* China controls 95 percent of global rare earth supplies
* China plans to raises fees on rare earth exports in 2011
* U.S. needs to boost domestic mining of rare earth metals
By Tom Doggett
WASHINGTON, Dec 15 The United States risks
major supply disruptions of rare earth metals used in clean
energy products unless it diversifies its sources of the
minerals, the Energy Department warns in a report due to be
released later on Wednesday.
The United States and other countries are worried that
China, which controls 97 percent of the world trade in rare
earth metals, will use those supplies as a political weapon and
cut back their export when it is in a dispute with another
country or to grow China's clean energy technology sector.
"The availability of a number of these materials is at risk
due to their location, vulnerability to supply disruptions and
lack of suitable substitutes," U.S. Energy Secretary Steven Chu
said in a report, due to be unveiled on Wednesday at a rare
earth metals conference at the Center for Strategic and
The release of the report coincides with trade talks in
Washington between the United States and China. U.S. officials
are expected to push Chinese officials to loosen export
restraints on rare earth elements.
China, which said on Tuesday it planned to raise export
taxes on some rare earth metals beginning next month
[ID:nL3E6NE0QW], holds 37 percent of known rare metal reserves,
the United States has 13 percent and the rest is in other
The 17 rare earth metals, with exotic names like lanthanum
and europium, form unusually strong lightweight materials and
are used in a wide range of applications including high-tech
and defense products, car engines and clean energy.
China has vowed that it would not use its dominance of rare
earth supplies as a bargaining tool with foreign economies
[ID:nSGE69R09H] but it has cut its exports of the materials on
environmental grounds. [ID:nTOE6AK00O]
U.S. Secretary of State Hillary Clinton raised U.S.
concerns over Beijing's export policy with Chinese Foreign
Minister Yang Jiechi during a visit to Asia at the end of
The Energy Department said in its report that it looked at
the use of rare earths in wind turbines, electric vehicles,
solar cells and energy efficient lighting because these clean
technologies are expected to be deployed substantially on a
global basis over the next 15 years, increasing demand for rare
It said that in order to manage the risk of rare earth
supply disruptions, the United States must increase its
domestic extraction and processing of the materials.
There is only one U.S. rare earths producer, Molycorp Inc
MCP.N. It is the largest non-Chinese rare earths firm and the
only rare earth oxide producer in the Western Hemisphere.
The report said the United States must work closely with
its international partners, including Europe and Japan, to
boost their production of the materials.
"Diversified global supply chains are essential," the
However, mining rare earth metals can be very expensive and
the lead times for new mining operations are long, ranging from
two to 10 years.
"Whether a deposit can be mined economically will depend on
a number of factors, including rare earth prices, regulatory
requirements and improvements in extraction and separation
technologies," the report said.
Recycling and reusing the rare earth metals could also
significantly lower world demand for the materials.
Traditional energy sectors are also at risk from rare earth
supply problems, the report said.
Rare earth ores are used in the fluid cracking catalysts
that convert heavy oils in the refining process into more
valuable gasoline, distillates and lighter products. Rare earth
elements are used in catalysts to produce higher yields of more
valuable products such as gasoline.
A disruption in rare earth supplies could have a noticeable
impact on refinery yields and require oil refinery owners to
make investments so the fluid cracking process will work
without the rare earth materials, the department said.
The department said it will develop an updated strategy by
the end of next year for increasing supplies of critical rare
(Reporting by Tom Doggett, Editing by Sandra Maler)