September 14, 2010


This past July, while we weren’t looking, Congressional Research Service issued a report called “Rare Earth Elements: The Global Supply Chain” (pdf warning). I thought we’d use it to kick off a week of reviewing things that you should either read yourselves or skip and allow us to read for highlights on your behalf.

The first way that you might find this CRS report particularly useful is that it gives actual demand projection figures. (Hint: demand is likely to rise.) I’ve heard these industry estimates from the horse’s mouth myself, and believe they are the best around, but has the government not developed its own estimates yet? Has anyone seen some rare earth demand estimates lying around that you can point me to? I haven’t looked for months, but am curious as to why none have been produced (if that is the case) considering that DOE is developing a rare earths strategic plan.

Regardless, the big takeaways on demand include:

World demand for rare earth elements is estimated at 134,000 tons per year, with global production around 124,000 tons annually. The difference is covered by above-ground stocks or inventories. World demand is projected to rise to 180,000 tons annually by 2012, while it is unlikely that new mine output will close the gap in the short term. By 2014, global demand for rare earth elements may exceed 200,000 tons per year. China’s output may reach 160,000 tons per year (up from 130,000 tons in 2008) in 2014. An additional capacity shortfall of 40,000 tons per year may occur. This potential shortfall has raised concerns in the U.S. Congress. New mining projects could easily take 10 years for development. In the long run, however, the USGS expects that reserves and undiscovered resources are large enough to meet demand. (emphasis mine)

This raises a question though: what is USGS considering “long run” in this case? It appears to mean longer than 4 years, but it isn’t specified.

The CRS report also includes a notable contrast between reserves and production. Reserves are more diverse and dispersed than the current rare earths conundrums (do to near-monopoly production) let on:

China holds 36% of the world’s reserves (36 million metric tons out of 99 million metric tons) and the United States holds about 13%. South Africa and Canada (included in the “Other” category) have significant REE potential, according to the USGS. REE reserves are also found in Australia, Brazil, India, Russia, South Africa, Malaysia, and Malawi.

But even if the long-term supply and demand picture looks just fine, and there is a potentially more diverse supplier base, there is no getting around the fact that this has become a foreign policy issue – which is a shame. This fall I’ll be working on a report that focuses on how to watch for warning signs that minerals are going to rise to the level of foreign policy and security problems for the United States, with the hope of mitigating these issues in the future.

As for this report, it is certainly notable that CRS produced it, and important given the likelihood that it will remain a concern on the Hill. However, it leaves me yearning for more and clearer information. But if you are new to examining strategic minerals concerns, this report would be a good primer on rare earths, including overviews of related legislation and policy options. In other words, this is worth reading if you need a good data citation or are new to considering questions of rare earths.

CRS appears to have been very busy this summer on natural resource-related issues. Tomorrow, we’ll give you our thoughts on its recent report on geoengineering.