other critical minerals I think is an important factor. 

Dr. DUCLOS. I would like to point out that there are 17 rare 

earths in the periodic table, and each one of its applications is different. And the solution will be different for each one of the 17. 

And with that in mind, that is why we recommend the five solutions, going from certainly developing new sources, all the way to 

developing technologies that eliminate the use. It will be different, 

and we have seen within GE on materials not necessarily dealing 

with rare earths but other rare elements. 

They have to take a number of the solutions in order to make 

it all work. So I don’t think there is a single answer to the question 

except that all five of these areas of work are absolutely needed. 

Mr. BROUN. Anybody else? Mr. Smith? 

Mr. SMITH. Thank you. I would concur with Dr. Duclos. I think 

that we have to balance the many needs of the rare earth world, 

and we are not adverse to finding substitutes for rare earths, either, contrary to what may seem quite obvious. 

But on the other hand, I can use the rare earth magnets as an 

example. The permanent rare earth magnets, the neodymium-ironboron type, have been around for well over 20, close to 30 years 

now. We have been researching for this entire time for a substitute 

for those magnets, and we haven’t found one yet. But that doesn’t 

mean that we should stop. The problem we have in between is that 

we have got about a two- or three-year window here before a major 

supply gap occurs between what China can supply to the rest of the 

world and what the rest of the world needs for their own needs. 

And we need to prioritize that right now as an immediate need 

that we have to address because the research will take a lot of 

time. But we certainly advocate research on all aspects, including 

replacement. 

Mr. BROUN. Mr. Stewart, quickly. I have about run out of time. 

I have another question or two I want to ask. 

Mr. STEWART. Just very quickly, while I support those positions, 

the WTO process is about a two-year process and should get started immediately to get our trading partners to honor the commitments that they have made as well. 

ROLE OF FEDERAL AGENCIES

Mr. BROUN. OK. Thank you so much. Dr. Freiman pointed out 

in his testimony that the Federal Government should enhance the 

types of data and information it collects, disseminates, and analyzes on minerals and on mineral products. His committee also suggested the Energy Information Administration as a model. What 

agency or office should be tasked with that responsibility, Dr. 

Freiman? 

Dr. FREIMAN. I would point out we chose not to select an agency. 

We didn’t feel that was our business. 

Mr. BROUN. No recommendation whatsoever? 

Dr. FREIMAN. No. No. We pointed out that whoever was chosen, 

they need to have enough authority to be able to demand that they 
72

could collect the kind of data and information they need in a timely 

manner. 

Mr. BROUN. Anybody else want to suggest an agency? 

Dr. GSCHNEIDNER. I would suggest the United States Geological 

Service. They have done an outstanding job for the last 20 years 

of pointing out this problem, with rare earths in particular, and I 

think what we need to do is to figure out how to communicate their 

results better amongst all the parties. 

Mr. BROUN. Thank you. Mr. Chairman, my time is expired. I 

yield back. 

Chairman MILLER. And now the regular order, the Full Committee Chairman, Mr. Gordon, for five minutes. 

Mr. GORDON. Thank you, Mr. Miller. You know, it is somewhat 

rare also that Mr. Miller and Dr. Broun can be in such strong 

agreement, so I think that we are onto something here and I want 

to thank the committee for being here. As Mr. Smith pointed out, 

this is the first of these type of hearings, and hopefully this will 

pull back the curtain. 

Now, in this committee, we don’t have jurisdiction on WTO and 

some tax benefits and that sort of thing. So I want to try to bring 

this discussion back to what we can do here, and listening to you, 

it seems that we should appoint or anoint a lead agency to try to 

collect and assess data. We need to have some type of research. Although you didn’t say it, I would say also workforce in terms of potentially through the National Science Foundation having fellowships and grants for those students that would go into the rare research area. 

And so I want to get your suggestions on what else within our 

sort of jurisdiction, which is the research and deployment, what 

public/private role should be played, and when it comes to research, 

is a research center adequate or do you have more than one for 

more different elements or do we parcel this around to various universities? How should we approach that? And I will open it up for 

the field. 

Dr. DUCLOS. One area that this agency could do is actually collect sensitive information. I think you can imagine, for a corporation that has challenges in these areas, it is not exactly something 

that we talk about publicly, and therefore the data collection can 

be done, for example, by an agency in confidence and then can use 

that data to help prioritize the materials that need immediate attention. And so long as that can lead to—as I said, the assessing 

of the situation is just the first part. 

Mr. GORDON. Well, it seems to me if you are collecting data and 

trying to determine what is immediate need, you are ten years behind. 

Dr. DUCLOS. You know, what you can do, and in fact this is what 

we do, we use this criticality diagram matrix that Dr. Freiman discussed to quantify where the elements are on this table, and then 

we do that annually, OK? So we can see them moving around. We 

can tell generally which direction the elements are going and have 

some hope of seeing it a little bit in advance what the——
73

IMPROVING RESEARCH INFRASTRUCTURE

Mr. GORDON. Let me go back in terms of research. Would we 

want a single research center? Is there already something at NIST 

or elsewhere that we would build upon? Do we need to have multiple? Do we need to make this university based and what is the 

private/public sector partnerships? What should there be there? 

Dr. GSCHNEIDNER. I would like to address that question. First of 

all, I don’t think you want to spread it out too far because things 

you have criticality as far as people, groups, and so forth and I 

think advocate a strong center which can then tie together research 

that is being carried out at other places and so forth, and I think 

a university is a good place to start because you can be training 

students which will go into industry eventually and help them out. 

I think one thing you don’t want to do is divide the rare earth, 

the 17 elements, into 17 research centers. Even though they may 

be somewhat different, there is a lot of commonality in there which 

can be used. I mentioned earlier today that neodymium-iron-boron 

magnet here using a new process which is very energy efficient in 

green technology. We have also just made last week, made the 

measurements on a lanthanum-nickel hydride battery material 

which is very competitive with what you can get from industry. So 

what we learned there applies to some of the other elements. 

So I think a strong center, and it should be well-funded because 

if you underfund it, it is not going to do the job you want it to do. 

Mr. GORDON. And is there an existing place? Is there an existing 

Federal agency again like NIST or a national lab that would be a 

lead agency here? 

Dr. GSCHNEIDNER. Well, one possibility of course is the Department of Energy because they have already funding—and that is a 

critical need in this country, and possibly the military would be another place to fund such a center. 

Mr. GORDON. Thank you. I am sorry. We have got a vote on 

again. 

Chairman MILLER. OK. In our regular order, Ms. Dahlkemper is 

recognized for five minutes. 

FUNDING FOR RARE EARTH RESEARCH

Ms. DAHLKEMPER. Thank you, Mr. Chairman, and thank you to 

the witnesses for being here today. A very interesting topic of discussion. 

I want to just kind of go on with the Chairman’s discussion here, 

Dr. Gschneidner. Right now your laboratory is being funded by the 

DOE. Where else is the DOE funding this kind of research in this 

country? 

Dr. GSCHNEIDNER. Well, a smattering of things at Oak Ridge, at 

Los Alamos. There is some up in Hanford up in there. There is also 

Argonne. You know, there are specialized areas or research where 

people are doing this. But there is really—I mean, we are the most 

coherent laboratory devoted to rare earth materials, but there is a 

lot of research being carried out. And also they fund a number of 

universities. But it is usually one or two groups at a university. It 

is very small. It is not critical——
74

Ms. DAHLKEMPER. So of the percentage of their dollars going to 

this, how much of it would be going to your lab, do you think? Do 

you have any idea? Coming out of DOE. 

Dr. GSCHNEIDNER. From all of DOE? Well, I will talk from basically——

Ms. DAHLKEMPER. You said you are the most concentrated. 

Dr. GSCHNEIDNER. Well, our laboratory gets about $16 million. 

Maybe 25 percent of that might go into rare earth materials, different people in the laboratory, something like that. 

Ms. DAHLKEMPER. Do you think the research is adequate for 

what we need to do in terms of energy and——

Dr. GSCHNEIDNER. No. 

Ms. DAHLKEMPER. Can you give me any idea by how much more 

we would need? Do you have any——

Dr. GSCHNEIDNER. Well, I think a research center is something 

like I mentioned in here of about 30 people, full-time equivalence. 

You probably should be funding that center alone by about $5 million per year, something like this with a 5-year lead time to show 

that they can produce what they claim they want to do. 

Ms. DAHLKEMPER. Dr. Freiman, you wanted to say something? 

Dr. FREIMAN. Yes, briefly I was going to say one of the things I 

think we don’t know is what research has been carried out over the 

past few years or even numbers of years in this area of rare earths. 

It is scattered about, National Science Foundation, Department of 

Energy, et cetera, and one of the things that would be nice to know 

right now is, you know, what has been done and therefore what 

could be done now or in the future in this area. 

Ms. DAHLKEMPER. So again, having a central lead agency that 

can collect all that data and bring that together? 

Dr. FREIMAN. Right. 

Ms. DAHLKEMPER. Dr. Duclos, did you want to say something? 

Dr. DUCLOS. Yeah, I just wanted to give you an idea of this sort 

of funding that it takes to solve some of these. These are very challenging problems. But generally, in our experience, and we have 

been through a number of challenges here in terms of materials, 

you are probably talking something between $5 and $50 million per 

element per application for a solution. 

Ms. DAHLKEMPER. And obviously we have huge budget concerns 

here. What would be the ramifications if we were not able to fund 

at the level you think we need to fund? 

Dr. DUCLOS. Well, what you do is you go through those five solutions. You take the shorter term ones, the quicker ones, and then 

you know, basically challenge yourself to ensure that you have a 

supply and work the best you can without doing the longer term, 

more expensive work that is the cleaner solution. 

DOMESTIC SOURCES OF RARE EARTHS

Ms. DAHLKEMPER. Mr. Smith, a question for you. Mountain Pass 

Mine. If you go back in, if you have domestic production, can you 

get all 17 rare earth minerals out of your locations that you have 

and how soon to supply the American, you know, the U.S. needs? 

Mr. SMITH. Understood. Thank you. We have all 15 of the lanthanide rare earths in our ore body. We can recover nine of those 
75

economically at today’s prices, and we can start doing that as early 

as 2012. 

Ms. DAHLKEMPER. And the others? 

Mr. SMITH. Prices will have to go up before they are economic to 

recover. 

Ms. DAHLKEMPER. And then there are two that you do not have 

supplies? 

Mr. SMITH. Right, yttrium and scandium. 

Ms. DAHLKEMPER. OK. And those are only found in? 

Mr. SMITH. They are found in various places, China being one, 

Canada has some yttrium. 

Ms. DAHLKEMPER. OK. So they are found in other countries besides China? 

Mr. SMITH. Correct, although not in the quantities and the concentrations that they are found in China. 

EXPANDING U.S. WORKFORCE

Ms. DAHLKEMPER. I did want to ask you just one more question. 

I have just a few seconds left here, but if I am back talking to students in my district, because you talked about having an issue with 

not being able to find the educated people that you need to work 

in your industry; what should I tell them to do? 

Mr. SMITH. Tell them to go into rare earths and that we would 

like to hire them as interns as soon as possible. We can use all the 

people that we can get that have rare earth experience. We found 

none when we went out to hire, and we went ahead and took a 

risk, hired people with zero experience and about three-and-a-half 

years later, they became very productive in our organization. 

Ms. DAHLKEMPER. And are there programs out there in different 

educational institutions——

Mr. SMITH. No, they will have to be established. 

Ms. DAHLKEMPER. OK. Thank you very much. 

Mr. SMITH. Thank you. 

Chairman MILLER. Thank you. Mr. Coffman is now recognized 

for five minutes. 

DEPENDENCE ON FOREIGN PRODUCTS

Mr. COFFMAN. Thank you, Mr. Chairman. Mr. Smith, I come to 

the rest of the panel, so I come to this committee via being on the 

Armed Services Committee where I became alarmed about the 

need and the supply for rare earth elements for advanced weapons 

systems. 

The one question that I have, Mr. Smith, to ask you a question, 

even if the Mountain Pass Mine is reopened, will the United States 

still be dependent upon foreign rare earth products? I think you 

mentioned there are two that we would still be dependent on. 

Mr. SMITH. Yttrium and scandium, yes. And we would still be dependent on other countries like China for portions of our supply 

needs. For instance, dysprosium is a very critical rare earth element needed for neodymium-iron-boron magnets. It is part of the 

alloy, and it allows the magnet to be used in a higher temperature 

application. Mountain Pass can produce a quantity of that mate-
76

rial, but it will likely not be enough to suit the full needs of the 

United States relative to the hybrid vehicle industry. 

Mr. COFFMAN. OK. Because I read an analysis where at full production that your mine could produce 20,000 tons of rare earth 

metals or elements. Is that figure correct? 

Mr. SMITH. That is correct. That is our design capacity right now, 

and we can, with existing permits in hand, we can actually double 

that production to 40,000 tons per year. 

Mr. COFFMAN. How long would it take you to get to full production? 

Mr. SMITH. We think it would take us until about the middle of 

2012 to reach our full, 20,000 ton, design capacity right now. 

Mr. COFFMAN. But I understand, if I hear some of the testimony 

from today is that China, its demand will meet its supply in the 

vicinity of 2012 and that we will have to drastically curb exports. 

Am I correct in that? 

Mr. SMITH. That is very, very accurate. The problem will be, they 

will produce enough for themselves, and it will be the rest of the 

world that has to find their alternative supply. 

Mr. COFFMAN. Anybody else on the panel? Yes? 

Dr. GSCHNEIDNER. I would like to address this product of, you 

know, yttrium and scandium, for example. The Canadians have 

several mines up there which are rich, and of course, the disposing 

point that Mark pointed out, but they are a little bit behind 

Molycorp in getting their products up. So I mean, as far as I am 

concerned, maybe the Canadians will like it. They are almost another state of the United States. Actually, there is no problem getting materials from them. 

Australia has some mines. We have a representative right back 

here from the Australian group, and they have several good mines 

with materials and they are probably about a year or two behind 

Molycorp, so these materials are coming. 

Scandium is a little bit rarer but a lot of it comes from Russia. 

China has some, too, but I don’t think it is a real critical problem, 

but it could be in the future. We don’t have much scandium. There 

aren’t very good ore sources of scandium. That is the problem, I 

think. 

MAINTAINING A COMPLETE SUPPLY CHAIN

Mr. COFFMAN. It would seem that the first phase of that supply 

chain in terms of mining, it seems that Molycorp may be able to 

bridge the gap in terms of China. But I also have a concern about 

the other levels of the supply chain in terms of the processing, and 

it seems that we have a real deficit in that area, and I think Dr. 

Gschneidner, I think you had mentioned the plant in Indiana that 

was moved to China. And so, can somebody speak to where we are 

in terms of that next step in the supply chain in terms of processing? Mr. Smith, would you like to address that first? 

Mr. SMITH. Thank you, Congressman Coffman. To my knowledge, 

there are not a whole lot of activities in that regard, other than 

Molycorp’s mining-to-magnets strategy where we will put in the 

conversion capabilities to go from oxides to metals. We will have 

the capability of taking the metals and alloying them, and we will 
77

9Keith Bradsher. ‘‘China Uses Rules on Global Trade to Its Advantage.’’ New York Times,

March 15, 2010: pp. A1, A10. 

have the capability of producing neodymium-iron-boron magnets 

here in the United States. 

Mr. COFFMAN. That is great. Yes? 

Dr. GSCHNEIDNER. Well, as I told you, we were preparing these 

neodymium-iron-boron magnet material, and that was one of the 

things we had come up with—a new process for making these metals. And Molycorp, of course, is quite interested and wants to obtain licenses for our technology but will also bring in a battery. So 

we are already solving part of that problem, but we are training 

people, too, at the same time. So this will help the supply train 

down the road. But again, it takes four years to get a Ph.D. out 

and two years for a Master’s, so you just can’t hit a light switch 

button and they pop up. But there are people out there that are 

reasonably well-trained and could move in pretty fast. 

Mr. COFFMAN. Mr. Chairman, I am afraid I am out of time. I 

yield back. 

KEEPING MANUFACTURING IN THE U.S. 

Chairman MILLER. Thank you, Mr. Coffman. I will now recognize 

myself for a second round of questions. I agree with Mr. Coffman. 

I am worried about sophisticated weapons systems that may need 

rare earth minerals, but I am also concerned about manufacturing 

jobs. My part of North Carolina has seen the loss of a great many 

manufacturing jobs that were less-skilled, cut-and-sew jobs in the 

apparel industry, but our hope has been to replace those jobs with 

highly skilled jobs in very sophisticated, innovative industries. 

China seems to be using the leverage of their rare earths to say 

if you need these minerals, these rare earth minerals in your products, come build your plant here. Mr. Stewart, you are nodding. 

This is the area you work in. What can we do to respond to that? 

Mr. STEWART. Well, it is unusual for a country that has joined 

the WTO to take on specific obligations in the export arena because 

most countries do not maintain these types of restrictions or impediments. So just as the United States has brought the first case 

dealing with, I think, eight or nine raw materials that are used in 

steel and aluminum and chemicals, the most direct approach is to 

take a second case, at least on rare earth products, to the WTO. 

It is a process that could take two years to resolve, but the resolution of that should be a very clear finding that China is not permitted to close its markets. It is doing this in a whole range of 

products. There was an article in the New York Times yesterday 

talking about how China is taking advantage of the rules in the 

WTO and the rules in the IMF to maximize their advantage.9 Well, 

that is what countries should do. They should be looking after their 

own interests. As a commercial power, we should be looking after 

our interest which is to see that China is not allowed to violate the 

commitments they have made without their being a cost, and the 

cost is to bring them in line, which would require them to take the 

taxes off, take the quotas off, and in fact make the products available to the highest bidders globally as most raw materials are 

done. 
78

BALANCING PRIVATE AND PUBLIC NEEDS

Chairman MILLER. Industry’s need seems to be more of a shortterm solution how to get production started again. Government 

seems to be more focused on what the long-term risk is of not having these minerals available. How can we kind of allocate our time 

and energy between industry and government to address both? Dr. 

Duclos. 

Dr. DUCLOS. Well, actually, I would say that industry’s interest 

is both short and long term. To the point earlier, I think an answer 

is technology, technology in developing systems and materials technologies that reduce the use of the material, technologies that involve recycling because, as I think everyone has seen, even if we 

develop all the sources of the rare earths that we—and it depends 

a little bit, rare earth by rare earth. But even if we develop all the 

sources of rare earths that we see around the world today, we are 

still not going to have enough in the sort of 5- to 10-year timeframe. 

The solution is to minimize the use of these materials and develop those technologies. That is the long-term solution. The shortterm solution is to certainly develop these sources which we absolutely need, but the long term is to do the technology development, 

recycling materials development. 

Chairman MILLER. I will yield back my remaining 40 seconds. 

Mr. Coffman, do you have an additional round? 

CHINESE INDUSTRIAL STRATEGY

Mr. COFFMAN. Thank you, Mr. Chairman. Just to any Member 

of the Committee, this strategy which China has deployed to secure 

really what is a strategic resource for its domestic industry, is this 

in any way calculated to rare earth metals that is different than 

any other commodity that China seeks to control for its own industrial base, in your view? Yes, Mr. Stewart. 

Mr. STEWART. Well, it is similar to some of the strategies they 

have employed on other products where they have a dominant 

share of global supply, but there are specific documents that have 

come out at the provincial and central government level, both laying out their strategy to be dominant players in these products and 

the downstream use of those products and to force investment 

through these kinds of strategies. So while it is similar to what 

they have been trying to do in some others because these are perceived as high-growth sectors, obviously is the reason that it is of 

such great concern to us and many other countries. 

Mr. COFFMAN. Very well. Anybody else? Mr. Smith? 

Mr. SMITH. I guess it wouldn’t be a full rare earth hearing if we 

didn’t hear this quote, but there was a Chinese premier back in the 

1980s that said the Middle East has oil and China has rare earths. 

Mr. COFFMAN. Anybody else? Thank you so much for your testimony today. Mr. Chairman, I yield back the balance of my time. 

FUNDING MODELS FOR MATERIALS RESEARCH

Chairman MILLER. Thank you. Mr. Smith, when you said there 

was a Chinese from here, I thought you were starting a limerick. 
79

I will now recognize myself for five minutes, although I will not 

use five minutes. With other technologies we need to develop, we 

feel some urgency about developing high-speed computing and 

nanotechnology. We do instruct OMB to publish, to make budget 

requests for all agencies contributing to the programs as a whole 

and publish an explanation with the President’s request to Congress. Is that a model that we should follow for materials research 

for rare earths? Any of you? Not a topic you have thought a lot 

about. OK. 

Then I think, Mr. Coffman, unless you want another round of 

questioning? 

TIMEFRAME FOR RE-STARTING DOMESTIC PRODUCTION

Mr. COFFMAN. Mr. Chairman, yes, I have a question for Mr. 

Smith. I understand so we are talking full production in your California mine by 2012? 

Mr. SMITH. Correct, the middle of 2012. 

Mr. COFFMAN. And obviously you seem to be the only game in 

town in the United States. Am I correct in that? 

Mr. SMITH. So far that is correct. 

Mr. COFFMAN. Now, is there anything that, I mean, unforeseen—

not necessarily unforeseen. You can’t control that. But is there anything that would in fact inhibit you or delay that capability of 

bringing that mine on line at that 20,000 ton capability? 

Mr. SMITH. There is only one thing that the company needs right 

now, Congressman Coffman, and that is the capital to put the 

project into play, and that is what we are working on very hard 

as we speak. 

Mr. COFFMAN. How hard is that? I mean, in your view, how hard 

is that? 

Mr. SMITH. I think that there will be challenges just because of 

the current climate in the banking industry where project financing 

is a very difficult way to finance things right now. If you can get 

the money at all, it is going to be at very high interest rates and 

it is going to be at very short terms, and that is where the DOE 

loan guarantee program comes in to help the problem because they 

do offer lower interest rates and longer payback periods, and that 

is a much more attractive form of capital to use. 

Mr. COFFMAN. So in your view, that would seal the deal in terms 

of your ability to go forward? 

Mr. SMITH. There is no doubt in my mind. 

Mr. COFFMAN. Give me a timeframe because it seems to me that 

we have a problem here in the sense that if in fact these timeframes are right where China, its demand catches up with the supply in 2012, and I have heard that from a variety of sources. 

Mr. SMITH. Right. 

Mr. COFFMAN. Your mine needs to come on line in the vicinity 

of 2012, and you think you could have full production of 20,000 

tons which meets the U.S. demand for the rare earth elements that 

you would produce out of your mine. If in fact those things don’t 

occur, it would seem to me that that would be an extraordinary escalation of price in these rare earth elements because where in fact 

would we get them from at that time? 
80

Mr. SMITH. There would only be one place, although there are 

other mines that are certainly trying to open right now in other 

countries. But we are the only game in the United States right 

now. It is absolutely imperative that we get this operation up and 

running by 2012. The one thing I have learned in my 28 years in 

this business is that forecasters are never accurate in what they 

forecast, so is it precisely 2012 or is it 2013, 2014, I don’t know. 

But I think that we can meet the window given the trends that we 

see today, but we do need to get going on our project and get going 

on it immediately. 

Mr. COFFMAN. Mr. Smith, according to your business plan, when 

do you have to have your financing in place in order to be in full 

production in the vicinity of 2012? 

Mr. SMITH. It would have to be in place this summer in order to 

have the full production on line and running by the middle of 2012. 

Every day we do not have the financing in place, it will be another 

day or so delay on the other end. 

Mr. COFFMAN. OK. Thank you, Mr. Chairman. I yield back the 

balance of my time. 

Chairman MILLER. Thank you, Mr. Coffman. I think that is a 

fine note to end on, Mr. Coffman’s call for a more active role for 

government in the economy. And before we bring the hearing to a 

close, I want to thank our witnesses for testifying before the Subcommittee today. Under the rules of the committee, the record will 

remain open for two weeks for additional statements from the 

members and for answers to any follow-up questions the Subcommittee may have for the witnesses and for the submission of extraneous materials. The witnesses are excused, and the hearing is 

now adjourned. 

[Whereupon, at 3:25 p.m., the Subcommittee was adjourned.] 
(81)

Appendix: 

ANSWERS TO POST-HEARING QUESTIONS
82

ANSWERS TO POST-HEARING QUESTIONS

Responses by Stephen Freiman, President, Freiman Consulting, Inc.

Questions submitted by Chairman Brad Miller

Q1. In developing the ‘‘criticality matrix,’’ and in applying it to the test cases discussed in the report, your committee appears to have gone through many of the 

steps that an ‘‘early warning’’ organization would take. If that’s true, what 

should Congress learn from your experience that it can apply in setting up similar capabilities within the Government?

A1. To use the matrix as a tool in an early-warning system, the evaluation method 

must be become more quantitative. That is, it will be important to base the placement of minerals within the matrix on more quantitative indicators of supply risk 

and impact of a supply disruption than the committee was able to do in its testing 

of the matrix (e.g., to employ and adapt the matrix in a manner similar to the approach used by General Electric). As I noted in my testimony, the matrix is only 

as good as the input data. The Federal Government’s access to data and information 

about some of the rarer minerals and metals will need to improve because at 

present many of these markets are not very transparent (e.g., rare earths, antimony, indium, etc.). As the committee noted in its recommendations, whatever agency is tasked with collecting mineral data, it must have the authority to require such 

submissions, as occurs with Principal Statistical Agencies such as the Energy Information Agency.

Q2. If the ‘‘early warning systems for material supply problems’’ required under the 

National Materials and Minerals Policy Act of 1980 are finally established, 

which Federal agencies should play a role in them, and what roles should they 

play?

A2. The 1980 Act calls out the Departments of the Interior, Commerce, and Defense 

as having principal roles. I would add the Department of Energy and the National 

Science Foundation(?), and possibly the Department of Transportation, since a number of applications of critical minerals relate to automobiles, etc. The roles of each 

of the agencies will differ, e.g. Interior (USGS) would be expected to play the lead 

role in collecting and analyzing mineral data, Commerce would have a dual role, 

through NIST in measurement and fundamental data and through Commerce’s role 

in analyzing international trade. An important aspect in implementing the 1980 Act 

would be to reestablish a coordination of activities of the agencies through OSTP.

Q3. As the former deputy director of the National Institute of Standards and Technology’s Materials Science and Engineering Laboratory, how would you say the 

Laboratory can contribute to a national research program for rare earth minerals?

A3. The mission of the NIST laboratories is to conduct research that advances the 

nation’s technology infrastructure. As such, within the Materials Science and Engineering Laboratory there are ongoing efforts in developing and maintaining databases on crystal structure and phase diagrams, both of which will be important in 

any research program on rare earths. 

In addition, the Technology Innovation Program provides cost-shared awards to 

industry, universities, and consortia for research on potentially revolutionary technologies that address critical national and societal needs.

Q4. Given your knowledge of Federal capabilities in materials research, which agencies would you see as able to contribute to the development and execution of a 

research program as called for by the 1980 Act (30 U.S.C. 1603 (2))?

A4. As the committee noted in its recommendations, and included in my testimony, 

a number of Federal agencies, including the National Science Foundation, Departments of the Interior, Defense, Energy, and Commerce should develop and fund activities to encourage U.S. innovation in the area of critical minerals. These same 

agencies should coordinate such programs as noted in number (2) above.
83

ANSWERS TO POST-HEARING QUESTIONS

Responses by Steven J. Duclos, Chief Scientist and Manager, Material Sustainability, General Electric Global Research

Questions submitted by Chairman Brad Miller

Q1. What information does the Government need, and what information should government and users of minerals be sharing, in order to maximize the lead times 

it will have for deciding which of the strategies you described at the hearing 

should be pursued in a particular case?

A1. From a manufacturing perspective the sourcing, recycling, manufacturing efficiency, materials substitution, and systems strategies outlined in my testimony will 

only be carried out on materials that the U.S. considers both critical to the country’s 

defense and manufacturing base and at risk from a supply and demand perspective. 

To assess which materials fall into this category an assessment could be done that 

is similar to the one proposed by the National Research Council in Minerals, Critical 

Minerals, and the US. Economy in 2008. The government would need to update and 

expand the list of elements considered by the NRC panel, but the assessment 

metrics used by this panel remain viable. Collection in confidence of anticipated future use of materials by industry in the three to five year timeframe, as well as augmenting current supply information collected by USGS with anticipated future supplies, would greatly improve the accuracy of evaluation of future supply and demand 

risks. For those materials deemed to be at greatest risk the government could then 

solicit business and technology solutions along the strategies outlined in my testimony. Government support of the longer term, higher risk solutions would enable 

industry to pursue a greater breadth of solutions that would minimize the risk of 

disruption to U.S. manufacturing. By completing this assessment annually the government would better understand the progression of elements along the criticality 

diagram, which could lead to an early warning on future risks.

Q2. If GE were interested in partnering with an academic institution or a government facility to develop a substitute material (or find a replacement) for something like Rhenium, what would it be looking for in that partner and what resources would that partner bring to the collaboration?

A2. Pre-competitive information, such as materials property databases, material 

property testing capability, and basic understanding of material behavior in systems 

is important to accelerate the insertion of new and substitute materials into OEM 

systems. Specific details of resources that a partner could bring to such a collaboration would depend greatly on the material to be reduced since each substitution effort tends to be unique to both the element and the application.

Q3. Would General Electric’s materials scientists be interested in collaborating with 

the type of Centers proposed by Dr. Gschneidner?

A3. Since GE uses permanent magnets in a wide array of products the company 

would welcome the opportunity to participate in the type of Center that Dr. 

Gschneidner has proposed. In addition to providing material science know-how, the 

company would provide a critical role in ensuring that the properties, cost, and reliability of developed substitute materials and processes are compatible with the systems in which they would be used.

Q4. As you serve as the ‘‘early warning system’’ for General Electric, what advice 

would you give a counterpart in the Federal Government trying to provide the 

same service for the Nation?

A4. The assessment of risks related to supply and demand should be made as quantitatively as possible. National and international data is available on both the supply and demand sides of the equation, and development of a quantitative risk rating, similar to that discussed in the invited contribution to this hearing 

Operationalizing the Concept of Criticality by Dr. Thomas Graedel of Yale University, would aid building the risk assessment. Such an assessment should include a 

specific recent elemental challenge, perhaps one from among the rare earths. Comparison of the position on the criticality diagram of this recent elemental risk would 

provide a useful relative level of risk of the other elements assessed. In addition, 

future material supply scenarios, akin to those built for economies, could be built 

for those elements and materials indicated to be at high risk on the criticality diagram. Such scenario building may help elucidate which of the risk reduction processes are most likely to lead to a solution. Finally, since the assessment is only the 
84

start of the process it needs to be done expeditiously, to allow time for new sources, 

recycling, efficient manufacturing, and material research on substitutions to be developed.
85

ANSWERS TO POST-HEARING QUESTIONS

Responses by Karl A. Gschneidner, Jr., Anson Marston Distinguished Professor, Department of Materials Science and Engineering, Iowa State University

Questions submitted by Chairman Brad Miller

Q1. What level of funding would you consider necessary to support the two Centers 

you proposed in your testimony?

NATIONAL RESEARCH CENTER ON RARE EARTHS AND ENERGY

A1. The National Research Center on Rare Earths and Energy (NRCREE) should 

be composed of five research groups covering the following five areas of greatest 

need:

1. Process Metallurgy and Scrap Recovery

2. Permanent Magnet Materials

3. Battery and Electronic Materials

4. Catalytic Materials

5. Materials for Nano Science and Nano Technology

A typical research group would consist of a group leader; staff scientist(s); postdoctoral, graduate and undergraduate students; technical and secretarial support. 

The NRCREE would also have critical in-house analytical chemistry and characterization expertise (x-ray diffraction, and optical, electron, atomic force and magnetic force microscopy) as a support group shared by all research groups. 

NRCREE would also initiate and support projects in important areas, not covered 

by the five research groups at other universities, non-profit research groups, national laboratories, and industry. Some potential topics may be separation science, 

optical and photonic research, organometallic chemistry, analytical chemistry. 

NRCREE would have a full-time director and a part-time associate director (probably one of the group leaders), an advisory board made up of representatives of the 

university, government, industry and general public. The cost would be $10M per year. The Center should be funded for five years and 

reviewed in its fourth year for extension for an additional five year term. 

The NRCREE would need a new building for offices and laboratories. There would 

be some special space requirements for the Process Metallurgy and Scrap Recovery 

Group because it would be involved in scaling up metallurgy production from laboratory size to bench scale to a full pilot plant scale. In addition a special handling facility would be needed for hydrofluoration process, which uses hazardous HF (hydrogen fluoride) gas, to prepare the fluorides which are later reduced to the metals. 

The cost of this building is $60M.

NATIONAL RESEARCH CENTER FOR MAGNETIC COOLING

The National Research Center for Magnetic Cooling (NRCMC) would be a fully 

integrated center devoted to bringing the energy efficient magnetic cooling (air conditioning/climate control, refrigeration and freezing) from the exploratory stage to 

commercial products. Today there are about 30 individual (a few persons at the 

most) laboratories scattered around the world (including about 5 in the USA) working on various aspects related to magnetic refrigeration but there is only one group 

(Denmark) which is concerned with the complete technology. The NRCMC would 

consist of five research groups devoted to the following areas:

1. Modeling and Theory

2. Magnetocaloric Materials

3. Regenerator Design and Fabrication

4. Magnetic Arrays

5. Cooling Machines

A typical group would consist of a group leader; staff scientist(s); post-doctoral, 

graduate and undergraduate students; technical and secretarial support. 

The NRCMC would also have a key characterization capabilities (x-ray diffraction; 

optical, electron, atomic force and magnetic force microscopy; and magnetic property 

and thermal transport measurements) support group. 

NRCMC would also initiate and support projects in important areas not covered 

by the five research groups at other universities, non-profit research groups, na-
86

tional laboratories, and industry. Some topics might be exploratory research on special fabrication techniques and unusual magnetocaloric materials. 

NRCMC would have a full-time director and a part-time associate director (probably one of the group leaders), an advisory board made up of representatives of the 

university, government, industry and general public. 

The cost would be $9M per year. The Center should be funded for five years and 

reviewed in its fourth year for extension for an additional five year term. 

The NRCMC would need a new building for offices and laboratories. Some special 

facilities would need to be considered, for example fabrication equipment for fabrication of regenerators, and machine shops for prototyping cooling machines. The cost 

of this building is $50M.

SPECIAL COMMENTS

The above estimates were made on the assumption that the two Centers would 

not be co-located. If, however, they were located on the same campus, they should 

be combined into one building which would result in some cost savings. For example, the operating expenses would be reduced because the NRCREE and NRCMC 

could share the characterization support group personnel and facilities, also the administrative cost could be reduced, i.e. instead of a sum of $19M per year, the operating costs for the two Centers it could be reduced to $18M per year. Also the cost 

of the buildings, one instead of two, the combined building would be $95M (compared to $110M for separate buildings). 

There are also additional advantages because persons carrying out research and 

development activities on permanent magnets in the NRCREE would have access 

to the NRCMC scientists and engineers designing permanent magnet arrays and 

vice versa, this would be an important synergism. There may be some other indirect 

interactions, but there is essentially no overlap between the missions of the two 

Centers.

Q2. Which Federal Agencies, other than the Department of Energy, could contribute 

to the research programs you would contemplate for the proposed Centers?

A2. The Department of Defense (DOD) and National Institute for Science and Technology (NIST) are logical choices of Federal agencies which could contribute to the 

research programs of NRCREE and NRCMC. For example, at the present time the 

Office of Naval Research (DOE) is funding a project for cooling electronic hardware 

on seafaring vessels, and the U.S. Air Force has funded a few (at least one) SBIR 

for magnetic cooling below about 200° C. As far as I am aware NIST has one internal (quite small) project on magnetic cooling. All three of these projects would complement research carried out at the NRCMC.

Q3. Given your knowledge of Federal capabilities in rare earths research, which 

agencies do you regard as able to contribute to the development and execution 

of a research program as called for by Section 1603(2) of the National Materials 

and Minerals Policy Act of 1980?

A3. The best Federal agency to develop and execute a research program called for 

by Section 1603(2) of the National Materials and Minerals Policy Act of 1980 would 

have been the U.S. Bureau of Mines, Department of Interior, but unfortunately all 

of the research laboratories were closed down in 1995 when the Bureau of Mines 

went out of existence. Today there is no Federal agency that could easily undertake 

the tasks required in Section 1603(2). But with some realignment and priority 

changes one of the following Federal agencies should be able to accomplish the goals 

of this act: DOE, DOD, NIST and NSF.
87

ANSWERS TO POST-HEARING QUESTIONS

Responses by Mark Smith, Chief Executive Officer, Molycorp Minerals, LLC

Questions submitted by Chairman Brad Miller

Q1. As you are planning to operate throughout the rare earths supply chain, can you 

tell us what processes in your production chain need immediate increases in 

R&D support?

A1. Re-establishing for America a domestic ‘‘mining-to-magnets’’ supply chain, on 

which Molycorp is focused virtually round-the-clock, involves deploying five fundamental steps of production: 1) rare earth mining and milling; 2) oxide production; 

3) oxide-to-metals production; 4) metal alloying; and 5) magnet manufacture. All of 

these steps are integrally linked to one another, and failure at any one step will 

prevent the U.S. from building a full domestic supply chain. Molycorp is investing 

significant capital and research and development across all five steps of production. 

The new technologies and processes that we are developing and seeking to deploy 

at each step of production are contributing to lowering production costs and improving environmental performance. In other words, we are finding that investment in 

‘‘green’’ process technologies at each step of production is a key driver to lowering 

costs and will help the U.S. become the low-cost producer of rare earth materials 

and products. This is why investment is needed across the entire production chain, 

as opposed to any single step.

Q2. Would you be interested in collaborating with the type of Center Dr. Gschneidner 

proposed at the hearing?

A2. Absolutely. As I testified, virtually all analyses show that the U.S. and the 

world will need both to increase production of rare earth materials and products as 

well as find economic paths to rare earth recycling and substitution technologies.

Questions submitted by Representative Kathleen Dahlkemper

Q1. If you are successful in developing the new magnet production capability, how 

likely are we to see a repeat of the Magnaquench episode, where the Defense Department and General Motors set up a domestic magnet producer only to see its 

facilities shipped off to China?

A1. Molycorp is committed to establishing and operating the entire rare earth magnet supply chain on U.S. soil. If we are successful in establishing this supply chain, 

and if we are able to compete successfully in the global market—as we are confident 

of doing—the odds of another Magnaquench happening as a result of investment in 

our project are practically zero. That is because we, as a company, believe very 

strongly that America’s national and economic security demand that the entire rare 

earth magnet supply chain be established and maintained here in America. This is 

our goal and our commitment.

Q2. What will guarantee that the benefits that come from investing in your project 

will be captured for and kept in the U.S. domestic economy?

A2. If Molycorp is successful in re-establishing a domestic mining-to-magnets supply chain on U.S. soil, then the benefits of that supply chain will clearly flow to the 

U.S. economy, including re-establishing a manufacturing base for many end-use 

products using rare earth elements. Moreover, studies have clearly shown that research and development activities closely follow industrial bases. Hence, our establishment of the entire supply chain will actually foster research related activities 

relating to rare earths. Perhaps more importantly, the U.S. will reap substantial 

long-term benefits from a reduction of our dependence on foreign countries for these 

strategic materials.
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ANSWERS TO POST-HEARING QUESTIONS

Responses by Terence Stewart, Esq., Managing Partner, Stewart and Stewart

Questions submitted by Chairman Brad Miller

Q1. What are the leading trade considerations that should shape a U.S. national 

policy for minerals and materials?

A1. Any new U.S. policy on minerals and materials would presumably be focused 

on tracking (1) use and anticipated growth in demand, (2) availability, (3) development of additional sources, (4) development of alternative products and (5) risks to 

availability. 

WTO rules already in place should reflect the types of trade considerations of importance to the U.S. and any policy it has or develops on minerals and materials 

to increase availability (Item 2). These rules could be bolstered by ongoing negotiations within the WTO (Doha negotiations) and in bilateral and plurilateral talks 

with major trading partners. 

As a general matter, international trade rules and ongoing negotiations look to 

open markets and limit restrictions on access to materials and to limit distortions 

flowing from government largesse. While there are exceptions that can be important 

from a national security perspective, the key element of a proactive policy is the 

need to eliminate discrimination in availability of products or access to markets or 

raw materials. 

More specifically, Article I of GATT 1994 deals with most favored nation treatment of goods on a market access perspective (this means no discrimination between 

WTO members); Article III of GATT 1994 requires the provision of national treatment (requiring governments to treat foreign goods the same as domestic goods once 

imported) and Article XI of GATT 1994 seeks to eliminate limitations on both imports and exports outside of duties, taxes and other charges. Moreover, some countries in their accession protocols have undertaken specific commitments not to apply 

export taxes or duties. This includes China as it pertains to rare earth minerals, 

as my testimony at the hearing reviewed. 

Hopefully, the current U.S. challenge to China’s export duties, quotas and licensing requirements on certain raw materials that are not rare earth minerals will confirm the vitality of these considerations vis-a-vis China within the WTO. If China 

fairly implements any adverse determination, that may eliminate at least one 

source of trade concern for the U.S. on minerals and materials. 

Probably it will be necessary for the U.S. to bring a second WTO case against 

China dealing with rare earth minerals, to provide additional pressure on China, 

and to provide a path forward to a positive resolution of the rare earths dilemma 

faced by the United States. 

There are trade considerations as well for subsidies which can, of course, be used 

to develop capacity, new uses and alternative materials (issues (1), (3) and (4) 

above). Trade considerations prohibit export subsidies for most countries and subsidies which are ‘‘contingent, whether solely or as one of several other conditions, 

upon the use of domestic over imported goods.’’ Article 3.1(b) of the Agreement on 

Subsidies and Countervailing Measures. At the same time, domestic subsidies for 

mineral and materials production and development are permitted where such subsidies are either general in reach or not causing injury to foreign producers (serious 

prejudice; nullification or impairment of benefits; injury to the domestic industry of 

another member). The U.S. should be vigilant in pursuing trade actions against 

trading partners who engage in the use of prohibited subsidies or use domestic subsidies in a manner harmful to U.S. manufacturing. This is particularly true for minerals and materials.

Q2. Which elements of the nation’s trade apparatus should participate in or contribute to the development of the ‘‘early warning system’’ for materials and minerals bottlenecks discussed at the hearing?

A2. The U.S. Trade Representative’s office prepares annually a National Trade Estimate in cooperation with input from other government agencies and our embassies 

and consulates overseas and information from the business community reviewing 

barriers to U.S. exports. Actions and policies by many of our trading partners are 

reviewed annually. This report could be modified to have a section within the overall report as well as a section in every country that looks at actions by foreign governments that affect any of the five policy issues on minerals and materials. 

In addition, the U.S. Department of Commerce and the U.S. Trade Representative 

put out an annual report on subsidy practices of our trading partners. In the past, 
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the report has focused on particular industries where there was Congressional interest. Requiring a section in this report that examines the subsidy practices of trading 

partners on minerals and metals would be an important step to take. 

Finally, historically there has been a so-called ‘‘special 301’’ provision in law to 

address annually concerns on intellectual property laws and protections amongst 

our trading partners. Through a statutory change, a special 301 provision could require an annual evaluation of government policies affecting availability, non-discrimination, national treatment, development and subsidy issues and require consultations with nations viewed as creating artificial barriers to minerals and materials.

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