China’s New Warnings on Further Rare Earth Export Restrictions Spotlights Need to Ramp up U.S. Production

China’s renewed warnings last week of further rare earth export reductions and stronger in-country production controls increases the urgency for the U.S. to ramp up its own rare earth production, Mark A. Smith, Molycorp, Inc.’s MCP -9.76% President and CEO, told a U.S. House Foreign Affairs Subcommittee on Wednesday.

"Senior Chinese officials relayed to me last week, both privately and through public statements, that China has no intention of remaining the world’s major supplier of rare earths and that it will continue to shift its focus to domestic demand," Smith told the U.S. House Foreign Affairs Subcommittee on Asia and the Pacific in hearing testimony. "China is clearly warning that they will consume more of their own rare earths and export less, and that they see tight supplies of rare earths as representing an ‘irreversible’ trend."

"Coupled with stronger enforcement of in-country production quotas, this points to a continued tightness in global rare earth markets for as far as the eye can see," Smith testified. "The U.S. must roll up its sleeves and get to building its own domestic rare earth manufacturing supply chain. We must move as rapidly as possible to a position where our economy and our national security interests are no longer tied to declining Chinese rare earth exports."

Smith recommended that the U.S. "take a page out of China’s strategic playbook and leverage its rare earth resources to attract manufacturing that relies upon these critical materials."

He urged Congress to encourage greater private sector investment in rare earth technology innovation; strengthen research and development related to rare earth materials; expand graduate and post-graduate instruction in the basic and applied sciences; and lend support to private sector efforts to recycle rare earths, a key future source of material.

Smith’s full testimony can be downloaded here: .

With offices in the U.S., Europe, and Japan, Molycorp, Inc. is the only rare earth oxide (REO) producer in the Western Hemisphere and the largest REO producer outside of China. In addition to its current production of rare earth oxides at its flagship rare earth mine and processing facility at Mountain Pass, California, the Company produces rare earth metals, rare earth alloys (such as neodymium-iron-boron and samarium-cobalt alloys) and rare metals such as niobium and tantalum.

The rare earths and rare metals Molycorp produces are critical inputs in existing and emerging applications including: clean energy technologies, such as hybrid and electric vehicles and wind power turbines; multiple high-tech uses, including fiber optics, lasers and hard disk drives; numerous defense applications, such as guidance and control systems and global positioning systems; advanced water treatment technology for use in industrial, military and outdoor recreation applications; and other technologies.