RARE EARTH ELEMENTS An Overview of Supply Chain Issues - PRODUCED BY - Washington, DC
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RARE EARTH ELEMENTS
An Overview of Supply Chain Issues
PRODUCED BY
Last updated: March 1, 2021
Table of Contents
1. Introduction to Rare Earths
○ Total Global Output
○ Applications
2. The U.S. Industrial Base
Rare Earth
○ Simplified Supply Chain Element Metal
○ Rare Earth Elements (REEs) &
Defense Supply Chain
○ Supplier Profiles
○ Supply Chain Diagrams
○ Concerns for U.S. Industry
3. Major Rare Earth Government Policy
○ Government Statements
○ Government Studies
○ 10 U.S.C. §2533c
○ Recent Policy Developments
4. Planning Ahead: Obstacles and Opportunities
○ Future Outlook
Disclaimer: This presentation should
○ U.S. Government Options not be treated as an exhaustive or latest
○ Green & Co. Recommendations overview of the rare earth supply chain.
5. Conclusions
Not for distribution without permission 2
Introduction to Rare Earth Elements
• 17 total:
Light
Medium
Heavy
• Rare is a misnomer.
To economically
process is “rare”
• Radioactivity
typical around
deposits (thorium)
Not for distribution without permission 3
Rare Earth Ore Output in 2020
Others Metric
7% World
United Country Tons
Total
States REO*
16%
Australia 17,000e 7%
China
Australia 58%
7% Burma 30,000e 12%
China 140,000e 57.5%
Burma
12% United
38,000e 15.6%
States
Total rare earth mine production was approx
243,300 tons in 2020. However, these figures do Others 18,300e 7.5%
not account for illegal production in China, once *REO = Rare Earth Oxide equivalent
estimated to exceed 40,000 tons per annum. E = Estimated
Source: USGS Mineral Commodity Summary, 2021
Not for distribution without permission 4
Select REE Defense Applications
MILSTAR & M1 Abrams Electromagnetic
Successor Railgun
Programs
JDAM AEGIS Combat Night Vision
System Googles
Not for distribution without permission 5
Select REE Energy and Commercial Applications
Wind Turbines
HDDS Televisions
Compact Fluorescent
Light Bulbs
Automotive / Electric / Hybrid Vehicles Fluid Catalytic
Industrial Motors Cracking in
Petroleum Refining
Not for distribution without permission 6
Simplified Supply Chain
• Ore is mined and REE minerals concentrated, usually at mine site
○ Mineral concentrate is processed to remove
impurities
• Oxide preparation historically requires significant investment (as
much as $500 million or $20-40k per MT in planned output),
significant energy, and environmental mitigation
• Metal production is dominated by China
• Magnet production is dominated by China with Japanese and U.S.
sources for SmCo and NdFeB
• Some alloy and magnet production in the U.S.,
but small by worldwide standards
Co-located Magnet
Ore Concentrate Oxide Metal Alloy Production
Production
Not for distribution without permission 7
REEs and the Defense Supply Chain
Chinese Exports
Toyota, Nissan, Honda, &
GM have moved R&D and
RE-intensive electric vehicle
engine production facilities to
China since 2011
US Military Customer
Exploration/Mining
End Product:
Concentrate
RE Magnets
OEM/Prime
Subcontractor
Alloy
Oxide
Metal
Major
Ore
Sy
Magnet Magnet ste
Manufacturer Distributor/ m sI
Fabricator nte
hain gra
C t ion
ply
p
Su
Not for distribution without permission 8
Metals, Alloys, and Powders Supply
Oxides Metals, Alloys, and Powders
Northern Rare Earth
Lynas Corp Group High-Tech Less Common Metals Shin-Etsu
Co
Oil, Gas, and
Ganzhou Southern Neo Materials
Metals Showa Denko
Rare Earth Mining Co
National Corp.
Aluminum Corp of CAS Key
Xiamen Tungsten Co Santoku
China Laboratory
Guangdong Zhe Jian Zhao-Ri-Ke
China Minmetals
Zhujiang Rare Magnet Sumitomo
Corporation
Earths Co Industries
Solvay Neo Materials
Not for distribution without permission 9
NdFeB Magnet Supply Chain
Reliant on Chinese REO
Potentially Supply Chain
Beijing Jingci San Huan
New Material Dexter Magnetic Dura
Magnetism Adams
75% Global Production
Thinova Magnetic
Technology High-Tech Technologies
Oxides
Advanced Integrated
Zhejiang Tinnau Technologies Ningbo Yunshen Force Field Bunting Magnetcs
& Materials
Magnetic Ningbo Lihe
Ningbo Co-Star Component Permanent
Material High Hitachi Metals KJ Magnetics Magnetic
Engineering
Tech Materials
Proposed Production
Ningbo
Vacuumschm- Allstar Magnet Sales Xionghai
Metals, Shin Etsu TDK elze GmbH Magnetics
Alloys,
Powders
Compass
Stanford Magnets &
Urban Mining Quadrant Magnetics
Company Components
NdFeB
NdFeB Magnet
Magnet Distributor &
U.S. Customer
Manufacturer
Fabricator
(Sales from Distributors
or Manufacturer-direct)
Not for distribution without permission 10SmCo Magnet Supply Chain
Ningbo Lihe
Chengdu Magnetic Vacuumschm-
Material Science & Integrated Permanent
elze GmbH Adams
Technology Magnets Magnetic
Oxides Materials
Ningbo
Dexter Magnetic
60% Global Production
Zhejiang Tinnau Shin Etsu Xionghai Magnet Sales
Supply Chain Reliant
Technologies Magnetics
on Chinese REO
Ningbo Co-Star Compass Stanford
Material High Arnold Magnetic Quadrant Magnets & Magnetics
Tech Components
Magnetic Dura
Ningbo Ninggang Electron Energy Applied
Perm. Magnetic Component Magnetics
Metals, Corp Engineering Magnets
Alloys, Materials
Powders
Nanjing Bunting
Chuangken
Industry Co.
SmCo
SmCo Magnet
Magnet Distributor &
U.S. Customer
Manufacturer
Fabricator
(Sales from Distributors
or Manufacturer-direct)
Not for distribution without permission 11Domestic and Allied Producers (Ores & Concentrates)
Mount Weld, Australia and Kauntan, Malaysia (Lynas Corp)
• Industry Perception: Currently in operation. Largest non-Chinese REE oxide producer. Resource skews “light”. Kuantan facility has
prior history of radioactive contamination with local popular and government support lacking, leading to production delays.
Mountain Pass, CA (MP Materials)
• Industry Perception: Historic U.S. producer of rare earths, with equipment and facilities on-site from previous efforts. Good
transportation networks. Resource skews light and separation efficacy has yet to be proven. Was awarded DPA Title III contract in
2020 for rare earth separation and processing.
Bokan Mountain, AK (Ucore Rare Metals)
Please note that these brief profiles
• Industry Perception: Possesses Rapid SX technology to cost-effectively separate REEs. on current and prospective REE
Still undeveloped. Resource skews heavy, significant State of Alaska financial support. producers are not intended to be a
complete analysis of each project.
Bear Lodge, WY (Rare Element Resources)
• Industry Perception: U.S. ownership. Skews “light.” Still undeveloped.
Round Top, TX (Texas Mineral Resources Corp)
• Industry Perception: Utilizes Continuous Ion Exchange (CIX) process. Still undeveloped.
Browns Range, Australia (Northern Minerals)
• Industry Perception: Skews “heavy.” Depends on Australian government loan forbearance.
May depend on Chinese customers.
Not for distribution without permission 12Domestic and Allied Producers (Oxide)
Lynas Corp, Kuantan, Malaysia
• Industry Perception: Largest source of high purity rare earth oxide outside China. Facility has a
prior history of radioactive contamination. Government issuance of three-year facility permit
could limit risk of production delays caused by prior permitting issues.
Lynas Corp/Blue Line Corp (TX) joint venture
• Industry Perception: Awarded IBAS contract. U.S. presence. Dedicated to medium and heavy
oxide production. Lynas is dependent on $350 million investment.
NPM Silmet AS, Estonia (Neo Materials)
• Industry Perception: Parent company (Neo Materials) relies on its
Chinese operations. Environmental concerns. Lacks sufficient waste
storage required to store radioactive byproduct in order to continue
production.
Not for distribution without permission 13Domestic and Allied Producers (Metal)
Eutectix Corp, Troy, MI/Tolleson, AZ
• Industry Perception: Has limited equipment available. Exited rare earth market after Molycorp bankruptcy.
Materion Corp, Mayfield Heights, OH
• Industry Perception: Large U.S. company headquartered in Ohio with a history of supplying rare metals to U.S.
military. Limited rare earth experience. Feedstock supply uncertain.
Less Common Metals, United Kingdom
• Industry Perception: Extensive experience with rare earth metals. Dependent on Chinese feedstock. Small producer
with limited U.S. military experience.
NPM Silmet AS, Estonia (Neo Materials)
• Industry Perception: Experience with rare earth metals. Parent company (Neo
Materials) relies on its Chinese operations. Potentially subject to Russian pressure.
Focus is on non-rare earth metals production. Environmental concerns.
Smaller rare earth metal producers are located in Brazil and Thailand as well, but they
provide only a small part of the supply chain.
Not for distribution without permission 14Domestic Producers (Alloy)
Eutectix Corp, Troy, MI/Tolleson, AZ
• Industry Perception: Has equipment already available. Exited rare earth market after Molycorp
bankruptcy and has expressed desire to avoid further rare earth exposure.
Electron Energy Corp, Landisville, PA
• Industry Perception: U.S. military supplier of REE magnets since 1970. U.S. presence. Only
produces SmCo, not NdFeB
Urban Mining Corp, San Marcos, TX
• Industry Perception: Recycling technology can provide “closed-
loop” NdFeB alloys without Chinese feedstock. Still developing
commercial-scale production. Only provides NdFeB.
Not for distribution without permission 15Producers (SmCo Magnets)
Electron Energy Corp, Landisville, PA
• Industry Perception: U.S. military supplier since 1970. Compliant with all U.S. sourcing laws.
Arnold Magnetics, Rochester, NY
• Industry Perception: U.S. military supply experience. Produces SmCo
magnets in China.
Vacuumschmelze, Germany
• Industry Perception: U.S. military supply experience. Compliant with U.S.
sourcing laws. Commercial focus.
Not for distribution without permission 16Producers (NdFeB Magnets)
Urban Mining Company, San Marcos, TX
• Industry Perception: Awarded contract from DPA Title III Office to produce NdFeB magnets.
Recycling technology allows “closed-loop” production not dependent on Chinese feedstock.
Hitachi Corp, Japan
• Industry Perception: Current non-Chinese supplier of NdFeB
magnets. History of aggressive behavior towards other Western
attempts to develop NdFeB sources. Not transparent or open about
sourcing.
Vacuumschmelze, Germany
• Industry Perception: Current U.S. military supplier for NdFeB.
Only compliant for one grade of NdFeB and for sales of this grade
in large quantities. Dependent on Hitachi patent license.
Commercial focus.
Not for distribution without permission 17Concerns for U.S. Industry
• Limited stable or non-Chinese ore and oxide supply
○ Only one U.S. producer, currently sends feedstock to
foreign suppliers to process U.S. mined material.
○ Wholly domestic producers cannot supply the
entire market alone
• Limited number of U.S. magnet suppliers
○ Only 1 U.S. facility for SmCo
○ First U.S. NdFeB magnet manufacturer
coming online
• Limited U.S. alloy capacity
○ Only 2-3% of global alloy capacity, and dependent on
on foreign markets and supply chains
• No U.S. metal manufacturing
○ Industry is still almost entirely concentrated in China
Not for distribution without permission 18Government Statements on REEs
Ellen Lord: Mike Pompeo:
• August 26, 2019 Press Briefing: • March 26, 2020 Interview: "When it comes to important material
"We have been focused on rare things that the United States needs for its own security...I would
earths for quite some time...The add rare earth minerals, I would add a host of other things that are
challenge is really the processing really central to American security. We need to fundamentally
of them and having facilities to do review our supply chains and make sure that we know those
that. Because quite often, China supply chains and have control over them for moments just like
mines them elsewhere and brings this."
them back to China to process • September 26, 2019: "...we must also pursue new sources of these
them...We're concerned about any critical minerals."
fragility in the supply chain, and
especially where an adversary Letter from Senators to Secretary Esper:
controls the supply." • April 24, 2020: “It is clear that our dependence on China for
• April 2018: Lord said that US vital rare earths threatens our U.S. manufacturing and defense
reliance on China for critical industrial base. As the October 2018 Defense Industrial Base
minerals is "quite alarming…we (DIB) Report states: ‘China represents a significant and
have an amazing amount of growing risk to the supply of materials deemed strategic and
dependency on China. We are critical to U.S. national security.’ […] Ensuring a U.S. supply of
sole sources for rare earth domestically sourced rare earths will reduce our vulnerability to
minerals, some energetics, supply disruptions that poses a grave risk to our military
different things. This is a problem readiness.” (Senators McSally, Cruz, Barrasso, Cotton, Enzi, and
for us as we move forward." Gardner).
Not for distribution without permission 19Government Rare Earth Studies
• USGS and Department of Interior – Rare Earths are
“critical minerals”
• DLA-SM – Rare earths are critical and in shortfall
• Department of Energy – Rare earths are critical
• GAO – Reporting on rare earths could be improved
• Bottom line: Government has studied the rare earth
issue for more than a decade and come to a
consensus position — rare earths are critical
materials!
Not for distribution without permission 2010 U.S.C. §2533c
• The FY19 NDAA included the first law prohibiting
purchase of Chinese rare earth magnets: 10 U.S.C. §2533c
(now codified at 10 U.S.C §4871)
• Requires DoD to avoid purchasing magnets “produced” in
China and other foreign adversarial nations
○ This applies to the sintering or bonding process —
allows use of Chinese ores, concentrates, and oxides
(due to lack of alternatives)
○ Incentivizes development of American solutions
• Disrupts the distributor/fabricator model, which depends
on magnets manufactured in China and then “cut” in U.S.
or Japan
• Incentivizes recycling of magnets within the U.S.
Not for distribution without permission 21Recent Rare Earth Policy Developments
• 2019: Five Presidential Determinations declaring REEs critical to
national security and authorizing Defense Production Act (DPA)
Title III investment to establish capabilities for:
1. Light Rare Earth Elements (LREE)
2. Heavy Rare Earth Elements (HREE)
3. Rare Earth Metals and Alloys
4. NdFeB Rare Earth Magnets
5. Samarium Cobalt Rare Earth Magnets
• 2020: DoD issues HREE/LREE contracts for REE production:
○ Lynas / Blue Line joint venture
○ MP Materials
• Also in 2020: DoD awards Urban Mining Company DPA contract
to produce NdFeB Rare Earth Magnets
• September 2020: Trump White House issues Executive Order
intended to spur REE mining
• February 2021: Biden White House issues “Executive Order on
America’s Supply Chains” calling for REE supply chain analysis
Not for distribution without permission 22Future Outlook
• Rare earth investment market has not recovered from the
bankruptcy of Molycorp, though MP Materials has taken
over its former Mountain Pass mine with stated plans to
provide fully integrated REE separation by 2022
• Lynas is the only allied company currently mining and
refining oxide
• Recycling offers intriguing possibilities, but currently only
projected to apply to one set of magnets
• China unlikely to give up its monopoly position willingly,
and will likely continue to use its power to push in to
higher-value downstream applications
Not for distribution without permission 23U.S. Government Options
DPA Investment WTO Action Substitution Continued Protection
for Non-Chinese
Targeted investments Counterproductive Low-hanging fruit Suppliers
can reinvigorate the the first time, gone, and has not
supply chain both on probably not an produced significant • SmCo protected
selected projects and effective strategy results under 2533b and
in adjacent sectors. 2533c
2533c creates • NdFeB protected
important U.S. under 2533c
demand to sustain • Non-magnet
entry of new REE uses still
domestic NdFeB mostly
suppliers into the unprotected
market
Not for distribution without permission 24Green & Co. Recommendations
1. Fully fund DPA Title III account for REE projects
2. Invest in right domestic sources for HREEs
○ Lynas/Blue Line reliant on foreign feedstock from
Australia
○ Prioritize innovative solvent extraction technology to achieve
cost-competitiveness with China
3. Release pending “Rare Earth Metals and Alloys” DPA Title III
solicitation
4. Establish buffer stocks or stockpile REE concentrate and REE
master alloy and/or magnets
5. Support tax incentives, liability protections, expand coverage of
2533c and other actions to develop domestic production of REEs
Not for distribution without permission 25Conclusion
• Rare earths are critical to national
security
• Despite some progress since 2010,
China remains dominant in the supply
chain
• The private sector cannot and will not
solve U.S. military REE supply chain
insecurity on its own
• But innovative solutions to portions of
the supply chain do exist
• Government must find ways to get
involved, but there are no quick fixes
• Government should prioritize truly
domestic projects for investment
Not for distribution without permission 26Acknowledgements
A special thanks to our partners and
outside advisors for their contributions
and peer review of this presentation.
Not for distribution without permission 27Contact Information
Questions? Contact us.
(202) 546-0388
jagadmin@jagreenco.com
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