U.S. sets $120M to regain what it lost in rare earth metals

Computerworld - There isn't a shortage of rare earth metals in the ground, but one country, China, has managed to dominate about 95% of the market. It not only mines the metals, but it has built a supply chain to produce them.

The U.S. once led global production in rare earth metals, but it couldn't compete with China's lower production costs and environmental standards. The metals are used in a wide range of products, including wind turbines, magnets, hard drives, and batteries along with many other things. They are critical to the tech industry.

China began restricting exports two years ago, raising alarm in the government, prompting congressional hearings and studies and now, on Thursday, action.

The U.S. Department of Energy announced plans to spend $120 million to create a Critical Materials Institute. The intent is to bring government research and private industry together to create mini-Manhattan Project type development environments.

The U.S recently launched a similar effort for battery research. This new lab, which will be based at the Ames Laboratory in Ames, Iowa, will look for ways to "improve the economics of processing" existing supplies, develop substitutes, improve reuse and recycling and conduct research.

"I'm not particularly impressed by this," said Jack Lifton, an analyst at Technology Metals Research who studies this market. He said the government is too bureaucratic in handling this issue. "The people who should solve those problems are the ones that actually have them," he said referring to the private sector.

The U.S. doesn't really import rare earth metals, said Lifton. These metals, which go by names such as dysprosium, terbium, europium, neodymium, and yttrium, arrive in the U.S., instead, in finished products.

"We don't buy raw materials here to make magnets or lasers, that's all done for us by the Chinese and the Japanese," said Lifton.

There are ongoing efforts to increase the mining supply, including the restarting of a mining operation in the U.S. But the problem is the supply chain, said Lifton. The metals have to extracted, separated and processed into materials that can be used by manufacturers.

"There are many, many steps here in many different industries and they are not all the same," he said.

What is clear is that rare earth metals are important to the U.S. "Rare earth metals and other critical materials are essential to manufacturing wind turbines, electric vehicles, advanced batteries, and a host of other products that are essential to America's energy and national security," David Danielson, assistant secretary for Energy Efficiency and Renewable Energy at DOE, said in a statement.

"[The new institute] will bring together the best and brightest research minds from universities, national laboratories and the private sector to find innovative technology solutions that will help us avoid a supply shortage that would threaten our clean energy industry as well as our security interests," said Danielson.

But Lifton said the U.S. is already too late. "It's over, we have given away this technology lead to the Chinese," he said.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at  @DCgov or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

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