By Daniel Dombey in Washington

Published: September 26 2010 18:22

The US is trying to resume production of raw materials vital for defence equipment and green technology in response to rising fears about Chinese dominance of the sector.

The push follows moves by Beijing, which controls more than 90 per cent of production, to restrict exports of “rare earths” – which have a range of sophisticated uses from precision-guided weapons, night vision and radar systems to green technologies such as hybrid cars and wind turbines.

Rare earths are 17 chemically similar metallic elements – such as europium, yttrium and lanthanum – that have unique magnetic, optical and other properties crucial for miniaturisation, lasers and energy efficiency.

The Department of Energy is to set out a strategy to increase US production, find substitute materials and use rare earths more efficiently. The Pentagon will complete a study of the US military’s dependency on the materials.

“We are certainly putting our country at risk in terms of our national security and our economic security if we don’t do something to ensure that we have an adequate supply,” said Kathy Dahlkemper, a congresswoman who has written legislation aimed at making the US self-sufficient in five years. She hopes her bill can come to a vote in the full House this week.

The challenges are steep. A report by the Government Accountability Office said in April that rebuilding the US’s supply chain for rare earths could take up to 15 years and would require patents held by foreign companies.

Other studies have suggested that China’s export cutbacks are likely to continue because of its own burgeoning demand and drive to use domestically produced raw materials for its high-tech exports.

While China denied claims last week by Tokyo that it had blocked rare earth exports to Japan amid diplomatic tensions between the two governments, Beijing has steadily raised export duties and cut quotas worldwide this year.

“Diverse global supply chains are important for any critical materials, including rare earths – recent incidents underscore this,” said David Sandalow, the assistant secretary at the energy department who outlined the push for a new US strategy.

Brett Lambert, an industrial policy director at the Pentagon, added that his department had a dedicated team working on rare earths and planned to issue a comprehensive review in October. He said the US remained confident that its forces “have access to any and all materials necessary”, while recognising “the importance some of these elements have for both our supply chain and certain military systems”.

Although rare earths are not in fact rare, their extraction is difficult and can often be environmentally hazardous. Beijing began a drive to accelerate its production under the late Deng Xiaoping, the political patriarch, who compared China’s rare earths to Saudi Arabia’s oil.

The US, however, has moved in the opposite direction. While once it was the world’s leading producer, it now mines no rare earths, largely because of environmental and cost concerns. The last US mine closed in 2002, although its owners are now looking for $500m to resume production and are still processing some rare earths from existing stockpiles.

Extraction at potential other sites could take far longer, because of the need for environmental permits and infrastructure.

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