U.S. Aims to End China's REE Monopoly

"We must globalize chains for these materials."

The U.S. wants more countries to boost production of rare earth elements (REEs to break China's supply monopoly, a top Energy Department official told Congress Thursday.

Diversifying supplies of the REEs is important to the Obama administration, because they are used in hybrids, solar panels and wind turbines, all of which the White House is promoting in its overhaul of U.S. energy policy.

China accounts for 95% of global production of REEs. Its market dominance came in focus this month when industry sources cited concerns Beijing was holding back shipments to Japan. A Japanese trading source said China ended the de facto ban, but Japanese customers are looking elsewhere for supplies.

This fueled concern that clean-energy products could become more expensive and harder to manufacture outside of China.

"This concentration of production creates serious concerns," David Sandalow, U.S. Assistant Energy Secretary told Congress. "It goes without saying that diversified sources of supply are important for any valuable material."

Sandalow, testifying before the Senate Energy Subcommittee, said the Obama administration plans to encourage U.S. trading partners to quickly develop rare earth metals production.

"We must globalize chains for these materials," he said. "To manage supply risk, we need multiple, distributed sources of clean energy materials in the years ahead."

Sandalow said the Energy Department will release a plan this autumn for developing more rare earth metal supplies.

The U.S. was the global leader in REE production in the late 1980s.

The rare metals are often difficult to extract in profitable quantities, which led their production to be geographically concentrated, said Sandalow.

Legislation was introduced in both the Senate and House of Representatives to increase U.S. investment in and production of REEs, including providing extraction companies with federal loan guarantees. However, the legislation is not expected to clear the Congress this year.

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