Understanding China’s Rare Earth Monopoly
Understanding China’sRare Earth MonopolyRare Earths are a cornerstone of China’s military & economic strategy to achieve global hegemonyWhy all U.S. efforts have failed to overcome this threat?What is the solution?Congressional Briefing: July 26, 2019 – Capitol Building Senate Visitor Center Room 215Speakers: General John Adams (Ret.), Ned Mamula, James Kennedy, Marc Noga, John Kutsch & J.J. Brown
Outline Of Presentation:Understanding China’s State Sponsored MonopolyHow It OperatesWhat Are Its GoalsWarnings IgnoredUnderstanding Its Commercial DimensionsScope of State Sponsored ResearchRelative Achievements in IP & R&DUnderstanding Its Military DimensionsLeadership In RE Dependent Weapon SystemsMilitarized MercantilismUnderstanding its Offensive & Defensive StructureWhy Opening New Rare Earth Mines Cannot Save UsWhy Its All About MetalIntroduction: Marc Noga & Facts On The GroundWhy Thorium Byproduct Utilization Is CriticalLessons In ChemistryUtilizing Abundant Uninterruptable ResourcesHow The Rare Earth Cooperative Will Work
Rare Earths Are One Of The Defining Economic& National Security Issues Of Our DayThe GAO has determined that:‘rare earths are a bedrock national security issue’&‘China can use rare earths to halt the procurement ofmultiple RE-dependent U.S. weapons systems’With such definitive National Security concernsand 10 years of Congressional scrutiny* youwould think this problem would have beensolved, but the situation has only gotten worse* Congress has offered at least two dozen bills that deal with rare earths since 2008
Why ? Because this is not a marketbased problemAll traditional ‘free market’ challenges toChina’s monopoly have and will continueto fail in overcoming China’s monopolyThe reasons for this are built into China’sstate sponsored monopolyThe following slides highlight many ofthese reasons, but not all of them
China’s rare earth programs were initiatedat the highest levels of government: Deng Xiaoping and Jiang Zemin initiated Programs 863 and 973respectively (making rare earths a top priority for China)Xi Jinping and Wen Jiabao maintained foreign investment, export,tariff and trade restrictions on rare earths while continuing internalsubsidies and investment into the industryDeng Xiaoping’s family acquired & relocated the world’s mostadvanced rare earth magnet company, a 70 million asset at thetime (circa mid-1990s) This U.S. company, Magnequench, was the only domesticproducer of rare earth magnets for all U.S. guided weaponsystemsXi Jinping’s family held nearly 400 million in rare earth processingassets as early as 2012Imagine if a series of U.S. Presidents held significant financial interest in a strategic commodity or industry Could / would that influence the economic or military policies of the United States (?) DARK HUMOR
For China, rare earths are a loss leader as partof its hyper-mercantile strategy of economicand military dominationAccess to these materials is used as leverage toforce RE dependent technologies to migrate toChina and create dependency issues for U.S.defense contractorsThis strategy has been so successful that entireU.S. & multi-national industries have movedoperations to China and defense contractorshave expressed concerns over supply disruption
The commercial consequence has been theglobal aggregation of intellectual property,manufacturing and profits inside ChinaWhile denying these profits and corresponding tax revenues to its adversariesThe militaristic consequence has resultedin China’s ability to cut off its adversaries'access to these materials. Note: The U.S.and NATO are 100 percent dependent onChina for all metallic forms of rare earthsWhile cultivating dependency relationships with western defense contractors
All of China’s actions are consistentwith the findings of the 1999Congressional Report on“U.S. NATIONAL SECURITY ANDMILITARY/COMMERCIAL CONCERNS WITHTHE PEOPLE’S REPUBLIC OF CHINA”SUBMITTED JANUARY 3, 1999 BY MR. COX OF CALIFORNIA,CHAIRMAN OF THE SELECT COMMITTEE
From the 1999 Cox Report:“In 1997, the CCP formally codified the 16Character Policy. The “16-Character Policy” isthe CCP’s overall direction that underlies theblurring of the lines between State andcommercial entities, and military andcommercial interests. The sixteen charactersliterally mean: Jun-min jiehe (Combine the military and civil) Ping-zhan jiehe (Combine peace and war) Jun-pin youxian (Give priority to military products) Yi min yan jun (Let the civil support the military)”“This policy, a reaffirmation and codification of Deng Xiaoping’s 1978pronouncement, holds that military development is the object ofgeneral economic modernization, and that the CCP’s main aim for thecivilian economy is to support the building of modern military weaponsand to support the aims of the PLA.”
This is also observable in China’sdemonstrated success in eclipsing all othernations in the areas of rare earth relatedbasic science, IP, R&D and military &commercial development of nextgeneration technologiesThese state sponsored program are arguablymore ambitious and far sighted than theU.S. Manhattan Project during WW2
China has two large cities exclusivelyfocused on rare earths. The cities areofficially referred to as “rare earth cities”China’s 2 Rare Earth CitiesGanzho & BautouA significant portion of Baotou and Ganzhoo’s 17 millioninhabitants are directly or indirectly supporting China’s RareEarth programThe cities combined population is about 15 times larger thanthe U.S. Manhattan Project during its peak of activity
To put things into perspective, the ChineseGovernment has established 5 national labsthat exclusively focus on rare earths 1985 China establishes the Baotou Research Institute of Rare Earths in recognition of the PRC’s focus on Rare Earths.Beginning in 1985, this facility became and remains the largest dedicated rare earth research facility in the world 1987 China establishes the Changhchun Institute of Applied Chemistry – focused on the chemistry and physics of rareearths 1991 China establishes Key Laboratory – focused on chemistry and applications of rare earths and the Chinese StatePlanning Commission formally places the entire rare earth industry under state control 1999 China establishes the Xiyuan Inner Mongolia Functional Materials Engineering and Technology Research Center –focused on Functional Materials Engineering 2001 China establishes the National Engineering Research Center of rare earth metallurgy and materials - focusedprimarily on MetallurgyThe U.S. only has one National Lab working onrare earths, but that work has been insignificantrelative to its overall budget during this timeframe
China has eclipsed the rest of the world in rare earthbasic science, IP and R&D researchChina files more rare earth patents each year thanthe rest of the world combined
By sometime in 2021 China will have filed moreRE patents than the rest of the world combinedThis state sponsored patent strategy iseffectively ‘ring-fencing’ all existing nonChinese patents and will be used to block orchallenge non-Chinese patent filings in thefutureSometime in the not-too-distant future Chinawill become the international champion andenforcer of IP
China is leading the U.S. in almost all areas of NextGeneration weapon systems. Many of these Chinesesystems have been tested or deployed Quantum computing, satellite & encryption technology (here, here, here, here), (here). Kinetic Energy weapons (here, here, here), (here) Hypersonic weapons (here, here, here) Directed Energy weapons & control over U.S. access to materials* (here), (here) Space Force weapon tests and deployment (here), (here) Nuclear powered weapon systems (here, here, here)All of these systems require ultra-high purity rareearth materials in post-oxide forms. The U.S. has nodomestic capabilities to produce these materials*
Beyond this, other Ultra-National Military &Mercantile-Economic Strategies have been initiatedIn 2017 a new Chinese National Intelligence Law nowrequires“all Chinese organizations and citizens to support,cooperate, and collaborate in [Chinese] nationalintelligence work”.This law makes every Chinese citizen a duty-boundspy for China, including those working in our NationalLabs, for defense contractors and at our universities. China has also made it known to recent expats thatthey consider anyone of ‘Chinese decent’ a citizen
Offensive & Defensive Structures Of China’s Monopoly
China’s monopoly is designed to eliminate (or moderatein the case of resource production) competitive threats atevery level of the resource, oxide and post-oxide valuechainHistorically China’s official stated rare earth resource,oxide and post-oxide production “capacity” has beenmaintained at two times official production levelsThe Chinese government estimates that ongoing ‘blackmarket’ production is at least 150% of its officialproduction numbersThat puts China’s total internal capacity at 350% of itscurrent level of production – or close to 3 times globaldemand
China produces 80% of the world’s RE resourcesand processes close to 90% of the world’s oxidesChina also produces over 95% of the world’s baserare earth metals The balance is almost entirely Japan, orJapanese controlled, and Japan relies on Chinafor close to 90% of its internal RE metal needsThis means that there are no non-Chinesemetals, alloys or magnets, ex-Japan, that did notoriginate from China (including recycled metals)Btw: China consumes 75% of what it produces
Most of China’s Monopoly Leverage Is At The PostOxide & Metallurgical Level In fact, China has made it clear that they intend torely on other nations to become their resourcesupplier in the future Representatives of China have publicly stated thatresource producers will be free to ship REresources to China but will not be allowed toadvance up the value chain (beyond oxides)China’s control over non-Chinese technology anddefense companies is at the post-oxide level – theywill not give this up
To speak about how this plays out in thedefense, aerospace and auto industry is MarcNogaMarc has been involved with the application of rareearth materials in motors for over 25 yearsHis work includes designing and sourcing rare earthmaterials into automotive, medical, aerospace anddefense applications, including existing, experimentaland prototype weapon systemsHis talk will focus on China’s control over U.S. accessto metals and magnets that go into these systems
Motor Industry Basics Permanent Magnet DC Motors accounted for about 22.5 Billion in worldwidesales in 2018 Asia Pacific, Europe and North America are the biggest regions Worldwide projected CAGR for this technology is 6.1% through 2025Rare Earth Materials in Motor Industry Magnets are where we find RE materials Old technology of ferrite magnets, still widely used but energy products peak ataround 4.3 MGOe RE magnets: SmCo has 8X energy product, NdFeB has more than 10X energyproduct This enables smaller, lighter and more power dense motors – critical inAerospace and DefenseApplications There are too many to list – virtually all new A&D motor applications use REmagnets As we speak I am actively working on ER-GMLRS, AARGM, Hellfire, TaurusMissile and JSF All use SmCo or NdFeB – as well as other Rare Earth additives (e.g. Dysprosium)
Challenges Previous “work-arounds” for ITAR projects allowed use of Chinese RE if finalgrind/coat/magnetize was in the USA This option is eliminated with HR 5515, barring Secretary of Defense waiver Domestic magnet supply base scrambling to figure out how to replace Chinesemined materials Even if mined elsewhere, China will still have to participate in value chainbefore material arrives in USPractical Impact RE Magnets are the long lead item in assemblies already, now it will be longer This extends product development life cycles at the very bottom of the valuechain I am currently seeing 7X to 15X price increases for RE magnets to comply withHR 5515 This is especially painful as RE magnets were already the highest costcomponent in most machines Bottom line: Cost Up – Development and Prototype Cycles ExtendedQuestions?
Continued: China’s Offensive & Defensive Advantages And Strategies
Over 50% of China’s current rare earth production is thebyproduct of an iron ore mine, with no direct miningcost How do any U.S. producers compete with that?China is not subject to the 1980 NRC / IAEA regulation*that defined thorium bearing rare earth byproducts as“Source Material” and is free to utilize these resources *This amendment to 10 CRF 40 was the primarydriver for China’s successful entrance into the rareearth industry, including the transfer of westernprocessing and metallurgical technology to ChinaThese materials are also a no-cost byproduct to China
The 1980 NRC / IAEA regulation has forced nonChinese mining operations to develop depositswith low levels of thoriumThese deposits typically do not contain recoverablelevels of the heavy lanthanides Resulting in significant economic vulnerability To make matters worse, typically about 80% oftheir rare earth production can result inoperating losses (due to its light RE distribution)Consequently, their rare earth distribution isincompatible with U.S. technology and defense needs
Bastnasite & other low thorium-bearing ores are notcompatible with U.S. tech & defense industry needsWhat does MP Mine actually produce ?The only Rare Earths currently mined in the USA.From a typical Bastnasite deposit.Light REs YLaCePrNd*Sells below productioncost – generates lossesSmEuGdYMP Mine cannot produce any of the heavy lanthanides andhas never produced a commercial quantity of YttriumShipped toChinaFULL Rare Earth distribution: common in Monazite and other Thorium bearing depositsLight REsLaCePrNdHeavy REsSmEuGdTbDyHoErTmYb Y & ScLuYScThMonazite and Apatite typically contain recoverable levels for all of the rare earths*La and Ce make up over 83% of the rare earth distribution within the Mt. Pass deposit
China has lower labor, capital and environmentalcompliance costs and can sustain operating lossesas long as the central government permitsIn short, China is the market, sets price and candrive any competitor out of business at the mining,oxide or metallurgical level For example, most non-Chinese rare earth mineseconomic viability is based on just two rare earthelements (Praseodymium & Neodymium)If China lowers the price of these two materialsenough all of these non-Chinese mining companieswould go bankrupt
Rare earth concentrates and oxides have nosignificant technology or defense applicationThe U.S. does not have post-oxide capabilitiesChina is the only country in the world with thecapacity and a fully integrated value chaincapable of converting these materials intometals, alloys, magnets and other post-oxidesmaterialsThis forces U.S. and other RE producers to shiptheir concentrates and oxides to ChinaIt should be obvious that opening new REmines to supply China is not the answer
The hard reality is that no non-Chinese rareearth mine has any protection from Chinesemonopoly pricing power and, thus, cannot berelied onConsequently, developing post-oxide &metallurgical capabilities without first securingan uninterruptable supply of adequateresources is economic folly and inconsistentwith our National Security needsA solution is needed.
Absent subsidies, the resource security issue can onlybe resolved by allowing the utilization of Th-REEresources (the primary pre-1980 historical resource)The U.S. produces enough recoverable Th-REEs tosupply the entire non-Chinese worldTh-REE Bearing Monazites, Apatite & other REPhosphates are typically dumped as tailings by: Phosphate MinesHeavy Mineral Sand – Titanium / Zircon Placer MinesIron Ore Mines, Uranium, Aluminum, Copper, Cobalt, Mines, etc.Bastnasite Rare Earth MinesBy utilizing Th-REEs from existing mines the rare earthsupply chain becomes uninterruptable
Rare Earth Distribution % By MineralizationChineseHRE-ChinaByan Obo Ionic 64.90.72.50.4YttriumScandium0.20.065.0TracePercent HeavyHeavy YRE in OrePercent Th / U0.3%0.5%5%0.3%18.1%83.1%0.2% .1%LightLanthanidesHeavyLanthanidesMt. PassSelectedBastnasite .7%8% 50%3 - 8%7.5%11 – 35%**25%30 – 60%**3% 3100 – 16600 ppm1% Th 30/U 500 ppmUSGS Data - In order of Geologic Occurrence – Bastnasite, HRE Laterite, Monazite, Apatite*Selected Florida Phosphate with the lowest RE content and highest content.**Heavy RE distributions range from 30% to 60% (not reflective of selected phosphates above
There is no shortage of Rare EarthsResearch conducted by TheFlorida Industrial & PhosphateResearch Institute and USFconfirms that the Phosphatemining industry in Florida dumpsabout 22,600 tons of rare earths*every year – due to Thoriumcontent.Assuming a 50% recovery, Floridaalone could cover nearly 100%of current U.S. rare earthrequirements.Poul Emsbro, with USGS, estimates that the U.S. PhosphateIndustry can supply up to 65% of global rare earth demand
Estimated Rare Earth Resources Available FromActive Mineral Sand Mining Operations In The U.S.It is estimated that current mineral sands production in theU.S. can supply approximately 5K tons/year of monazitewith low capital upgrade costs ( 10M) and within a shorttimeframe (6 - 12 months). Expansion of current productioncould produce an additional 5K tons/year of monazite.Expansion opportunities could be brought online in 12-18months and would involve more significant capitalexpenditure.Estimates Produced by Adam Karst, P.G., President and Principal Geologist of KarstGeo Solutions, LLC, an independent consultant providing expertise to the mineralsands industry
China’s state sponsored monopoly represents aclear case of “market failure” for the U.S. andother nationsHistorically, all capitalist economies resolve“market failure” with the same economic tool:a Cooperative.Cooperatives utilize shared capital to establisheconomies of scale and minimize risk bycoordinating the interests of producers andconsumers
Multiple non-RE mining companies provide Monazite, Apatite & other Th-REE resources tothe co-operative. All resources currently a waste byproduct of some other commodityThe Th-Bank assures thatThorium is no longer releasedback into the environmentMultiple RE Suppliers – RE is a byproductThorium BankThorium liabilityRE Refinery Co-op to produce oxides, metals, alloys, magnets, etc.Potential Co-op OwnersU.S. Aerospace U.S. Defense Ind. U.S. Auto Ind.Japanese Industry, Korean Industry, EU Industry,N.A.T.OAISTJapanese, Korean & EUGovernment EntitiesThorium Bank holds allActinide liabilities, but hasauthority to develop “Uses &Markets for Thorium,including Energy”RE end-users own and control the Co-operative and off-take, but share profits with suppliers
Centralized Th-Bearing Rare Earth Refinery CooperativeLarge OEM Technology Companies:Aerospace, Electronics, AutoDefense ContractorsPrivately funded Rare Earth Refinery provides fullyintegrated value chain for rare earth chemicals,oxides, metals, alloys, magnets, etc.Research Facility Partners:OSD - ASD R&D (TE)DoD, DoE, DARPA, ARPA-EShared University TechResource FacilityOEM rare earth end-users, defense contractors, theU.S. Defense Logistics Agency and national programssuch as JOGMEC, KORES and the UE.Shared Corporate Industrial Development & Research FacilityIP owners, fabricators, component makers and new technology applicators willsupport the cooperative internally or externally
All environmental risks are resolved bytransferring the resulting actinides to a“Thorium Bank”The current alternative is that these materials arereleased back into the environment – intopermitted tailings containment areas (includingMP Mine) or blended back into the depletedresource areaThe Thorium Bank eliminates all downstreamcontamination risks and would comply with allNRC and EPA regulations
The Thorium Corporation: Storage, IndustrialUtilization & EnergySafe StorageEnergyDefense & Space ApplicationsTh BankThorium Storage, Energy & Industrial ProductsCorporationIndustrial UsesComputing &ElectronicsStructural MaterialsEnergy SystemsAdvanced Alloys
Thorium and all other Actinides will betransferred to the “Thorium Storage, Energyand Industrial Products Corporation”DBA: The Thorium BankThe Thorium Bank will act as a:1) Strategic reserve for the safe storage of Thorium2) Private corporation authorized by Congress to developcommerciala) uses and markets for Thorium, includingi) non-energy, medical and industrial materialsii) Thorium energy systemsFunded by U.S. & multi-national entities and sovereigngovernments
A significant part of our Nations defense systems are heavy RE dependentHeavy RE Dependent TechnologiesTbDyHoNone ofthese arecurrentlyproduced inthe USAErTmYbLuMagnets, Lighting & Phosphors, Fuel Cells – Automotive, Wind Turbines,Defense Applications: Terfenol-D Sonar , Guided Ordinance, Lasers, DronesMagnets, Nuclear Control Rods, Lasers – Automotive, Wind TurbinesDefense Applications: Terfenol-D Sonar, Guided Ordinance, Drones, Stealth, Directed EnergyMagnets, Nuclear Control Rods, Lasers, Microwave EquipmentDefense Applications: Rail Gun, Direct Energy Weapons, EMPs, LasersIndustrial & Medical Lasers, Fiber Optics, Nuclear Control Rods, EU CurrencyDefense Applications: Infra-Red CM, LADAR, Communications. DronesSuper Conductors, X-Ray, Industrial & Medical Lasers, Optic Display, EU CurrencyDefense Applications: Magnets, CTH YAG Lasers. Drones, Directed EnergyX-Ray, Optics, Steel Alloy, Stress Instrumentation, Solar Cells, LasersDefense Applications: Advance Photonics Phase-Lock Array Lasers, DronesNuclear Dating, Metal Alloys, Catalysts, Medical Imaging and TreatmentsDefense Applications: Active / Passive Infra Red Cameras, Scintillators, Directed EnergyScSupper Aluminum Alloys, Specialty Lighting, Lasers, Fuel CellsDefense Applications: Air Frame Alloys and Missile HardeningYPhosphors, Electrodes, Super Conductors, Lasers, CatalystsDefense Applications: Guided Ordinance, Lasers, Communication, Radar, Super AlloysUnder the current environment the problem is grossly exacerbated because MP Mine sendsall of its valuable REs to China. The U.S. becomes a supplier to its adversaries monopoly
Rare Earth Monopoly Rare Earths are a cornerstone of hina [s military & economic strategy to achieve global hegemony . this facility became and remains the largest dedicated rare earth research facility in the world . In 2017 a new Chinese National Intelligence Law now requires all hi
WEI Yi-min, China XU Ming-gang, China YANG Jian-chang, China ZHAO Chun-jiang, China ZHAO Ming, China Members Associate Executive Editor-in-Chief LU Wen-ru, China Michael T. Clegg, USA BAI You-lu, China BI Yang, China BIAN Xin-min, China CAI Hui-yi, China CAI Xue-peng, China CAI Zu-cong,
Rare earth alloy wear-resistant pipe The wear and tear of rare earth alloy is a phenomenon of material loss caused by relative motion between objects. Rare earth wear-resistant alloy steel tube wear-resistant materials can resist wear and prolong the life of the product. Main Material: ZG40CrNiMoMnSiRe Heat treatment hardness: HRC 40
0.8 M Earth 1 M Earth 0.1 M Earth Planet Radius (R Earth): 0.95 R Earth 1 R Earth 0.5 R Earth Distance from Sun (DEarth): 0.7 D Earth 1 D Earth 1.5 D Earth Average Surface Temperature: 456 oC 10 oC -95 oC Atmosphere: T
Jul 08, 2009 · student returns to China, he or she is replaced by another Chinese visiting student. China has long lagged behind the U.S. technologically. However, as of the early 1990s, China’s vast rare earth resources have propelled the country into the number one position in the industry. Hence, it is only fitting that Chinese student interest follow suit.
EARTH / MOON WHITE EARTH / MIAMI WHITE EARTH / MULTICOLOR EARTH / LIGHT GREY colors EARTH / OUTDOOR 2CM EARTH / LIGHT GREY p.22 EARTH / DARK GREY p.26 EARTH / DARK GREY. 2 Drawing inspiration from the Dolomites in Northeastern Italy, Earth
Nine Lives Stealer (any sword) Yes Very Rare 36,000 gp DMG 183 Oathbow (longbow) Yes Very Rare 13,000 gp DMG 183 Scimitar of Speed Yes Very Rare 7,500 gp DMG 199 Spear of Backbiting (spear or javelin) Yes Very Rare 6,500 gp TYP 229 Sword of Sharpness (slashing swords) Yes Very Rare 42,000 gp DMG 206 Bookmark (dagger) Yes Legendary 30,000 gp TA 206
LINEAR REGRESSION WITH RARE EVENTS The term rare events simply refers to events that don’t happen very frequently, but there’s no rule of thumb as to what it means to be “rare.” Any disease incidence is generally considered a rare event (van Belle (2008)).
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