To: File From: Elizabeth Kohl, DOE GC-71 Date: June 25, 2009 Re: Ex parte discussion on rare earth phosphors

On April 28, 2009, Mahima Gupta and Robert Carmichael of Navigant Consulting spoke via phone with James Hedrick of the US Geological Survey, a rare earth materials expert. Ms. Gupta and Mr. Carmichael asked Mr. Hedrick a bout the supply of rare earth phosphors as it relates to the final rule for general service fl uorescent and incandescent reflector lamps.

Mr. Hedrick emphasized the world’s dependence on China for rare earth resources, including phosphors. He noted most terbium (Tb) and eur opium (Eu) comes from the Bayanoba mine in northern China and most yttrium (Y) comes from ion absorption clays in southern China. The areas in southern China are quite polluted. He said Mountain Pass, Ca, the site of a Molycorp mine that operated for decades before closing in the ‘90s, is currently processing stocks of rare earths but not yet mining again, as a consequence of the recent increase in prices and Chinese trade policies linked to the resource. The site co uld be a great resource for Eu, but getting the environmental community in California to buy in to a mining project c ould be difficult. However, when rare earths are a multiproduct or byproduct, which is the case here in conjunction with iron ore, there is a better chance of getting projects online, at least in terms of financing.

Mr. Hedrick said it is very difficult to estimat e how much of the rare earths reserves (in the world, and particularly in China), are composed of Tb, Eu, and Y, and even more difficult to estimate how much could be yielded for lamp use. There are simply too many variables at all levels: concentrating practices, waste levels, levels of use in mixes for other processes, impurities, etc. Looking at reported capacity is not much more illuminating because the production estimates for mines are closely held, sometimes embellished or completely unreported.

Mr. Hedrick said most processors use a solven t extraction, which has la rge upfront costs and takes a year or longer to produ ce anything and even longer to ge t to higher purities but is a continuous, closed-loop system that minimizes the loss of the rare earth phosphors sought and can have smaller environmental impacts than other systems. Essentially, the process is completed in liquid containers a nd there are no smoke stacks, etc.

Mr. Hedrick said probably the la rgest risk to supply is Chinese policy, rather than demand. They’ve put tariffs on the product and export quotas already. If they suddenly decide to put stop exporting the resource--and they have a growing n eed for the material in their own country, not to mention a desire to use it in manufacturing in China--then the world will have to pay whatever China asks. He said China and Japan have been active in going ar ound the world and buying up resources, while the U.S. hasn’t. He said all rare earths are serious i ssues, not just phosphors.Mr. Hedrick said there are many mines/prospec tive projects around the world, but most of the time something holds them up, like environmenta l permits, financing, etc. He mentioned a developing site in Pearid ge, MO, which is trying to get more funding, and said they have heavy
rare earths there.

Mr. Hedrick indicated that the recent spike in phosphorcosts is directly related to spike in energy prices, China policies, and dema nd increases. In addition, there are more than 400 applications for rare earths. Rare earth phosphors, as opposed to rare earths in general, have fewer applications in that there are fewer of them.

End of conversation.