[Senate Hearing 113-192]
[From the U.S. Government Publishing Office]
S. Hrg. 113-192
CRITICAL MINERALS POLICY ACT
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
TO
RECEIVE TESTIMONY ON S. 1600, THE CRITICAL MINERALS POLICY ACT OF 2013
__________
JANUARY 28, 2014
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
RON WYDEN, Oregon, Chairman
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
MARK UDALL, Colorado JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia LAMAR ALEXANDER, Tennessee
BRIAN SCHATZ, Hawaii ROB PORTMAN, Ohio
MARTIN HEINRICH, New Mexico JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin
Joshua Sheinkman, Staff Director
Sam E. Fowler, Chief Counsel
Karen K. Billups, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Conrad, Gregory, Executive Director, Interstate Mining Compact
Commission, and on Behalf of Alaska Department of Natural
Resources, Anchorage, AK....................................... 41
Danielson, David, Ph.D., Assistant Secretary, Office of Energy
Efficiency and Renewable Energy, Department of Energy.......... 7
Eggert, Roderick, Professor And Director of The Division of
Economics and Business, Colorado School of Mines, Golden, CO... 51
Heller, Hon. Dean, U.S. Senator From Nevada...................... 3
Isaacs, David, Vice President of Government Affairs,
Semiconductor Industry Association............................. 36
Latiff, Maj. Gen. Robert H., (Retired), Ph.D, Research Professor
and Director for Intelligence Community Programs School of
Engineering, George Mason University........................... 25
Meinert, Lawrence D., Mineral Resources Program Coordinator, U.S.
Geological Survey, Department of the Interior.................. 13
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 4
Sims, Jim, Vice President, Corporate Communications, Molycorp,
Inc., Greenwood Village, CO.................................... 29
Thomas, Jennifer, Director. Federal Affairs, The Alliance of
Automobile Manufacturers....................................... 48
Udall, Hon. Mark, U.S. Senator From Colorado..................... 6
Wyden, Hon. Ron, U.S. Senator From Oregon........................ 1
APPENDIXES
Appendix I
Responses to additional questions................................ 65
Appendix II
Additional material submitted for the record..................... 73
CRITICAL MINERALS POLICY ACT
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TUESDAY, JANUARY 28, 2014
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:09 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Ron Wyden,
chairman, presiding.
OPENING STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON
The Chairman. The committee will come to order.
Today the committee will turn its attention to S. 1600, the
Critical Minerals Policy Act of 2013.
It has been a pleasure to join Senator Murkowski in
negotiating a truly bipartisan bill as evidenced by the 9
Democratic and 8 Republican cosponsors.
We've been joined by 17 of our Senate colleagues, including
committee members--Senators Udall, Franken, Risch, Hoeven,
Landrieu, and Manchin.
It seems to me, Senator Murkowski, this is a testament to
the bipartisan effort to reach agreement and I want to tell you
again how much I've enjoyed being part of this bipartisan
effort through the negotiations that were held.
As the committee learned in passing the Helium Stewardship
Act, our country depends on materials that are not burned or
consumed for energy, but are key to many energy technologies,
from wind turbines, to batteries, to oil refineries, as well as
a host of other technologies. Our country is increasingly
dependent on these minerals, to increase efficiency, lower
costs, and improve performance of manufactured products in
these industries. Without them, many of our essential U.S.
industries would struggle to survive.
Critical minerals are minerals which are essential to
American industries and may be at risk for supply disruption
such as by a small global market or geopolitical complexities.
This legislation tackles these issues head on and most
importantly it ensures a steady supply of the materials that
are crucial to thousands of good paying American jobs. One of
the keys to help putting Americans back to work and to help our
businesses in a tough global economy is to get it right with
respect to our essential, domestic policies.
If I was going to sum it up in a sentence, I would say our
premier challenge is to grow things in America, make things in
America, add value to them in America, and then ship them
somewhere. To do that American businesses need access to raw
materials in especially, in a high technology area, that means
access to what is known as the critical mineral field.
Critical minerals are the key to stronger permanent magnets
for wind turbines, for cleaner energy, and electric drive
vehicles. They're vital to phosphors which give us more
efficient lighting and flat panel displays and also give our
military night vision goggles and heads up displays.
Critical minerals are key to rechargeable batteries in
hybrid and electric vehicles and the high efficiency motors
that power them. They serve as catalysts for fuel cells and for
refining automobile fuel. We also know that they're essential
for many of our advanced weapon systems, MRI machines, and many
other technologies that are vital to America's national and
economic security.
Yet for as critical as these minerals are, our country has
been dangerously depending on imports from foreign suppliers.
The United States imports all, all our rare earth oxides, a
special class of critical minerals. In fact, American imports
the vast majority of them from a single supplier. Ninety-one
percent of our rare earths come solely from China, and our
country has seen how dangerous this dependence can be.
In 2009, China choked off the supply of these materials to
the rest of the world, restricting exports by 72 percent,
causing the prices of rare earths to skyrocket here at home.
Although China currently enjoys near monopoly in the global
production of critical materials, we're talking now about both
mining and processing, the truth is it didn't used to be this
way. I think it's our view, of our bipartisan coalition, that
it doesn't have to be this way in the future.
Fifteen years ago the United States was self-reliant for
our rare earths. Today China holds only 50 percent of the
worlds natural reserves while our country holds about 13
percent according to a recent study by the U.S. Geological
Survey.
In fact, a large part of the critical mineral supply shock
in 2009 was due to uncertainty about the global distribution of
critical minerals. When China began to restrict supply, the
rest of the world was in the dark about what the alternative
sources of the supply were, and were they even available.
Finally, a crucial but too often neglected part of this
supply conversation is minerals processing. Although mining is
an important part of the supply equation and S. 1600 encourages
Federal agencies to expedite the permitting for new critical
minerals extraction, it is the lack of processing capacity
transforming the raw materials we pull out of the ground into
the high-purity compounds needed for manufacturing. It is that
challenge that is my concern and the concern of many experts.
In a sense, it is our Achilles heel.
Mining more ore in the United States is not going to reduce
our dependence on foreign suppliers if the United States does
not develop the processing and refining technologies and
infrastructure needed to turn the ore into useful products and
then recycle them at the end of their useful lives.
S. 1600 expands the U.S supply of critical minerals by
looking comprehensively at the entire domestic supply chain of
critical minerals. The bill starts with the identification of
which minerals and elements are truly in need of special
attention. It then requires the Interior Department to conduct
assessments of where those minerals are located and expands
research to find more efficient ways of extracting and
processing the minerals.
The bill also requires the 2 lead agencies, the Department
of the Interior and the Department of Agriculture, to take a
fresh look at the permitting process. We ought to make sure,
with respect to hard rock minerals, that we're looking at every
possible way to reduce delays for mining projects that would
extract critical minerals.
The legislation also includes important training programs
for our future scientists and the bill includes research
programs to extract critical minerals from unconventional
sources.
Our witnesses today also represent the entire supply chain
from research and education, to mining and processing, to
manufacturing the final end products our people use every day.
We thank them for testifying.
Two of my colleagues have spent an inordinate amount of
time working with the committee trying to deal with both the
substance and the politics of putting together a bipartisan
bill when sometimes people wonder if the U.S. Senate can order
a Coca-Cola, let alone do an important piece of legislation.
I want to commend Senator Murkowski and Senator Udall.
We'll recognize Senator Murkowski now, then we want to
recognize Senator Udall who also has toiled hard and
effectively on this issue.
Senator Murkowski.
[The prepared statement of Senator Dean Heller follows:]
Prepared Statement of Hon. Dean Heller, U.S. Senator From Nevada
Chairman Wyden and Ranking Member Murkowski, thank you for holding
today's hearing. Mining is integral to Nevada's economy, and we have a
proud tradition of leading the nation on mining and mineral research.
The legislation we are considering today would go a long way towards
bringing federal mineral policy into the 21st Century, and I am proud
to be an original co-sponsor of this important legislation.
I would like to also thank Mr. Jim Sims, Vice President of
Corporate Communications at Molycorp for being here. The company's
Mountain Pass rare earth facility is only about seventy miles south of
Las Vegas. The project has been an important economic driver in the
region, employing hundreds of Nevadans, during a time where my state
continues to lead the nation in unemployment. I have had the pleasure
of working with Molycorp while it went through the site expansion
permitting process, and I am proud that Nevadans are playing such a
leading role in our nation's only rare earth oxide producing facility.
In Nevada and across the country, we have an abundance of critical
and strategic minerals that play a vital role in our everyday lives, as
well as our nation's economic success and national security. The mining
industry is one of the central pillars of Nevada's economy, directly
employing thousands of Nevadans. But as many people familiar with
mining communities know, the jobs directly at the project sites are
just one aspect of their economic impact. The influx of hundreds of
mining jobs into local communities ultimately facilitates additional
economic growth supporting the mine and the people who work there.
Those mine workers need restaurants to eat at, convenience stores to
shop at, and places to live. A recent economic study showed that mining
provides more than 60,000 direct and indirect jobs in the State
producing over $200 million in tax revenue and nearly $10 billion of
economic activity annually. That is why, even though Nevada currently
has one of the highest unemployment rates in the country, the areas in
my state that rely on mining, such as Elko County, have an unemployment
rate that is nearly half of the State's average.
I am pleased to join this diverse bipartisan group of senators
working to enact the Critical Minerals Policy Act. These reforms can
reduce our nation's reliance on other countries for the resources we
need to power our economy.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you Mr. Chairman.
I do appreciate the fact that you have scheduled up this
hearing today and very pleased that we are at this point.
You have noted the bipartisanship that went into
constructing this bill and you've mentioned several members of
the committee, I appreciate your leadership on it as Chairman,
but I particularly want to recognize my friend and colleague
Senator Udall who had his own bill in the last session and our
folks got together and worked through some of the issues. I
think what we have built is a legislative proposal that is good
and sound and rational and exactly what should happen in a
committee likes this.
So I thank you for the opportunity to hear this this
morning and again to Senator Udall my thanks to you for your
great cooperation in building what I think is a good bill here.
I think it is somewhat, I suppose serendipitous, maybe it's
a little bit presumptuous the bill was numbered S. 1600 and
when I think of 1600 I think about the white place down the
road here. It is my hope that because our bill really does
address such significant issues this critical supply chain it
already has 19 members on board in a bipartisan sense I really
do think that we can send this down the road this year. That
would be a great win for this country, and so I will continue
to keep working on this with of my colleagues.
Mr. Chairman you've outlined the contents of the bill very
well in your opening remarks. I appreciate particularly your
recognition that if we don't have the processing capacity and
ability, we are still left in a very, very vulnerable state.
I think we recognize that well we don't have the lion's
share of critical minerals here in this country, we do have
very good supplies, we certainly have very strong supplies in
my home State and an opportunity to gain access to them we're
looking at it very critically.
The problem though then the concern is we would have to
ship it to China to be processed. So, once again they have the
leverage that I think we're trying to get around here. So I
appreciate again you highlighting that aspect of what we need
to do when we're talking about the supply chain.
I mentioned that we have reintroduced this bill with the
proposals that I had outlined in my legislation along with
Senator Udall's. A little over 2 years ago at a hearing very
similar to what we're having today I asserted that the problem
that we have on our hands is very real. Today I would assert
that that problem has not diminished.
Our mineral related policies remain outdated, our
dependence on foreign minerals is reportedly deepening as you
had mentioned. Our agencies are not as coordinated and focused
on this issue as I believe they need to be, and when it comes
to permitting delays for mines, our Nation is tied for last. In
other words we're the worst in the world when it comes to
permitting delays.
All along the supply chain our mineral related capabilities
have slipped. Unless we take meaningful action, and soon, I
think our economy and our security can be jeopardized. Our
recent experience with helium shows how dire a shortage of a
critical mineral would be for many different industries. We
need to realize that unless we do more to ensure our own
domestic supply, we may have no way to present--prevent a
crisis next time around.
Now our colleagues over in the house have presented ideas
to fix this problem and I think that we should consider them
fairly just as we expect that they will consider ours. The fact
to the matter is that we've taken different approaches between
the 2 bodies.
Here in the Senate we focus on the entire supply chain by
establishing a process through which minerals can be designated
as critical; by adding accountability to the permitting
process; by returning agencies to the important work of
geological surveying; by seeking alternatives and encouraging
recycling; and by promoting a work force that can rise to the
challenges that undoubtedly lie ahead.
Now I know that we're all focused here today on the big
speech that's going to be delivered in the Capital later this
evening. While I would love it, as we are sitting there
listening to the President, if he would look at us, Senator
Udall, the chairman here, myself and other members of the
Energy Committee, and say the State of the Union would be
better if we improved our mineral policies.
Now I'm not going to hold my breath for that. Maybe we
should try to send some mental telepathy between here and now
and then, but I somehow doubt that that's made it into his
final text. But it is the truth and these are issues that
deserve our attention.
Minerals are the building blocks of our economy, critical
to our prosperity, our standard of living and our
competitiveness. We need a steady, affordable, and domestic
supply of them and as you have pointed out Mr. Chairman,
minerals that are mined here, refined here, and processed here,
and made into products here.
So again I'm pleased because we've got a good bipartisan
bill, it's practical, it's physically responsible, it takes a
comprehensive approach to an increasingly complex set of
challenges. I think it's worthy of our committee's support and
I would hope that we will reach that point very soon.
I'll look forward to the testimony from both panelists and
thank you all for agreeing to be here this morning.
The Chairman. Senator Murkowski thank you for an excellent
statement.
I also note that I hope that the bipartisanship of the
Senate bill will infiltrate into the other body because their
bill was not largely bipartisan. I think it was overwhelmingly
a partisan vote. So the good work that you have helped to make
possible I hope is going to set off a little bit of a push for
some bipartisanship in the house and I thank you for it.
Senator Udall, as Senator Murkowski has said--has put an
exceptional amount of time into this and understands this issue
inside out, inside and out.
Senator Udall, we welcome you----
Senator Udall. Thank----
The Chairman. Please go ahead.
STATEMENT OF HON. MARK UDALL, U.S. SENATOR
FROM COLORADO
Senator Udall. Thank you Mr. Chairman, thank you Senator
Murkowski for the kind words and we have been involved in this
together. It's been a labor of love, I'm really pleased with
the point that we're at and I think we've learned a lot in the
process.
One of the things I've learned is that rare earth materials
and minerals aren't actually rare they're just rare in
concentrated forms. It's very--it's time consuming, it's
technologically challenging, although we're going to hear about
some of the real advances today to concentrate those minerals
and metals.
I think this new term we're using which is critical
materials really does the job and sets up the agenda for us and
the challenge but also the opportunity. So I want to associate
myself with your remarks, both of your remarks and thank you
for the kind words.
I have 2 Coloradans I'm going to introduce to you in a
minute, but I did want to add a couple of other comments. The
reason I got involved in this, this is a very important issue
for Colorado and it fits with 2 of my priorities which have
been national security and clean energy, that doesn't mean that
traditional energy actually needs to use these kinds of
materials as well. We ought to be leaders in this area not
followers, we can partner with some of the other countries, but
we can lead and this is what this legislation really gives us
an opportunity to do.
You all mentioned the legislative vehicles you've used, in
2011, I introduced the Critical Minerals and Materials
Promotion Act and it focused on the very challenge and
opportunity we're talking about here today. My focus was on
research and development which would then develop a -or
strengthen I should say our domestic supply chain and then
would have the result of further developing in more robust
critical minerals industry work force.
We want people to know how to do this and I'm really
pleased that our revised version, the Critical Minerals Policy
Act of 2013, includes these ideas and many more from my
legislation as well as from what you all did.
I can't stay for the entire hearing, I hope you'll
understand that, but I did want to introduce these 2 Coloradans
I mentioned.
I want to start with Dr. Rod Eggert, he's a professor and
director of the Division of Economics and Business at the
Colorado School of Mines. We're very proud of the Colorado
School of Mines.
I don't know, Dr. Eggert, maybe you can speak to this in
your comments, But I don't know if there's any other
institution in any other state that equals mines, but of course
I'm a hometown boy and I care about Mines, it's a wonderful
school. As well as our Denver Broncos we're going to win on
Sunday, but anyway that--I shouldn't.
[Laughter.]
Senator Udall. Dr. Eggert you're known as a leading expert
on rare earth minerals and you chair the National Research
Council and you helped literally to write the book on why
critical minerals are so vital to our economy. You're also the
deputy director of the Critical Minerals Institute. The
Institute is a DOE energy innovation hub and I believe you
focus there on research to more efficiently use current
materials, reduce waste during manufacturing, diversify our
supply and many other important areas of research occur at the
institute.
So thank you for that great work and I know the committee
will benefit from your expertise.
Sitting just behind you is Jim Sims and he's the Vice
President of Corporate Communications for Molycorp. Molycorp is
a Colorado based company, it's a world leader in rare earths
and rare metals. They have a facility in California, Mountain
Pass facility and there--and I just got an update from Jim,
Molycorp is creating one of the most energy efficient
environmentally friendly rare earth production facilities in
the world.
Mr. Chairman, Ranking Member we also have a third witness
with us who has a connection with the great State of Colorado
and that's Major General Robert Latiff. He was the commander of
NORAD, outside Colorado Springs and I'm glad that he's here and
able to share some of his insights with the committee today
from a national security perspective.
So again thank you all for taking your valuable time. This
is a crucial hearing and again I extend my gratitude to the
ranking member and the chairman for having this important
hearing today. We'll, whip the House of Representatives into
shape on this, I have no doubt.
The Chairman. There you are. Thank you again for the good
work you've done, let's just make sure the record is clear, if
Senator Cantwell of Washington comes in we are going to give
her equal time----
[Laughter.]
The Chairman [continuing]. To address the gridiron front.
Senator Udall. That's true.
The Chairman. Let's go right to our witnesses, we've got
Dr. David Danielson the Assistant Secretary for the Office of
Energy Efficiency and Renewable Energy at the Department. They
house the Critical Minerals Institute and the advanced
manufacturing office.
Dr. Larry Meinert, he is the mineral resources program
coordinator for the USGS at the Department of the Interior.
Gentleman we will make your prepared remarks a part of the
record in their entirety. I've come to feel that there's almost
a physiological need at these sessions to read every bit of
what we'll put into the record. If you can just kind of
summarize your key views, that'll leave plenty of time for
questions.
Why don't we start with you Dr. Danielson?
STATEMENT OF DAVID DANIELSON, PH.D., ASSISTANT SECRETARY,
OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, DEPARTMENT OF
ENERGY
Mr. Danielson. Great, thank you.
Chairman Wyden, Ranking Member Murkowski, and members of
the committee, thank you for the opportunity to testify today
on the important role that critical minerals play in moving the
U.S. toward a clean energy economy and the Department of
Energy's ongoing work related to this topic.
The Department is currently reviewing S. 1600, the Critical
Minerals Policy Act of 2013 and has no specific comments on
legislation at this time. However DOE strongly believes in the
importance of ensuring a stable sustainable domestic supply of
critical minerals and has already begun to take significant
actions to address this challenge.
I represent DOE's Office of Energy Efficiency and Renewable
Energy, EERE, which leads DOE's efforts to help build a strong
American clean energy economy.
Critical materials are used in many traditional new and
emerging energy applications including in lighting, solar
photovoltaics, batteries, and wind turbines, and are expected
to play an increasingly important role in meeting our national
energy environmental and economic goals going forward.
DOE has been moving swiftly on multiple fronts to address
critical materials challenges and issued critical materials
strategy reports in 2010 and 2011 that formally identified 5
rare earth materials, dysprosium, neodymium, europium, terbium,
and yttrium as critical materials for clean energy applications
and identified 2 additional elements lithium and tellurium as
near critical materials.
DOE's Critical Materials Strategy Report identified 3 key
pillars to address critical materials challenges.
One, diversifying the supply of critical materials, 2,
developing substitutes for critical materials, and 3, driving
recycling, reuse, and more efficient use of critical materials.
Several entities within DOE contribute to our critical
materials R&D effort including the Office of Science, the
Advanced Research Projects Agency-Energy, and our applied
technology offices including my office EERE.
EERE's R&D investments including its Critical Materials
Institute are directly aligned with the aforementioned 3
pillars of DOE's critical materials strategy and are closely
coordinated with other efforts across all of DOE.
Regarding the first pillar diversifying supply, EERE has
invested in technologies to improve domestic lithium production
to supply the domestic battery industry as well as in
technologies to recycle lithium batteries. We've also funded
the development of technologies to cost effectively extract
minerals such as lithium from geothermal brines to improve
domestic production of geothermal energy at reduced cost. This
year EERE intends to expand this work to develop technologies
to cost effectively extract rare earth elements from geothermal
brines as well.
In the second pillar the area of critical materials
substitutes. DOE has made significant research investments in
alternative motor and generator topologies which contain no
rare earth permanent magnets at all. EERE has also invested in
magnetic materials research to develop magnets with lower rare
earth content and to develop completely rare earth free
permanent magnets as well. EERE also supports research on next
generation wind turbine drive train technologies that could
help reduce the use of rare earth elements while continuing to
drive down the cost of wind energy.
Improving the recycling and reuse of critical materials in
the third pillar has had limited R&D investment at DOE until we
recently stood up our Critical Materials Institute, or CMI, in
the middle of last year in 2013. Led by Ames National
Laboratory, the Critical Materials Institute which is one of
DOE's energy innovation hubs brings together leading
researchers from academia national laboratories in the private
sector to develop solutions to the domestic shortages of rare
earth metals and other materials critical for U.S. energy
security.
This institute has focused its R&D efforts around the 3
pillars of the DOE critical materials strategy. For example CMI
researchers are studying new lower cost ways to extract,
separate, and process rare earth metals from both ores and
recycled materials, searching for substitutes for rare earth
phosphors for efficient lighting, and developing new high
strength, high temperature magnetic materials with low or no
rare earth content.
If successful the technologies being developed by CMI could
reduce the rare earth content of permanent magnets by more than
50 percent, reduce the amount of critical elements going to
domestic landfills in the U.S. by up to 35 percent, and reduce
the loss of critical rare earths within domestic manufacturing
facilities by up to 50 percent.
Finally DOE would like to underscore the importance of
continued interagency coordination and collaboration on the
topic of critical materials. DOE co-chairs an interagency
subcommittee on critical and strategic mineral supply chains
that facilitates coordination across Federal agencies to
identify and address important issues related to critical
minerals supply issues across all government.
In conclusion the development and implementation of its
critical materials strategy including the creation of the
Critical Materials Institute, the DOE is taking strong initial
steps forward to address the critical materials challenges
faced by American manufacturers in the clean energy industry.
We look very forward to working with Congress going forward to
address the Nation's critical materials challenges.
Thank you.
[The prepared statement of Mr. Danielson follows:]
Prepared Statement of David Danielson, Ph.D., Assistant Secretary,
Office of Energy Efficiency and Renewable Energy, Department of Energy
Introduction
Chairman Wyden, Ranking Member Murkowski, and Members of the
Committee, thank you for the opportunity to testify today on the
important role that critical minerals play in moving the U.S. towards a
clean energy economy and the U.S. Department of Energy's (DOE) ongoing
work related to this topic.
Many domestically-manufactured products rely on critical materials,
or materials that are important in their use and subject to supply
restrictions. The energy industry is heavily reliant on critical
materials and could be significantly affected by supply disruptions and
resulting price increases and fluctuations. These critical materials
are found in many traditional, new, and emerging energy applications,
as well as key ingredients in lighting, solar photovoltaics and
batteries, and many other applications. Technologies using critical
materials are poised to make even more significant contributions to
national energy, environmental, and economic goals.
The Department is currently reviewing S. 1600, the Critical
Minerals Policy Act of 2013, and has no specific comments on the
legislation at this time. However, the Department believes in the
importance of ensuring a stable, sustainable, domestic supply of
critical minerals. We look forward to continuing our discussions with
Congress on ways to: monitor and identify critical materials as they
potentially impact the energy economy; address the production, use, and
recycling of critical minerals throughout the supply chain; as well as
develop alternatives to critical minerals moving forward.
The Department has been moving swiftly on multiple fronts to
address challenges across the lifecycle of critical elements, while
also exploring alternatives to those that are hardest to obtain. These
efforts are informed by the Department's Critical Materials Strategy
developed in 2010 and 2011, which I will be happy to discuss with you
today. I will also describe the Critical Materials Institute, an Energy
Innovation Hub established by my office last year, and devoted to
finding solutions in response to the scarcity of these elements that
are critical to U.S. manufacturing and the expansion of clean energy
technologies.
DOE is pursuing an all-of-the-above approach to developing every
source of American energy. I represent the Office of Energy Efficiency
and Renewable Energy (EERE), which leads DOE's efforts to help build a
strong clean energy economy, a strategy that is aimed at reducing our
reliance on foreign oil, saving families and businesses money, creating
jobs, and reducing pollution. We support some of America's best
innovators and businesses to research, develop, and demonstrate
cutting-edge technologies, and work to break down market barriers in
the EERE portfolio's three sectors: 1) sustainable transportation
(vehicles, biofuels, hydrogen and fuel cells); 2) energy efficiency
(energy-saving homes, buildings, and manufacturing); and 3) renewable
electricity generation (solar, geothermal, hydrogen and fuel cells,
wind and water).
Our nation stands at a critical point in time regarding the
competitive opportunity for clean energy. In 2013, $254 billion was
invested globally in clean energy, just over 360 percent increase since
2004; trillions more will be invested in the years ahead.\1\ In the
decades-long transition to a clean energy economy, the United States
faces a stark choice: the clean energy technologies of today and
tomorrow can be invented and manufactured in America, or we can
surrender global leadership and import these technologies from other
countries.
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\1\ See: Bloomberg, ``Global Trends in Renewable Energy Investment,
Fact Pack as of Q4 2013'' (Jan. 2014): http://about.bnef.com/files/
2014/01/BNEF__PR__FactPack__Q4__CleanEnergyInvestment__2014-01-15.pdf
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DOE's Critical Materials Strategy
Many of today's clean energy technologies rely on the use of
materials with certain essential properties, such as efficient light
emission or strong magnetism. Many of those critical materials are
essential to producing products that EERE is also investing in, and in
order to address this reliance, in both 2010 and 2011, DOE issued
Critical Materials Strategy reports that defined and assessed critical
materials by analyzing two dimensions: importance to the clean energy
industry, and supply risk. The Department's 2010 and 2011 Critical
Materials Strategy reports identified five rare earth materials--
neodymium, europium, terbium, dysprosium, and yttrium--as critical
materials currently essential for America's transition to cost-
competitive clean energy technologies, like wind turbines, electric
vehicles, and energy efficient lighting. The Strategy reports also
identified two additional elements, lithium and tellurium, as ``near-
critical'' materials. Identifying and addressing near-critical element
challenges is crucial as both the clean energy industry and critical
materials market dynamics change. These particular non-rare earth
materials play, at this time, an indispensable role in batteries for
hybrid and electric vehicles and commercial photovoltaic thin films,
and represent the next-highest criticality in terms of importance to
the clean energy industry and risk of supply disruption.
The Department's Critical Materials Strategy reports identified
three pillars to address critical materials challenges: 1) diversifying
supply of critical materials, 2) developing alternatives to critical
materials, and 3) driving recycling, reuse, and more efficient use of
critical materials. I will address these in turn: First, diversified
global supply chains are essential. To manage supply risk, multiple
sources of materials are required. This means taking steps to
facilitate the extraction, processing, and manufacturing of critical
materials here in the United States, as well as encouraging other
nations to expedite alternative supplies. In all cases, extraction,
separation, processing, and manufacturing must be done in an
environmentally sound manner. Second, substitutes must be developed.
Research leading to material and technology substitutes will improve
flexibility, decrease demand for critical materials, and help meet the
materials needs of the clean energy economy. Third, recycling, reuse
and more efficient use of critical materials could significantly lower
world demand for newly extracted materials. Research into recycling
processes coupled with well-designed policies will help make recycling
economically viable over time. Addressing these three pillars is a
moving target, as critical materials challenges change over time.
Ongoing assessments are necessary to identify the status of current and
emerging critical materials; as new technology develops and markets
respond to supply risk, the criticality of materials will also shift.
DOE R&D Organizations
Several entities within the Department contribute to the critical
materials research and development (R&D) effort. The Basic Energy
Sciences program in the Office of Science supports broad-based,
fundamental materials research. The Advanced Research Projects Agency--
Energy (ARPA-E) invests in high-potential, high-impact energy
technologies that are likely too early for private-sector investment.
Within EERE, investment in research related to critical materials
occurs within the Vehicle Technologies Office (VTO), the Wind Power
Technologies Office, the Solar Energy Technologies Office (SETO), the
Geothermal Technologies Office (GTO), and the Advanced Manufacturing
Office (AMO).
DOE national laboratories are also integral to this R&D effort. The
national laboratory system includes the nation's historic leader in
rare earth materials research, the Ames Laboratory in Ames, Iowa. While
Ames Laboratory has a core-competency in rare earth materials, many
other national laboratories also contribute significantly to R&D aimed
at reducing the criticality of critical materials. For example, Argonne
National Laboratory, Brookhaven National Laboratory, Pacific Northwest
National Laboratory, Sandia National Laboratories, and Lawrence
Berkeley National Laboratory have complementary efforts spanning from
basic and applied research to development and demonstration.
In response to the Critical Materials Strategy reports, the
Department of Energy launched a national competition for an Energy
Innovation Hub. Early in 2013, DOE announced the Critical Materials
Institute (CMI), led by Ames National Laboratory. CMI is the nation's
premier research, development and analysis institute dedicated to
finding innovative solutions and developing creative, transformational
paths to eliminating the criticality of rare earth and other materials.
CMI began operations in June of 2013. CMI has brought together leading
researchers from academia, four Department of Energy national
laboratories, as well as the private sector to develop solutions to the
domestic shortages of rare earth metals and other materials critical
for U.S. energy security. CMI addresses materials criticality problems
by developing technologies spanning the supply chain for the rare earth
(plus lithium and tellurium) elements, as well as providing research
infrastructure to address any emergent challenges related to materials
criticality.
CMI faces a formidable task: developing solutions to potential
supply chain risks across the lifecycle of several different materials.
The solutions will not be the same for different kinds of materials or
applications. For example, technologies to improve separation and
processing of rare earth elements from domestic deposits may increase
the supply of neodymium (for magnets) but not europium (for lighting)
due to the ore composition.
The Institute has focused its efforts around the three pillars of
the Critical Materials Strategy. For example, to diversify supply,
researchers are studying new, lower cost ways to extract, separate and
process rare earth metals from ores and recycled materials. To develop
substitutes, Institute researchers, in partnership with private sector
partners, are searching for substitutes for rare earth phosphors.
Energy-efficient lighting phosphors currently need europium, terbium,
and yttrium, and this group is searching for alternatives using
materials such as manganese. To improve reuse and recycling, CMI's R&D
in this area is focused on two major areas: first, improving the cost-
and energy-efficiency of separating the rare earth containing
components from end-of-life products like light bulbs, hard drives and
motors; and second, developing new technologies to extract rare earth
elements from these end-of-life components to produce new materials. If
successful, the technologies proposed by CMI could reduce loss of
critical rare earths within domestic manufacturing by 50 percent and
reduce critical rare earths elements going to domestic landfills by 35
percent.
In its first year of operations, the team is off to a fast start.
Key start-up and management operations have been put in place. About 35
projects across the Institute are up and running. All of these projects
involve multiple partners, often three or four partners collaborating
to achieve the best solutions under CMI's mission. EERE is pleased to
report that CMI researchers filed seven intellectual property invention
disclosures. While there is tremendous work still to be done by the
Institute, that is a great sign of things to come.
R&D Progress by DOE Programs
In my office and across the Department, we have an obligation to
research issues relevant to supporting manufacturing as it relates to
energy. Increasing U.S. manufacturing competiveness relies on thinking
broadly about addressing challenges across the supply chain and across
various industrial applications in our R&D investments. By stepping up
research related to critical materials, DOE will help ensure clean
energy technologies will be invented and manufactured in America.
EERE's R&D investments are directly aligned with the aforementioned
three pillars of the Critical Materials Strategy and coordinated among
the program offices across the Department.
Regarding the first pillar--diversifying supply--some of the key
research challenges in separations and processing of rare earth
elements have been addressed historically at a small scale within the
research portfolios of the Basic Energy Sciences program in the Office
of Science, Laboratory Directed Research and Development, Small
Business Innovation Research, and Small Business Technology Transfer.
EERE has also invested in technologies to improve domestic lithium
production. Through the American Recovery and Reinvestment Act of 2009,
VTO supported a project to expand lithium carbonate and lithium
hydroxide production to supply the domestic battery industry as well as
a project to recycle lithium batteries for resale of lithium carbonate.
The EERE Geothermal Technologies Office has funded the development of
technologies to cost effectively extract minerals such as lithium,
manganese and zinc from geothermal brines--to improve domestic
production at reduced costs and to increase the overall value of
geothermal electricity generation.
For substitutes, DOE has made significant investments, specifically
toward rare earth permanent magnets for motors and generators. For
instance, both EERE (through VTO and the Wind Power Technologies
Office) and ARPA-E have significant efforts related to addressing rare
earth materials criticality in these areas through the development of
alternative motor and generator topologies which do not require rare
earth permanent magnets. VTO has also invested in optimizing the use of
rare earth materials in permanent magnets--focusing on magnet
processing, composition, and improving high temperature performance
with reduced rare earth content. In addition, VTO supported researchers
are working to develop rare earth-free permanent magnets for advanced
traction motors. For example, they are modifying aluminum, nickel and
cobalt (alnico) magnets for improved performance in these new motors
and developing new iron-cobalt based alloys to replace rare earth
permanent magnets. ARPA-E's ``Rare Earth Alternatives in Critical
Technologies'' program focuses on early-stage alternative technologies
that reduce or eliminate the need for rare earths by developing
substitutes in two key areas: electric vehicle motors and wind
generators. Technological advances that utilize low-cost and abundant
alternatives such as manganese and nickel will become increasingly
vital to our national economic and energy security. The projects funded
by ARPA-E must aim to meet or exceed the performance of their rare
earth predecessors while remaining cost-competitive.
EERE's Wind Power Technologies Office supports several next-
generation drive train technology projects. One of the key goals for
these projects is reduction in the cost of wind energy. Although not a
stated requirement for the program, many of these innovative
technologies would also reduce or eliminate the use of permanent
magnets containing rare earth materials, particularly for next-
generation direct-drive wind turbines. For example, innovative
superconducting direct-drive generators and new processes to make these
materials on a cost-competitive basis for large wind turbines are being
investigated.
The Department is also addressing substitutes for near-critical
materials. DOE's 2011 Critical Materials Strategy classified lithium as
``near-critical.'' R&D efforts continue across the Department to
develop alternatives to this material. In December 2012, the Joint
Center for Energy Storage Research (JCESR), which is the Energy
Innovation Hub for Battery and Energy Storage, began operations. JCESR
is managed out of DOE's Office of Science and is led by Argonne
National Laboratory. The mission of JCESR is to develop new battery
chemistries beyond lithium-ion, and its goal is to deliver electrical
energy storage with less or no lithium, five times the energy density,
and at one-fifth the cost of today's commercial batteries within five
years.
Additionally, in the 2011 Critical Materials Strategy, tellurium
was also assessed as near-critical. It is a material used in solar
cells being deployed in the United States today. EERE's Solar Energy
Technologies Office has supported a large number of projects to develop
new technologies that focus on earth abundant materials as alternate,
inexpensive materials in solar photovoltaics. For example, in September
2011, DOE awarded funding to 23 projects ($24.5 million) through the
Next Generation Photovoltaics II solicitation, many of which
incorporated earth-abundant materials such as copper, iron, and tin.
Improving the recycling and reuse of critical materials--the third
pillar--has, until recently, had limited DOE R&D investment. However,
with the startup of the Critical Materials Institute and its work in
this area, DOE is primed to make strides in this arena of R&D.
Interagency Coordination
Finally, the Department would also like to underscore the
importance of continued interagency coordination and collaboration on
the topic of critical materials. Issues related to critical materials
and minerals touch on the missions of many federal agencies, and the
full interagency perspective can help us proactively address critical
materials issues. DOE co-chairs the National Science and Technology
Council's Subcommittee on Critical and Strategic Mineral Supply Chains,
which was established in December 2010. This Subcommittee facilitates a
strong, coordinated effort across federal agencies to identify and
address important policy implications arising from strategic minerals
supply issues. Areas of focus for the Subcommittee include identifying
emerging critical materials, improving depth of information, and
identifying R&D priorities. The Subcommittee also informally reviews
and examines domestic and global policies that affect the supply of
critical materials, such as permitting, export restrictions, recycling,
and stockpiling.
Conclusion
The work being done across the Department, including at the
Critical Materials Institute, shows that DOE is taking steps to address
the global demand for critical materials that underpin clean energy
technologies. The United States intends to be a world leader in clean
energy technologies. To this end, we must ensure a sustainable domestic
supply chain for our clean energy economy. We look forward to working
with Congress on addressing critical materials challenges.
The Chairman. Thank you.
Mr. Meinert.
STATEMENT OF LAWRENCE D. MEINERT, MINERAL RESOURCES PROGRAM
COORDINATOR, U.S. GEOLOGICAL SURVEY, DEPARTMENT OF THE INTERIOR
Mr. Meinert. Good morning Chairman Wyden, ranking member--
Good morning Chairman Wyden, Ranking Member Murkowski and
members of the committee, and thank you for the opportunity to
discuss the Critical Minerals Policy Act of 2013, I'm joined
today by Karen Mouritsen, deputy assistant director energy
minerals and realty management for the Bureau of Land
Management.
The Department of the Interior supports the goal of
facilitating the development of critical minerals in an
environmentally responsible manner. As background the U.S.
Geological Survey is responsible for conducting research and
collecting data on a wide variety of mineral resources. Studies
include how and where deposits are formed, the interactions of
minerals with the environment, and information to document
current production and consumption of about 100 mineral
commodities within the United States and around the world.
This full spectrum of mineral resource science allows for
comprehensive understanding of the complete life cycle of
mineral resources and materials including resource formation,
discovery, production, consumption, use, recycling, and reuse,
and allows for understanding of environmental issues of concern
throughout the lifecycle.
The Bureau of Land Management administers over 245 million
surface acres of public land located in the 12 Western States
including Alaska, as well as 700 million acres of subsurface
mineral estate throughout the Nation. The BLM manages mineral
development under a number of different authorities. Each of
these authorities along with the BLM regulations and guidance
provides a legal framework for the development of minerals
including critical minerals on Federal and Indian lands.
Global demand for critical mineral commodity is on the rise
with increasing applications of consumer products, computers,
automobiles, aircraft, and other advanced technology products.
To better understand potential sources of critical mineral
commodities the USGS has completed studies of known domestic
and global rare earth reserves, resources, and uses, which
summarize basic geologic facts and materials flow issues
related to rare earth element resources one type of critical
materials.
Other USGS studies analyze worldwide trade and supply
chains for other critical minerals including lithium, platinum
group metals, and tantalum.
In 2012 the United States was 100 percent dependent on
foreign suppliers for 17 mineral commodities and more than 50
percent dependent on mineral sources for an additional 24
mineral commodities.
In 2008 a National Research Council Committee funded
largely by the USGS, developed a criticality matrix that
combines supply risk with importance of use as a first step
toward determining which mineral commodities are essential to
the Nation's economic and national security.
This has been updated by subsequent studies and ongoing
work by the Critical and Strategic Mineral Supply Chain
Interagency Subcommittee of the National Science and Technology
Council. As David mentioned that is co-chaired by DOE and the
USGS representing the Department of the Interior.
For S. 1600 it directs the Secretary of the Interior
through the Director of the USGS to perform a number of actions
that build on current USGS activities and capabilities,
including the recent rare earth element inventory that I
mentioned. It also describes the BLM -directs the BLM to
improve the quality and timeliness of decisions regarding the
environmentally responsible development of critical minerals on
Federal lands. The BLM supports the responsible development of
minerals on Federal lands and is working to improve
efficiencies while ensuring protection of other resources.
In conclusion the Department maintains a work force of
geoscientists including geologist, geochemist, geophysicists,
and resource specialists with expertise on critical minerals
and materials. The Department continuously collects, analyzes
and disseminates dated information on domestic and global rare
earth and other critical mineral reserves and resources,
production, consumption, and use.
The Department through the USGS stands ready to fulfill its
role as the Federal provider of unbiased research on known
mineral resources, assessment of undiscovered mineral
resources, and information on domestic and global production
and consumption of mineral resources for use in global critical
mineral supply chain analysis.
The BLM is committed to implementing efficiencies for the
environmentally responsible development of critical minerals on
Federal lands.
Thank you for the opportunity to present the views of the
Department on S. 1600, I'll be happy to answer any questions.
[The prepared statement of Mr. Meinert follows:]
Prepared Statement of Lawrence D. Meinert, Mineral Resources Program
Coordinator, U.S. Geological Survey, Department of the Interior
Good morning Chairman Wyden, Ranking Member Murkowski, and Members
of the Committee, and thank you for the opportunity to discuss S. 1600,
the Critical Minerals Policy Act of 2013. The bill directs the
Secretaries of the Interior and Energy to perform a large number of
activities intended to support and enhance the Nation's critical
mineral supply chain, beginning with developing a methodology to
determine which minerals are critical to the Nation's economy. In this
statement, I will address the provisions relevant to the Department of
the Interior.
The Department of the Interior supports the goal of facilitating
the development of critical minerals in an environmentally responsible
manner. We note that many of the activities called for in S. 1600 are
within the scope of existing Department of the Interior authorities.
Background
The U.S. Geological Survey (USGS) is responsible for conducting
research and collecting data on a wide variety of mineral resources.
Research is conducted to understand the geologic processes that have
concentrated known mineral resources at specific localities in the
Earth's crust and to estimate (or assess) quantities, qualities, and
areas of undiscovered mineral resources, or potential future supply.
USGS scientists also conduct research on the interactions of mineral
resources with the environment, both natural and as a result of
resource extraction, to better predict the degree of impact that
resource development may have on human and ecosystem health. USGS
mineral commodity specialists collect, analyze, and disseminate data
and information that document current production and consumption for
about 100 mineral commodities, both domestically and internationally
for 180 countries. This full spectrum of mineral resource science
allows for a comprehensive understanding of the complete life cycle of
mineral resources and materials-resource formation, discovery,
production, consumption, use, recycling, and reuse-and allows for an
understanding of environmental issues of concern throughout the life
cycle.
Global demand for critical mineral commodities is on the rise with
increasing applications in consumer products, computers, automobiles,
aircraft, and other advanced technology products. Much of this demand
growth is driven by new technologies that increase energy efficiency
and decrease reliance on fossil fuels. To better understand potential
sources of critical mineral commodities, the USGS has completed studies
of known domestic and global rare-earth reserves, resources, and uses
(Long and others, 2010; Tse, 2011; Wilburn, 2012). These studies
summarize basic geologic facts and materials flow issues related to
rare earth element resources, which are a type of critical mineral.
Other USGS studies analyze world trade and supply chains for other
critical minerals including lithium, platinum-group metals, and
tantalum (Goonan, 2012; Yager and others, 2012; Soto-Viruet and others,
2013).
The Bureau of Land Management (BLM) administers over 245 million
surface acres of public land located in the 12 Western states,
including Alaska, as well as 700 million acres of sub-surface mineral
estate throughout the nation. The BLM manages mineral development under
a number of different authorities, including the Federal Land Policy
and Management Act, the Mineral Leasing Act of 1920, the Materials Act
of 1947, and the Mining Law of 1872. Each of these authorities, along
with BLM regulations and guidance, provides a legal framework for the
development of minerals, including critical minerals, on Federal and
Indian lands.
Though rare earth elements are currently of most concern to many
stakeholders, including the Department of Defense which funded some of
the studies, it should be noted that in 2012 the United States was 100
percent dependent on foreign suppliers for 17 mineral commodities and
more than 50 percent dependent on foreign sources for an additional 24
mineral commodities. Import partners include Brazil, Canada, China,
France, Germany, Japan, Mexico, Russia, and Venezuela. In 2008, a
National Research Council committee, funded largely by the USGS,
developed a ``criticality matrix'' that combines supply risk with
importance of use as a first step toward determining which mineral
commodities are essential to the Nation's economic and national
security (National Research Council, 2008). This has been updated by
subsequent studies and ongoing work by the Critical and Strategic
Mineral Supply Chain Interagency sub-committee of the National Science
and Technology Council, which is co-chaired by the USGS on behalf of
the Department of the Interior.
S. 1600
S. 1600, the Critical Minerals Policy Act of 2013, directs the
Secretary of the Interior, through the Director of the USGS, to perform
a number of actions that build on current USGS activities and
capabilities, including the recent rare earths inventory. The bill in
Section 101 directs the USGS to develop a rigorous methodology for
determining which minerals are critical and then to use that
methodology to designate critical minerals. Section 103 calls for a
comprehensive national mineral resource assessment within four years of
the bill's enactment for each mineral designated as critical under Sec.
101, and it authorizes field work for the assessment, as well as
technical and financial assistance for States and Indian tribes. The
bill establishes in Section 108 a collaborative effort between USGS,
academic institutions, and the U.S. Energy Information Administration
for annual reviews of domestic critical mineral trends as well as
forward-looking analyses of critical mineral production, consumption,
and recycling patterns. Section 301 of the bill repeals the National
Critical Minerals Act of 1984.
S. 1600, Section 102, amends the National Materials and Minerals
Policy, Research and Development Act of 1980 to encourage Federal
agencies to facilitate the availability, development and
environmentally-responsible production of critical minerals. Section
105 directs the BLM to improve the quality and timeliness of decisions
regarding the environmentally responsible development of critical
minerals on Federal lands. The BLM supports the responsible development
of minerals on Federal lands and is working to improve efficiencies
while ensuring protection of other resources. Section 105 also directs
the BLM to annually report on the implementation of these measures and
on critical and hardrock mineral production on Federal land. We note
that under the Mining Law of 1872, the BLM does not collect the
quantity, type, and estimated value of minerals produced on Federal
land.
Conclusion
The Department maintains a workforce of geoscientists (geologists,
geochemists, geophysicists, and resource specialists) with expertise in
critical minerals and materials. The Department continuously collects,
analyzes, and disseminates data and information on domestic and global
rare-earth and other critical mineral reserves and resources,
production, consumption, and use. This information is published
annually in the USGS Mineral Commodity Summaries (USGS, 2013) and
includes a description of current events, trends, and issues related to
supply and demand.
The Department, through the USGS, stands ready to fulfill its role
as the federal provider of unbiased research on known mineral
resources, assessment of undiscovered mineral resources, and
information on domestic and global production and consumption of
mineral resources for use in global critical mineral supply chain
analysis. The BLM is committed to implementing efficiencies for the
environmentally-responsible development of critical minerals on Federal
lands.
We note, however, that many of the activities called for in S. 1600
are already authorized by existing authorities. Any activities
conducted to fulfill the objectives of the bill would require
substantial resources and would need to compete for funding with other
priorities.
Thank you for the opportunity to present the views of the
Department on S. 1600. I will be happy to answer any questions.
The Chairman. Alright gentlemen, thank you very much.
Dr. Danielson let me start with you.
We've talked about how the supply of critical minerals is
essential for a whole host of things; let's start with say--
electric vehicles. It seems to me this is also an opportunity
though to significantly improve the economics of a number of
other energy technologies. So for example minerals like lithium
can be recovered from battery packs now one of the major costs
of electric vehicles. So we tried to capture as many of these
opportunities as we could.
You have a background in materials science, what additional
recommendations might you have so that we can continue with our
work on minerals to recapture as much economic value as we
possibly can? That's why I cited the example of the lithium
recovery from the battery pack. Are there are other areas where
we can recapture value?
Mr. Danielson. Thank you for that question Mr. Chairman.
You know DOE performed these--the Critical Materials
Strategy Reports in 2010 and updated it in 2011 and our
approach was really based on the 3 pillars I mentioned. You
know the first being diversifying supply, the second being
about developing substitutes that don't have criticality, and
the third is really focused on reuse and recycling and more
efficient use of critical materials. The third pillar is really
the area that you're touching upon.
I think we've seen tremendous opportunities on the
recycling side in a number of critical technologies as you
mentioned. For DOE's work we've identified 4 specific
technologies that are especially vulnerable to critical
materials, electric vehicles both for motors, permanent magnets
for motors and lithium for batteries, efficient phosphors for
lighting where europium, terbium, yttrium are critical there.
Wind turbines, which is an area where permanent magnets are a
big part of the road map going forward which contain critical
materials.
One of the areas where we see great opportunity and we're
attacking this head on with the Critical Materials Institute is
in the area of recycling rare earth phosphors from fluorescent
light bulbs. This is an area where europium, terbium, yttrium,
they're--these are critical elements that we've identified, 3
of 5 critical elements at DOE. We're already collecting about
30 percent of fluorescent light bulbs to remove the mercury
from these light bulbs.
So we already have a supply chain to collect those
materials, but we don't have the cost effective technology to
separate out the rare earths from those phosphors. So one of
the major focus areas of our institute is in developing new
separations technologies which is an area where we haven't made
a lot of investment in the past but I already see a lot of
opportunity to cost effectively recycle those rare earth
elements in phosphors.
The Chairman. Good let me ask you one other question.
One of the things I was struck by with respect to this
issue, when I talked to Senator Murkowski and Senator Udall who
have spent so much time on it, is that the programs that the
Department-that the Federal Government really runs were just
sort of strewn all over the country side. There are a lot of
different programs and just because you have a lot of people in
the kitchen doesn't necessarily mean you produce a good meal.
[Laughter.]
The Chairman. You've worked in materials science for quite
some time. Is it your view that making sure that we have a more
organized effort here, which is right at the heart of the bill,
is a valuable contribution that this legislation makes?
Mr. Danielson. Yes, without commenting directly on the bill
itself I would point out that----
The Chairman. We know the people at OMB are listening, I
just want to make sure that the emphasis of the sponsors, which
is to have a more organized effort that the value of that is
something that you and other experts realize.
Mr. Danielson. Yes, I and my colleagues, we see tremendous
value in having coherent efforts around this, and within the
Department as well as across all of government we have seen
that within the DOE universe it was tremendously valuable to
have our energy policy and strategic analysis office take the
lead in organizing all of us. As my colleague mentioned we have
an interagency subcommittee on critical and strategic mineral
supply chains where we are all pulling together and so we--I
see tremendous value in interagency----
The Chairman. Let me use----
Mr. Danielson [continuing]. Coordination.
The Chairman. Let me use my last 20 seconds on something
that's important for folks at home, at Oregon State.
On December 20th a senior official in your office informed
the directors of the Northwest National Marine Renewable Energy
Center, which has collaboration between Oregon State University
and University of Washington, that it would not be receiving
any more funding to operate. It's our view that this is a
critical area. We're falling behind our international
competitors.
It's my understanding that the Senators funding agreement
with DOE runs through the first half of fiscal 2015 so you're
not only cutting them off, but you are cutting them off in mid
stream. Also that was a decision made a full month before
Congress passed the Appropriations Bill, which provided the
funding that we thought was needed to continue the program.
Before the end of the week, I want to hear back from you on
why this decision was made and in light of the fact that the
Congress has passed and the President has now signed this new
bill whether or not continued funding is going to be provided
to the center. Will you get back to me on this by the close of
business Friday?
Mr. Danielson. Absolutely.
The Chairman. Very good, alright.
Senator Murkowski. Thank you Mr. Chairman and gentleman, I
do appreciate you being here, but I have to admit I am a little
bit disappointed in the written testimony that you have
provided and your comments indirect support or opposition of
the bill are very--they're so nuanced I can't tell, which is
not usually a good sign.
But--and we've got a second panel here that I think speaks
very clearly to some of the issues that have been raised in S.
1600, so I'd like Dr. Danielson for you to give me a little bit
more of your comments in--both in writing and what you have
affirmed here is the Department is currently reviewing it,
you've got no specific comments on the legislation at this
time.
We introduced the bill back in late October, we certainly
gave plenty of notice to the Department that we were planning
this hearing and asking for folks to come in and testify. It's
not a lengthy bill it's only 40 pages long. Are you saying that
nobody within the Department has really had an opportunity to
review and to be able to then provide comment?
Mr. Danielson. Critical materials is an area that the
Department and our interagency task force takes very seriously.
I think we've evidenced that at DOE by publishing these
critical materials reports that allow----
Senator Murkowski. Yes, but what about this bill that has
been out there now for 3 months, this 40 page bill. If critical
minerals are so important why have you not formed an opinion
one way or another that you would like to relay publicly?
Mr. Danielson. At this point the DOE is reviewing it. We
don't have any formal administration comments on the bill
itself. I would welcome a request if desired for technical
assistance related to this bill to the Department of Energy.
Senator Murkowski. I don't know that there's any technical
assistance. I think you guy's just need to read the bill and
let us know whether it's something that you can support or not
support. Everything that you have conveyed here in the hearing
about the significance, the importance of critical minerals in
our supply chain is certainly all fine well and good and we're
talking about what you're doing within the Department to ensure
that we're focusing on recycling, reuse, the other priorities.
But we need to move a bill in order to advance some of this so
we would greatly appreciate DOE weighing in.
Dr. Meinert your testimony begins by stating that the
Department supports the goal of facilitating the development of
critical minerals in an environmentally responsible manner, you
repeated that a couple of times, do you think that enactment of
this bill would further enhance that goal?
Mr. Meinert. Yes, we have read the bill in detail and we
are thrilled and delighted at a bill that focuses on mineral
resources. I as the head of the mineral resources program am
particularly thrilled and delighted that the bill focuses on
this critical need for the Nation. So as I stated very clearly
here the Department is supportive of the goals of this bill and
we are glad to see it introduced.
Senator Murkowski. I'm thrilled and delighted, thank you.
Let me ask both of you in the bill itself we--where we
establish a process to designate which minerals are critical.
We require that the list not exceed 20 in total, and I have to
confess that that's a somewhat arbitrary number. The question
to both of you is whether or not you think we have the right
number? Should we be higher, should we be lower, does it make a
difference? Your input here, Dr. Meinert you can go first.
Mr. Meinert. This is a subject that we spent a lot of time
on so we are the Nation's chief compiler of this type of
information and so we've given a lot of thought to it. As you
have pointed out there is no specific number that is absolutely
correct.
If you look at the various estimates that have been made
around the world, so the European Union has looked at this and
came up with a list of 14 elements in their study in 2011 and
then they have redone that study and now expanded it beyond 20.
So it's very clear that reasonable people could come up with
lists of different lengths and I think the actual length of the
list is less important than focusing the Nation and the world's
attention upon minerals resources as a subject.
So we are comfortable with the number that you have put
forward and we recognize that it's not an absolute number and
we understand the reasoning behind it.
Senator Murkowski. OK, good, good.
Mr. Meinert. I'll add that in our DOE--you know detailed
DOE critical materials assessment strategy we looked at 16
separate materials that were identified by our stakeholders and
narrowed that down to 5 to 7 just within the Department of
Energy space. So if we look at our interagency level a number
in the--on the order of 20 plus or minus seems like a
reasonable number.
Senator Murkowski. OK, thank you Mr. Chairman.
The Chairman. Thank you Senator Murkowski.
In order of arrival we have Senator Baldwin, Senator Risch,
and then Senator Franken.
Senator Baldwin. Thank you Mr. Chairman, Ranking Member
Murkowski.
I'm delighted that we're having this hearing and I wanted
to just start off with a couple of points that are slightly off
topic for the bill but related. One is that the bill obviously
focuses on critical materials critical minerals and you were
drilling down on the critical aspect of it. Right now the State
of Wisconsin is facing a very severe propane shortage.
Now I'm not pretending that's the subject matter of the
bill before us, but it gives a really stark illustration of
what happens when there are disruptions, how dangerous it can
be when resources that we absolutely rely on for, in this case
warmth of our constituents homes are disrupted and we need a
stable supply of our critical resources.
The other issue that I wanted to bring up where Wisconsin I
think is playing a proud leadership role is also slightly off
topic, but pretty closely related and that's the supply of, and
I can never pronounce this very accurately, but Molybdenum-99.
We nickname it Moly-99, which is used in a lot of health
diagnostic applications.
Currently our country is reliant on nondomestic sources for
this in reactors in Canada, in the Netherlands, and elsewhere
in the world. Because of maintenance and other shutdowns of
these reactors we've been in short supply. I think its 55
thousand Americans use or have tests in any given day that use
Moly-99 and our domestic production of it is going to be
important in the future and Wisconsin is taking a real lead in
that in coming up with nonreactor based ways of producing Moly-
99.
While not the subject of this legislation it is related
closely and an area in which my state is very concerned. I--
this bill is important to my state not because we are the home
to large or even any perhaps supply or stocks of critical
minerals, but we are home to manufacturers that rely on these
critical minerals in their products and also as a manufacturing
state have long been the home to companies that build the
mining machines that extract these minerals.
So this legislation and these policies at the national
level are really critical to my State's economy too and I am
very appreciative that we're spending some time on this today.
Dr. Danielson, I took particular notice in your written
testimony and your testimony provided here today about the
value of one of your pillars the recycling and reuse programs
for critical minerals and how research into recycling processes
could make these more economically viable over time. Wisconsin
is home to recycling businesses like Veolia Environmental
Services as an example which utilizes innovative ways to remove
hazardous materials like mercury from our waste stream.
But recycling programs not only reduce the amount of
unwanted waste products they also and crucially can reduce
demand for newly extracted critical minerals. So based on the
testimony that we've heard today indicating a demand for
critical minerals that continues to outpace our domestic
supply, recycling programs can be ever more important.
I'm interested in knowing in more detail the strategies
that the Department is utilizing to improve the recycling of
critical materials and what you view as the greatest
opportunities for recycling and reuse in your sphere and
energy?
Mr. Danielson. Thank you very much Senator for that
question.
Recycling is one of the 3 pillars that we really are
driving our strategy around, and the Critical Materials
Institute being at the center of our strategy. We're looking at
a wide array of activities across the whole supply chain, which
I think, is one of the key important elements of the approach
the bill is taking. All the way from you know separations,
processes that can actually remove the small amounts of these
rare earths from magnets or phosphors that need to be recycled.
All the way going back to analyzing--designing these motors
or batteries or lighting fixtures so that they're easy to
disassemble and perform recycling processes on. One of the
elements that is particularly critical when it comes to the
clean energy applications is dysprosium, which is very
important for magnets that can perform at high temperature
required, especially, for motors for electric vehicles.
So that element in particular is one that we are targeting
in a serious way as we go forward with our work related to
recycling of critical materials.
The Chairman. Thank you Senator Baldwin.
I'm going to recognize Senator Risch, but just note that
I'm very pleased that you brought up this propane issue and I
know Senator Franken cares a lot about this as well because the
Midwest has been hit very hard. Senator Murkowski and I have
always tried to make sure that the committee and those who are
following these issues can get briefed.
So this afternoon at 3:30 in this room the Energy
Information Administration will be putting on a briefing at the
request of Senator Murkowski and I--and this is going to be
important and I think actually quite fitting this week. Not
only are people really getting clobbered with these high
propane prices, but it also gets into the issue that we're
going to have to debate and that's the question of exports.
Senator Murkowski and I have agreed that Thursday we're going
to have a hearing on the whole oil export issues.
So we'll have a good briefing this afternoon and on
Thursday all who are interested in that issue and I think it's
very timely that we have the debate and start talking about the
pros and cons and Heaven forbid have a civilized conversation
about the merits of an important issue.
We're very glad Senator Risch is here, he's got a lot of
expertise in this area.
Senator Risch. Thank you Mr. Chairman.
Senator Baldwin I was delighted to hear you talk about the
issues with Moly-99, there's a lot of us been beating the drum
for many years on this. There's absolutely no reason why the
United States of America should be reliant on other countries
to provide this.
Most Americans have no idea how important it is in the
diagnostic aspects of medicine and obviously at the Idaho
National Laboratory there's been work done on this and we've
been a player in this for a long time, so welcome to the fight
and I hope you'll join us.
I think that Moly-99 and all these others are--is
underscoring a situation we have in America where as we do more
and more of these high tech things we're going to be more
reliant on some very rare commodities and last year we went
through the helium fight, which again most Americans weren't
aware of how critical it is.
We have a very large high tech operation in Idaho called
Micron Technology and they are incredibly reliant as is
virtually all--are virtually all IT manufacturers on helium and
so we got right to the edge I think, but in a bipartisan manner
we got the job done and we're going to be hitting more and more
of these walls I think as we go forward. So this hearing is
particularly important.
Again most people don't realize how many of these critical
commodities there are and how reliant we are on countries like
China where political stability in the long term certainly is
not something that can be counted on and so we need to continue
that.
I want to thank the chairman and co-chairman for sending
bill S. 1600, I'm proud to be a co-sponsor with many other
people. It is very simple, it simply directs the USGS to
establish a list of these critical minerals that we need and
then set out a comprehensive set of policies, and I'm assuming
they would give these policies to us because this is going to
be a matter of debate and I think that we should all have or
get our 2 cents worth it.
The question I have for the 2 witnesses briefly is these 2
things that were being--were asked the USGS to do is to
establish a list of minerals and to set out a comprehensive set
of policies. It's something that I'm sure there's been a lot
work done on over the years so the question I have for you is
how much of this work is already done, that is what kind of an
effort is this bill going to take and how quickly can we expect
to get some results from this?
Dr. Meinert maybe we could start with you?
Mr. Meinert. Thank you for that question.
We have indeed done a lot of work on this over the years,
some of this is continuing and ongoing work so the inventory of
materials, the collection of materials flow, studies of the
global trade tracking that--that's something we do on a
continuous basis and every year we put out the minerals
commodities summary that describes for the Nation and for the
world what's the resources are and their availability. So
that's one part of the whole criticality analysis is having the
data that you would then base those analysis on.
Relative----
Senator Risch. I'm glad to hear that you've done that much
work already I mean that--and that--obviously that's a
foundational point that's very critical if we're going to
answer these questions so thank you for that.
Mr. Meinert. We appreciate your support for that because
this requires a huge amount of work if you can imagine
anybody's who's collected this sort of data. The other part of
the bill directs is the assessment of critical materials in the
United States and that would be a major, major undertaking. We
have done assessments of many different areas we just completed
the first global assessment for copper which is the assessment
of the entire world for copper.
So we have the expertise, we have the methodology for doing
this and we have done a lot of work in development and
anticipation of doing these sort of assessments and we try to
maintain the scientific capability to perform that service for
the Nation.
Senator Risch. Thanks very much.
Mr. Danielson. Thank you, Mr. Senator.
I would just add or reiterate you know that we've done a
lot of work to date with the leadership of the Department of
the Interior and USGS in particular in establishing methodology
that works in terms of criticality assessment and we've applied
that to the Department of Energy through our critical materials
strategy report and that's been the basis for our work.
I think we are ahead of the curve in terms of we are
collaborating across the agencies through this interagency
working group on critical and strategic mineral supply chains
out of the National Science and Technology Council. But I do
believe that there is more work to be done, but I do think
we're setup to work together well under the leadership of
whatever entity would take the lead going forward.
Senator Risch. Thank you Mr. Danielson.
Thank you, Mr. Chairman.
The Chairman. Senator Franken.
Senator Franken. Thank you Mr. Chairman.
I have to run so I'm going to submit my questions for the
record.
I would like to say thank you for having this 3:30 meeting
on propane. We in Minnesota have had very cold winter, we've
had our corn came in kind of wet and we used the propane to dry
that, so thank you for having that meeting at 3:30.
One of the things I just want to say is that you know so
many of these critical minerals are needed for things like
electric cars and for--just for winter binds and lighting and
that this--I know that so many folks want to make sure that we
are able to do those technologies to lower our carbon footprint
and the tradeoff in terms of making sure that we--Mr. Meinert
at the Bureau of Land Management you're looking at the
environmental aspects of the processes by we--which we get
these things. I want to keep a lot of people to understand that
these are essential in these clean energy technologies and
that's why I'm proud to be a sponsor of the Chairman and
Ranking Member's bill.
So I'll submit those questions for the record and thank you
gentleman for your testimony, thank you Secretary Danielson for
coming to Minnesota so recently.
Thanks.
The Chairman. Thank you Senator Franken.
I don't have any other questions for this panel, Senator
Murkowski any additional questions?
Senator Murkowski. I have just one very quick one for Dr.
Meinert and you mentioned the assessment going forward and what
I am curious about and would like to understand better is,
what's our analytical capacity here in assessing future supply
and demand?
As we kind of forecast out and we've got a section in this
bill that relates to forecasting, can you tell us whether USGS
supports a joint effort with EIA to bolster our analytical and
forecasting capabilities for these minerals?
You talked a lot in your--both of you in your opening
statements particularly Mr. Danielson here in terms of how we
diversify supply, how we look for substitutes, how we recycle,
reuse. We know that we're going to continue to do good things
in Senator Baldwin's state in terms of manufacturing so we're
going to need more, but given the effort that is underway with
substitution or reuse, how do we forecast with any degree of
reliability?
Mr. Meinert the question is for you, but I think it also
goes to what you're doing in DOE as well.
Mr. Meinert. Forecasting is a complex science and the
foundation is always built upon the data that you have and so
you are looking at the history, the current uses, the current
supplies and then modeling that forward. So we have some
experience with that, our main expertise is in the collection
of the data, the assessment of the resources.
You mentioned EIA, they certainly have done much more in
the modeling realm than we have. But we have a long history of
working with other Federal agencies, both DOE, BOM with an
Interior, EPA, and a lot of agencies to try to work toward a
common goal.
Senator Murkowski. Do you think it makes sense to bring in
EIA or others that may have that assessment or forecasting
perspective?
Mr. Meinert. As we move in that direction we would
certainly attempt to learn from anybody who has----
Senator Murkowski. Yes.
Mr. Meinert [continuing]. Been further out in the curve
than we are.
Senator Murkowski. Dr. Danielson.
Mr. Danielson. I will point out that, although it's not
under my purview, I know that the EIA would welcome any
partnership that would be beneficial to the USGS to share best
practices that have been established at the EIA and have worked
out well in terms of forecasting.
Senator Murkowski. OK, thank you Mr. Chairman and I would
hope that as we move forward, not only with this legislation,
but just in the efforts that are out there, that when we talk
about the interagency coordination that that is more than just
good buzz words, it's--we all talk about interagency working,
but it really is going to be necessary in this area to know and
understand what we have and how cross department we can be
working to be more effective in all these areas.
With that I thank both of the witnesses and look forward to
second panel.
The Chairman. Alright we'll excuse you, thank you
gentlemen.
Our next panel retired Major General Robert Latiff a
research professor and director in the Intelligence and
National Security Research Center at George Mason University
and an adjunct professor at Notre Dame. He previously served as
vice commander for the U.S. Air Force Electronics System Center
and as commander of the NORAD Cheyenne Mountain Operation
Center in Colorado.
Mr. David Isaacs, the vice president of Government Affairs
for the Semiconductor Industry Association. Semiconductors are
of enormous importance in my home state so we're glad that
they're here.
Jennifer Thomas is the director of Federal Government
Affairs for the Auto Alliance, a leading advocacy group for the
automobile sector and we're very glad that Senator Stabenow
felt that it was important to have Mr. Thomas.
Mr. Jim Sims is the vice president of Corporate
Communications for Molycorp, Inc. Molycorp is one of the
world's leading producers of custom engineered rare earth and
rare metal products.
Mr. Gregory Conrad is the executive director for the
Interstate Mining Commission. Senator Murkowski thought it was
important to have Mr. Conrad and we're glad to have him.
Professor Rod Eggert, who Senator Udall requested, is the
director of the Division of Economics and Business at the
Colorado School of Mines and we're very glad that Professor
Eggert is here as well.
As I say to our witnesses, we will put your prepared
statements into the record in their entirety and it's going to
start getting hectic here in a little bit. So if you could just
summarize your principal concerns, that would be very helpful
and I want everyone to know that every single word in your
prepared statement will be part of the record.
OK, Professor Latiff.
STATEMENT OF MAJ. GEN. (RETIRED) ROBERT H. LATIFF, PH.D,
RESEARCH PROFESSOR AND DIRECTOR FOR INTELLIGENCE COMMUNITY
PROGRAMS SCHOOL OF ENGINEERING, GEORGE MASON UNIVERSITY
Mr. Latiff. Yes sir, I will try to be brief.
Good morning Chairman Wyden, Ranking Member Murkowski and
distinguished members of the committee.
I'm honored to be able to testify to this committee on a
subject of great importance. My name is Robert Latiff, I'm
currently a private consultant, I'm a retired Air Force Major
General serving 32 years active duty mostly in research and
development in weapons acquisition.
As was noted I'm also an academic with appointment at
George Mason University and at the University of Notre Dame. I
hold a doctorate in metallurgical engineering and materials
science.
Pertinent to the interests of this committee, I'm also the
former chairman of the National Materials and Manufacturing
Board of the National Academies. I serve as a member of the
Minerals, Metals, and Materials Society, a major professional
society of materials, engineers, and scientists.
At a Strategic Materials Advisory Group, a group of former
defense and government officials concerned about critical
minerals and metals.
I'm here to speak in strong support of S. 1600. For several
years I followed the attempts in both the House and the Senate
to pass legislation on this important topic. It remains
critical to national security in my opinion that this
bipartisan piece of legislation be acted--enacted into law.
While the rare earth crisis of the last few years appears
to have somewhat abated, we should not become complacent. The
fundamental risks that result from not having a secure supply
of critical materials has not gone away.
S. 1600 would require the U.S. Government to define
criticality as it relates to materials, identify those
materials that deems critical, and establish policies to ensure
their availability. It would authorize funding for research and
development and would advance work force development in areas
important to materials.
In all of these actions I believe we'll have positive
effects on national security and national defense. To the first
point I note that the European Union published a report in 2010
that identified 14 materials and now I understand 20 that they
deemed critical and recommended policies to the member Nations
for their supply conservation and potential substitution. The
U.S. has no such policy, nor do we have a single definition. S.
1600 is an important step in correcting that issue and
establishing a coherent policy.
I've been following these issues since 2007 when I chaired
a committee concerned with the national defense stockpile of
the Defense Logistics Agency. Our committee was very concerned
over what we felt to be DOD's continued inaction on the topic
Subsequently in a report to Congress, DOD reported that
there had in fact been cases in which materials issues had
impacted weapons acquisition programs in some way. However,
even in the face of these materials impacts and by the then
well known issues surrounding rare earth materials, DOD policy
continued to be silent on the topic and insisted that market
forces would be sufficient to satisfy DOD needs.
It has only been in the last year that DOD has finally
agreed that the market might not be sufficiently robust to
supply needs for several materials. That recognition was a
positive result. However, while they may choose to stockpile
materials like yttrium and dysprosium, there is still not a
domestic supply of some key rare earth metals or oxides, thus
it becomes essentially affixed to the supply chain.
What is needed is not just a near term fix, but also a long
term solution and my hope is that S. 1600 might better inform
DOD policy which could in turn lead to better availability and
availability of key weapon systems.
On the subject of materials research a highlighted June
2013 report by the U.S. Air Force Chief Scientist entitled,
``Global Horizons''. In that report the Chief Scientist lists
materials science as the first of 5 enabling technologies
important to the Air Force from FY13 to FY27. The subsequent
chart lists declining domestic availability of raw materials as
an important key trend.
Policy makers should take note of this, clearly the
services in executing their Title 10 training equip
responsibilities recognizing -recognized the criticality of
these issues as they are forced to deal with availability and
material scarcity.
The National Materials Advisory Board and paneled a
committee in 2005 on the globalization of materials research
and development, which it is important to note was funded by
the Department of Defense. The report of that committee quite
accurately predicted an increase in the importance of materials
research in other countries, along with a decreased dominance
by the United States in the materials research field.
More recently a 2011 report by Thompson Reuters verified
this result and concluded that while materials research
publications have been on the rise worldwide, the U.S. has in
fact been in decline.
I would point out to many that past DOD weapon systems from
satellites to submarines, from missiles to manned aircraft have
pushed the state-of-the-art in material science and the DOD
historically has been a funding source and a beneficiary. The
Chairman: General I apologize I just think we're going to have
to have you wrap up so we can move on.
Mr. Latiff. I am happy to wrap up and take your questions
Senator.
[The prepared statement of Mr. Latiff follows:]
Prepared Statement of Maj. Gen. (Ret) Robert H. Latiff, Ph.D., Research
Profesor and Director for Intelligence Community Programs School of
Engineering, George Mason University
Good morning Chairman Wyden, Ranking Member Murkowski and
distinguished members of the Committee. I am honored to be able to
testify to this Committee on a subject of great importance and about
which I have written and spoken frequently.
My name is Robert H. Latiff. I am currently a private consultant,
providing technology and management advice to FFRDCs, universities, and
private industry. I am a retired Air Force Major General, having served
32 years of active duty, largely in research and development and
weapons system acquisition. I am also an academic, with appointments at
George Mason University, where I teach systems acquisition and
intelligence technologies, and at the University of Notre Dame where I
am an adjunct professor in the Department of Philosophy. I hold a
doctorate in metallurgical engineering and materials science.
Pertinent to the interests of this Committee, I am the former
Chairman of the National Materials and Manufacturing Board and am a
member of the Air Force Studies Board of the National Academies. I am
also a member of The Minerals, Metals, and Materials Society (TMS), a
major professional society of metals, minerals, and materials engineers
and scientists, and of the Strategic Materials Advisory Council, a
group of former senior U.S. government defense and materials officials
and industry experts concerned about critical minerals and metals.
I am here to speak in strong support of S1600. For several years I
have followed the attempts in both the House and Senate to pass
legislation on this exceptionally important topic. For reasons I will
discuss, it remains critical to national security, in my opinion, that
this bi-partisan bill be enacted into law. While the rare earth crisis
of the last few years appears to have somewhat abated, we should not
become complacent. The fundamental risks that result from not having a
secure supply of critical materials have not gone away.
S1600 would require the U.S. government to define criticality as it
relates to materials, identify those materials it deems critical and
establish policies to enhance the their domestic availability. It would
authorize funding for research and development on those materials and
would advance education and workforce development in areas important to
materials. All of these actions will, I believe, have positive effects
on national security and national defense. To the first point I note
that the European Union published a report in 2010 that identified
fourteen materials they deemed critical and recommended to the member
nations broad policies for their development, recycling, conservation,
and potential substitution. The U.S. has no such policy document. Nor
do we have a single definition of what constitutes critical materials.
S.1600 is an important step in correcting this issue and establishing a
coherent national policy.
I have been following these issues since 2007 when, as a member of
the National Materials Advisory Board, I chaired a committee concerned
with Defense Logistics Agency's National Defense Stockpile. Our
committee was very concerned over what we felt to be Department of
Defense's continued inaction on the topic. Subsequently, in a report to
Congress, DOD reported that there had, in fact, been cases in which
materials issues had impacted weapons acquisition programs in some way.
However, even in the face of these materials impacts and the by then
well-known issues surrounding rare earth materials, DOD policy
continued to be silent on the topic and insisted that market forces
would be sufficient to satisfy DOD needs. It has only been in the last
year that DOD has finally publicly agreed that the market might not be
sufficiently robust to supply needs for several materials deemed
extremely important to current weapon systems. That recognition was a
positive result. However, while they may now choose to stockpile
materials like Yttrium and Dysprosium, there still is not a domestic
supply of some key rare earth metals or oxides; thus it essentially
becomes a fix to the supply-chain. What is needed is not just a near-
term fix, but also a long-term solution to the underlying and systemic
problems. My hope would be that a national policy, such as that
engendered by S1600 might better inform DOD policy, which could in turn
lead to better materials security, and availability of key weapon
systems. The end result of the activities required by this legislation
will likely mean that the DOD would not have to depend on extraordinary
measures to insure access to important materials for its weapon systems
On the subject of materials research, I highlight a June 2013
report by the USAF Chief Scientist entitled ``Global Horizons''. In
that report, the Chief Scientist lists materials science as the first
of five enabling technologies of importance to the USAF from FY13 to FY
27. A subsequent chart lists declining domestic availability of raw
materials as an important key trend. Policy makers should take note of
this. Clearly, the services, in executing their Title 10 ``train and
equip'' responsibilities, recognize the criticality of these issues as
they are forced to deal with availability issues and materials
scarcity.
Turning again to the work of the National Academies, as early as
2005 The National Materials Advisory Board impaneled a Committee on the
``Globalization of Materials Research and Development'' which, it is
important to note, was funded by the Department of Defense. The report
of that committee quite accurately predicted an increase in importance
of materials research in other countries, along with a decreasing
dominance by the United States in the materials research field. More
recently, a 2011 report by Thomson Reuters, verified this result and
concluded that while materials research publications have been on the
rise world-wide, the U.S. has in fact been in decline in regard to
materials R&D. I would point out that many past DOD weapon systems,
from satellites to submarines, from missiles to manned aircraft, have
pushed the state of the art in materials science and that DOD
historically was a significant funding source and beneficiary of
advanced materials research.
On the topic of education and workforce development, I note with
some dismay the decline in the number of university materials science
departments in the U.S. and the steep decline in the number of
materials science and engineering degrees conferred. While some of this
decline can be attributed to and explained by the concomitant increase
in degrees in associated fields, it remains true that knowledge of
basic materials science, materials design, mining, extractive
technologies, materials processing, etc. has been on the decline. While
admittedly dated, a 2004 American Association for the Advancement of
Science article advised graduates not to seek a job in the metals
industry unless they intended to work overseas. At that time, in the
previous 30 years the number of jobs for scientists working in metals
had declined from more than 13,000 to fewer than 2000. This is
consistent with the more recently expressed views of Dr. Karl
Gschneidner of Ames Laboratory, considered to be the leading U.S.
expert in rare earth materials. Policies and the requirements of S1600
to enhance education and workforce development in theses areas will
have important national security as well as economic implications. A
reinvigoration of materials education writ-large will also benefit DOD
and its industrial base as they seek to retain or regain technical
superiority in weapon systems performance.
In summary, I feel this is an extremely important piece of
legislation in placing a long needed emphasis on domestic security of
critical minerals. The national defense implications are, in my
opinion, profound. I reiterate my support for S1600 and my hope that
this bi-partisan legislation will be successful.
The Chairman. Very good.
Mr. Sims.
STATEMENT OF JIM SIMS, VICE PRESIDENT, CORPORATE
COMMUNICATIONS, MOLYCORP, INC., GREENWOOD VILLAGE, CO
Mr. Sims. Thank you Mr. Chairman, Ranking Member Murkowski.
I'm Jim Sims I work with Molycorp, I'm glad to be here
today.
S. 1600 is a solid step forward in the effort to revitalize
domestic supply chains for critical materials. As many of us
know the words permitting reform are often a type of third rail
of politics in natural resource discussions and that's why I
think this bipartisan compromise is so important and I thank
the chairman, the ranking member and the other members of the
committee who have put this forward. It's a good step forward
if it were to be enacted.
Molycorp is a U.S. company. We recently complete
construction and--of our $1.55 billion rare earth processing
facility in Mountain Pass, California. We spent all private
capital in building that facility, now as a result the U.S. is
back in business in both mining, processing, and doing value
added manufacturing of rare earth materials.
Moreover, we've worked on assembling a relatively robust
vertically integrated rare supply chain that can now produce a
wide range of materials from all 15 rare earths and from 5 rare
metals: niobium, tantalum, rhenium, gallium, and indium. We
sell these materials to U.S. and other manufacturers all around
the world.
As part of our downstream supply chain we also produce a
very important value added rare earth material, rare earth
magnetic powders. Those are used in the construction of rare
earth permanent magnets, and those magnets are increasingly
vital to a wide range of technologies.
I know both of you know a lot of these technologies, but
things such as direct drive wind turbines, high efficiency
owned home appliances, and HVAC systems, MRI's, medical imaging
devices, national defense systems, hybrids, plug in electrics,
electric veal--vehicles, etc., many things, too numerous to
list. The list continues to grow, by the way as new uses for
these rare earth materials are found every year.
Our company walked a regulatory pathway to bring U.S. back
in rare earth production for about 15 years. It took us just
over 500 individual permits in order to get Mountain Pass back
online, so with that back drought let me make just a couple of
observations quickly.
No. 1 the fact that the U.S. is back online is important,
but it's also important I think to note how the U.S. through
Mountain Pass, now produces these rare earth materials. Once
our facility is fully operational at full scale commercial
rates and all of our chemical plants that comprise that
facility are optimized, we will be able to produce rare earths
with the environmental footprint that is smaller than has ever
been done before and is smaller than it's done anywhere in the
world.
Moreover the very technologies that we invested in, a lot
of early stage capital, to shrink the environmental footprint
of that production with precisely the technologies that also
help to drive down our cost to production. So what we've found
at Mountain Pass is that improving our environmental
performance is also going to help us prove our--is also going
to help us improve our competitiveness in U.S. global markets.
No. 2 there are a lot of advances being made in helping
manufacturers use rare earth more efficiently and this was a
big deal for our company, we've done a lot of this research
ourselves. For example we're finding ways in working with
downstream manufacturers on how to use less of the--of one of
the more scarce rare earths called dysprosium, less of that
rare earth in these permanent rare earth magnets. What that
does is it allows more dysprosium to be made available for use
in other magnets, and the more magnets that can be made, the
more that the automotive makers and many other technologies can
use these. That research is improving the efficiency of many
more products, it's also helping more consumers gain the
benefits that these magnets provide.
Finally let me just note there's understandably a lot of
focus on the upstream side of rare earth and critical material
production and that's important, and that's what this bill
looks at. I would also encourage though the committee to look
at the demand side or the downstream side of the critical
materials equation. What I mean by that is the reality of the
marketplace today is that downstream demand for these materials
is what is largely driving upstream investment in their
production.
Today the fact is that most rare earth materials wherever
they're produced in the world are not consumed by manufacturers
in the U.S., their isn't as much of a manufacturing base in the
U.S. that needs these materials, it's largely overseas. So as
you look at the policy implications of how to make this process
better, I would encourage you to look at the downstream
manufacturing demand because that helps drive supply.
Thank you very much.
[The prepared statement of Mr. Sims follows:]
Prepared Statement of Jim Sims, Vice President, Corporate
Communications, Molycorp, Inc., Greenwood Village, CO
Chairman Wyden, Ranking Member Murkowski, and distinguished members
of the Committee, my name is Jim Sims, and I am Vice President of
Corporate Communications for Molycorp, Inc. I very much appreciate the
opportunity to appear before you today to discuss S. 1600, the Critical
Minerals Policy Act.
A U.S. company headquartered in Greenwood Village, Colorado,
Molycorp is the only advanced material manufacturer in the world that
both controls a world-class rare earth resource and can produce high-
purity, custom engineered rare earth products to meet increasingly
demanding and varied customer specifications. With 27 locations in 11
countries, Molycorp produces a wide variety of specialized products
from 14 different rare earths (lights, mids and heavies), the
transition metals yttrium and zirconium, and five rare metals (gallium,
indium, rhenium, tantalum and niobium). Molycorp produces rare earth
magnetic materials through its Molycorp Magnequench subsidiary,
including neodymium-iron-boron (NdFeB) magnet powders used to
manufacture bonded NdFeB permanent rare earth magnets. Through its
joint venture with Daido Steel and the Mitsubishi Corporation, Molycorp
manufactures next-generation, sintered NdFeB permanent rare earth
magnets. The Company also markets and sells a line of rare earth-based
water treatment products through its Molycorp Advanced Water
Technologies subsidiary.
HOW S. 1600 WILL ADVANCE THE CAUSE OF DOMESTIC MINERAL SUPPLY CHAIN
REVITALIZATION
Rare earth elements (REEs), and rare metals more broadly, are
increasingly critical to high-tech, clean tech and advanced civilian
and defense systems. While the U.S. has significantly increased its
domestic production capabilities of REEs in recent years, a wide
variety of critical and strategic metal and mineral supply chains are
missing a domestic production component. The Critical Minerals Policy
Act is a solid step forward in the effort to revitalize domestic
mineral supply chains in the U.S.
Given that permitting reform is often a `third rail' in natural
resource policy discussions, the fact that a majority of both parties
on this Committee have found common ground on this issue is an
extraordinary achievement. It demonstrates both courage and principled
leadership by the bill's authors and cosponsors. Chairman Wyden,
Ranking Member Murkowski, Senators Udall and Heller, and the other
original cosponsors of this bill, all deserve praise for working so
hard to forge the compromise that resulted in this legislation. Your
demonstration of bipartisan commitment significantly increases the
chances of Congressional passage of this legislation.
On behalf of a company that walked a regulatory pathway that took
15 years and more than 500 permits to restart rare earth production in
California, let me offer some observations on several elements of S.
1600:
By launching a process to update and modernize critical
minerals policies in the U.S., and by encouraging better
coordination across the many federal agencies that oversee
aspects of mineral development, this bill would provide
additional regulatory certainty for all parties in permitting
processes. Increased regulatory certainty is a must if the U.S.
is to encourage greater private sector investment in domestic
mineral exploration, processing, and downstream supply chains
that can help meet the needs of manufacturers here in the U.S.
and around the world.
The bill recognizes that much can be done to make permitting
processes more efficient, even without wholesale changes in
underlying law. Requiring performance metrics for the
processing of permit applications should spark new thinking and
innovative ideas for reasonable reforms.
The bill's directive to complete a comprehensive national
resource assessment for each element designated as critical
should help to prioritize resource opportunities for both
government officials and private sector interests.
Its focus on encouraging more efficient production and use
of critical materials, development of alternative materials,
and increased recycling is equally important. For a number of
critical materials, increased production will need to be
supplemented by these strategies to meet future global demand.
Strengthening the education and workforce training
infrastructure related to critical material, a goal of this
bill, also is a high priority. The U.S. lags behind many
nations in this area, which in turn can negatively impact
investment decisions by private sector companies in critical
material supply chain development.
THE RE-BIRTH OF U.S. RARE EARTH PRODUCTION
REEs offer a window into many of the issues listed above as well as
the challenges of bringing more critical minerals and metals through
permitting and into production.
The U.S. was once the world's largest producer of REEs, thanks to
the rare earth production done for more than 45 years at Mountain Pass,
California, home to one of the largest, richest and most readily
processable REE ore bodies in the world.
Production at the original processing facility at Mountain Pass was
halted in the late 1990s, and active mining of rare earth ore was
suspended in 2002.
However, fast forward to today: the U.S. is back online in REE
production. Construction is complete at Molycorp's new, $1.55 billion
state-of-the-art rare earth processing facility at Mountain Pass, and
production is ramping up. Not only that, but once this facility is up
to full-scale operation and its chemical processes are fully optimized,
we will be able to produce REE materials with a dramatically smaller
environmental footprint and at a cost of production that will make the
U.S. competitive with any REE material producer in the world.
Taking REEs from the ground, separating them from one another, and
converting them to usable REE materials involves a highly complex,
multi-stage series of chemical processes. The Mountain Pass facility is
actually a collection of 12 operating systems that must work together
both in series and in parallel. As our current rare earth production
ramp-up continues, we are working to optimize and strengthen the
system, improve rare earth recovery rates, improve on-time reliability,
add redundancy, and increase product throughout.
In order to better understand the process by which REE ore is
converted into useful REE products, a short 4.5-minute Technology Tour
video outlining this process can be seen here: http://
www.brainshark.com/molycorp/vu?pi=zHCzU9yV6zCQamz0.
You can also click on the photo* at left to see the Technology
Tour.
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* All photos have been retained in committee files.
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All key production components of the Mountain Pass facility are
operational, and we are in the process of conducting an orderly ramp-up
of the many systems that work together to convert REE ore into usable
products. The new facility was designed to produce at an annual rate of
about 20,000 metric tons (mt) of rare earth oxide (REO) equivalent1
products. Output can vary during the ramp-up and optimization phase,
and that is normal for new chemical plant start-ups. To date, the
system has demonstrated an annualized production rate of 15,000 mt of
REO equivalent\1\ product, but we haven't sustained that rate due to
the demands of process optimization. After we complete these
procedures, which we expect to do in the first half of 2014, we
anticipate increasing production volumes as demand requires.
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\1\ ``Rare earth oxide equivalent'' is the industry's standardized
unit of measurement across all rare earth containing products. It is
comparable to the oil and gas industry's ``unit of measurement.
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TECHNOLOGY INNOVATION: REDUCED ENVIRONMENTAL FOOTPRINT
Mountain Pass may be a re-started rare earth mine, but it is by no
means the same facility it was in the late 1990s. After rare earth
production was halted at Mountain Pass, Molycorp scientists went back
to the drawing board to design new processes and technologies that
could help to dramatically shrink the environmental footprint of rare
earth production.
These new technologies and process innovations, some of which have
never before been used in the rare earth industry, have been
successfully integrated in our new facility. They include:
High-efficiency, on-site power generation through a clean-
burning natural gas-fired Combined Heat and Power (CHP) plant.
Among other things, this technology is helping us reduce our
greenhouse gas emission (GHG) intensity as compared to legacy
operations.
A high-efficiency water treatment and recycling plant. This
plant allow us to greatly reduce our fresh water usage and
helps to recycle process water.
An onsite chlor-alkali plant, which allows us take
wastewater and convert it into the chemical reagents used in
rare earth processing
Higher rare earth recovery rates from our ore, which means
that the facility can produce more rare earth products using
the same amount of ore as before.
An innovative tailings disposal system, which removes most
of the water from mine tailings (for recycling) and allows
tailings to be formed into a paste, which sets up into a solid
substance for permanent onsite disposal. This eliminates the
creation of a tailings ``dam.''
In short, once fully operational and optimized, this facility will
operate as the world's most environmentally advanced rare earth
processing complex.
TECHNOLOGY INNOVATION--GLOBALLY COMPETITIVE PRODUCTION COSTS
In addition to significantly reducing environmental externalities
associated with REE production, the technology innovations developed by
Molycorp also will help reduce the cost of producing REE materials at
Mountain Pass. Producing REEs at a cost that is competitive in global
markets is vital to the viability of any REE production facility.
For example, Molycorp dedicated a significant amount of early-stage
capital to install an onsite chlor-alkali plant, which when fully
operational will enable Mountain Pass to convert what was once
wastewater discharge--hundreds of gallons a minute of salty water--into
chemical reagents needed for rare earth processing. In essence,
Molycorp has built a recycling loop at Mountain Pass that continually
regenerates these reagents from wastewater and recycles virtually all
of our process water.
This capability will significantly reduce the overall environmental
footprint of rare earth production, as well as drive down our cost of
production. By making our own reagents from wastewater, we will be able
to do the following:
Buy less reagents from the open market. (Chemical reagents
are a significant portion of rare earth production costs);
Sell excess reagents we produce; and
Virtually eliminate wastewater disposal costs.
Additionally, this capability allows Molycorp to produce REE
materials that are recognized in downstream markets for the
environmentally superior manner in which they are produced. We believe
that what is good for the environment can also be good for business.
HOW REES ARE ENABLING TECHNOLOGIES THAT INCREASE ENERGY EFFICIENCY AND
LOWER POWER-RELATED EMISSIONS
One of the more exciting rare earth materials that we make from
Mountain Pass ore is permanent rare earth magnetic materials, which
when made into magnets can significantly improve the energy efficiency
of motors, generators, compressors, and other devices. Because they
also are significantly smaller than competing, less efficient
``ferrite'' magnet technologies, rare earth permanent magnets allow for
smaller motors. This allows manufacturers to save on the use of other
materials such as copper, steel, etc.
One example of the growing use of rare earth permanent magnets is
in residential water circulation pumps.
In Europe, regulations now require the use of high efficiency water
circulation pumps to distribute heat in buildings. The European
Commission (EC) estimates that there are more than 100 million of these
devices currently installed in the EU, and that their energy draw can
make up between 5 and 10 percent of the typical electricity bill in
households. That adds up: across the EU, these devices consume more
than 50 terrawatt-hours per year of electricity, which is equivalent to
about two percent of the overall electricity consumption in the EU.
This amount of electricity generation equates to more than 30 million
tons per year of CO2, according to the EC.
Manufacturers are now turning to pumps that utilize rare earth
permanent magnets in order to increase efficiencies. These next-
generation, variable speed pumps can reduce annual electricity use by
60 percent or more, according to the EC. This equates to more than 30
TWh/year of avoided energy consumption.
Another example of rare earth materials used to increase energy
efficiency is in electric motors used in automobiles. There can be
dozens of individual electric motors in a modern automobile. When these
motors utilize permanent rare earth magnets, instead of larger, heavier
and less powerful iron-based permanent magnets, manufacturers are able
to significant reduce vehicle weight. That translates into higher fuel
efficiency and an enhanced ability to meet increasing stringent
Corporate Average Fuel Economy (CAFe) standards. Additionally, rare
earth permanent magnets allow motors to be smaller and more compact,
which in turn allows more space in the passenger compartment. Hybrid
electric, plug-in hybrid, and all-elective vehicles especially benefit
from rare earth permanent magnets.
From a macroeconomic perspective, motors and motor-driven systems
are estimated to be the single largest end use of electricity in the
U.S., consuming over twice as much electricity as lighting, the second
largest end use. Even small increases in the efficiency of these
systems can translate into very significant reductions in energy demand
and associated emissions, such as GHGs.
Energy efficiency experts and motor industry leaders agree that
enhancing motor and motor-driven system efficiencies is one of the most
promising--and currently overlooked--pathways to lower energy use and
emissions reductions. Rare earth permanent magnets can play a key role
in those efforts.
ADVANCES IN REE MATERIAL SCIENCE ARE INCREASING THE EFFICIENT USE OF
SCARCE HEAVY REES
One of the most important technology advances being made today in
rare earth material science relates to the use of relatively scarce
heavy rare earths, such as Dysprosium, in permanent rare earth magnets.
This heavy rare earth (HREE) generally exists in very small quantities
relative to other rare earths in virtually all REE ore bodies. It is
added in small amounts to high-performance rare earth permanent magnets
that must operate in relatively higher temperature, `under the hood'
operating environments, generally those above 150C. When added at
levels between 2 percent and 10 percent, Dysprosium helps these magnets
retain their magnetic power.
Given that this HREE is a truly `rare' rare earth, and is
overwhelmingly produced today in one nation (China), manufacturers have
been reluctant in recent years to utilize these high-performance
magnets in some applications.
Fortunately, continuing advances in REE material science, some of
which are being pioneered by Molycorp scientists, are allowing magnet
manufacturers to make rare earth permanent magnets with less and less
Dysprosium.
Manufacturers are also finding ways to incorporate low-Dysprosium
NdFeB magnets into their systems. Together, these efforts are allowing
greater use of sintered NdFeB magnets with only 2 percent--4 percent
Dysprosium, instead of traditional levels of 8 percent--10 percent
Dysprosium. Such reductions are already having an impact on global
demand levels for these scarce rare earths. With more Dysprosium
available to markets, a greater number of sintered NdFeB magnets can be
made and utilized in energy efficiency applications.
Also, advances in material science and engineering are expanding
the use of bonded NdFeB magnets, made by Molycorp's Magnequench
subsidiary, that have no Dysprosium content.
Some of the motors in a modern automobile that can utilize
permanent rare earth magnets with little to no Dysprosium.
A separate technology trend is the continuing migration from tri-
phosphor fluorescent lighting to LED lighting. Tri-phosphor lighting
utilizes several relatively scarce rare earths, such as Terbium,
Europium, and Yttrium. This continuing shift to LED lighting is already
helping to soften demand, and increase the availability, of HREEs like
Terbium and Yttrium.
CHALLENGES TO EXPANDING DOMESTIC REE PROCESSING CAPACITY IN THE U.S.
The most significant barrier to entry for new rare earth producers
is undoubtedly the capacity to take mixed rare earth minerals out of
the ground and chemically process them into separated, usable rare
earth products. Virtually no two rare earth deposits are the same, and
the often complex mineralogy of some deposits makes them highly
challenging to chemically process. Consider these facts:
1. There are more than 200 different minerals that contain
rare earths.
2. Virtually all rare earth deposits are comprised of
multiple types of minerals.
3. The unique chemical structure of the rare earth-bearing
minerals in an ore body can require a chemical processing
facility that is unique to that deposit. Many rare earth
deposits will require their own unique separate chemical
processing facility.
4. Some rare earth-bearing minerals in a single deposit can
require different chemical approaches to rare earth separation
than other minerals found in the same deposit. Such multi-
mineralogic ore bodies can be so difficult and costly to
process as to be uneconomic.
5. Some rare earth-bearing minerals, including those that
have a relatively higher percentage of HREEs, have never been
successfully processed at the commercial scale to remove and
separate the rare earths they contain.
These factors only scratch the surface of the many challenges
inherent to economically extracting and separating rare earth elements
from various ore bodies. From the perspective of policymakers, this
underscores the importance of encouraging investment and continuing
research and development in the area of rare earth chemical processing.
With so many technical and economic challenges that must be met, more
certainty in permitting and the overall regulatory framework would be
welcomed by those seeking to bring new mines and production facilities
online.
A close corollary to this is the relative lack of workforce
knowledge and training in the U.S. today relative to rare earth
chemical processing challenges. Fortunately, several U.S. universities,
including Iowa State University, Montana State University, and the
Colorado School of Mines, ably represented here today by Dr. Rod
Eggert, have in recent years initiated new curricula aimed at better
educating the next generation of technical leaders for work in the rare
earth industry.
Additionally, the Administration`s support for the Critical
Materials Hub, housed in the Department of Energy's Ames Research Lab
in Ames, Iowa and led by Dr. Alex King, also is helping to strengthen
and reinforce the America's knowledge infrastructure in this area.
THE ROLE OF INCREASING GLOBALIZATION IN CRITICAL MATERIAL SUPPLY CHAINS
The increasing rare earth production at Molycorp's Mountain Pass
facility, as well as new production that has come online in Malaysia by
the Australian company Lynas, is helping to diversify global production
of rare earths and to reduce the world's collective reliance on the
world's predominant rare earth producer, China. Other nations are
working to start rare earth mines and associated separations
capabilities. Additionally, facilities that process rare earths into
various downstream, value-added products, such rare earth metals, rare
earth alloys, and rare earth magnetic materials, also have come online
in various nations around the world.
One impact of such increasing globalization of vertically
integrated rare earth supply chains is to provide manufacturers with
multiple options for their rare earth supplies. This helps to de-risk
critical material upstream supply chains and to reduce rare earth price
volatility. All of these factors are helping to restore confidence in
rare earth markets.
The capital market's response to the market instability of 2010 and
2011 has been to shift private capital to the development of these
integrated supply chains. This has resulted in a significantly stronger
global rare earth supply chain for manufacturers around the world.
SUMMARY
Thank you again, Chairman Wyden, Ranking Member Murkowski, and
distinguished members of the Committee, for allowing Molycorp to
present our views on S. 1600. This bipartisan legislation represents a
very good step forward in the effort to revitalize domestic mineral
supply chains in the U.S. It deserves bipartisan support in the
Congress and should be supported by critical material producers and the
manufacturing community that relies upon reliable supplies of these
materials.
The Chairman. Let's do this. If I can call an audible with
the indulgence of my colleagues, I have got to be in 2 other
places right now. We also have the chairman of the mining
subcommittee and, of course, the ranking member of the full
committee here. I just wanted to ask one quick question and
then we'll just continue with our witnesses.
Mr. Sims you all were the largest producer of rare earths
in the country, but you shut down your operations and you've
since revived it and are actively ramping up production. Why
did you shut down?
Mr. Sims. A couple of reasons Mr. Chairman, but I could
probably boil them down to 2.
No. 1 Mountain Pass, that facility had some environmental
issues with wastewater spills. We produce a lot of saltwater in
this chemical process and there were some spills of that water
and those were issues that shutdown the processing of rare
earths.
Then we had a mine permit that lapsed in 2002, we didn't
get that renewed in time, it was probably more our fault than
anything else. So that physically stopped mining at the
facility. Then when that permit was renewed in 2004 the then
owners of that facility which was Unocal, Union Oil of
California, looked at the global economics of rare earths and
determined that they just didn't know how to make money making
rare earths at that facility.
The Chairman. So the China issue had--was a factor in what
you all were trying to do and that----
Mr. Sims. A major factor Mr. Chairman.
The Chairman [continuing]. Part of the shutdown, because
what we're trying to do, what Senator Murkowski and Senator
Udall and I have all been a part of. Senator Manchin is trying
to get more processing in the United States and it seemed to me
as we looked at it that China was a big factor in that shutdown
and also the price situation was a factor. Is that fair to say?
Mr. Sims. Very fair to say and I'll say that now with the
new technologies that have been developed, we're going to be
able to produce rare earths at a cost that's among the lowest
in the world including that in Asia and China.
The Chairman. I don't want to take time from additional
witnesses, but it seems to me there are lessons here that
relate to the development of other U.S. sources of rare earths
and that's why our legislation is so important.
So I apologize to our other witnesses for the hectic nature
of the morning. Senator Manchin is chairman of the mining
subcommittee, Senator Murkowski, of course (is the key author
of this legislation, and they will helm the remainder of the
panel and I appreciate all the witnesses. We'll be working very
closely with you.
Senator Murkowski noted an enormous amount of work has gone
into this bill, literally years and we're going to get the
administration, Senator Murkowski on this as well----
Senator Murkowski. Yes.
The Chairman [continuing]. I appreciate your bringing up.
Senator Manchin gavel is yours and know we are in good
stead with you and Senator Murkowski, thank you.
Senator Manchin. [Presiding]. She'll lead me straight I
know that.
So what we'll do Mr. Isaacs if you would proceed now with
your statement.
STATEMENT OF DAVID ISAACS, VICE PRESIDENT OF GOVERNMENT
AFFAIRS, SEMICONDUCTOR INDUSTRY ASSOCIATION
Mr. Isaacs. Thank you Senator Manchin and Senator
Murkowski.
My name is David Isaacs, I'm with--testifying on behalf of
the Semiconductor Industry Association, we are the association
of the U.S. based semiconductor companies involved in the
design and manufacturing of semiconductors. As you probably
know semiconductors are the key enabling technology that
support all modern electronics and therefore advancements in
semiconductor design and manufacturing has led to the
innovations in IT, and telecommunications, and transportation,
and medical devices, and national security systems.
So in addition to being a major employer and one of the
country's leading exporters we are a key foundational
technology that supports our overall economic strength. We very
much appreciate the chairman and ranking member for convening
this hearing and addressing this important legislation because
the process of manufacturing and fabricating advanced
semiconductors depends on the use of certain key materials,
whether they are minerals or gases or chemicals that have
certain unique chemical and physical properties.
In many instances there are no known substitutes for those
materials and therefore having a secure and continuous supply
of those materials is essential to our continued success and
our continued ability to innovate, and central to the economy
as a whole. As semiconductors get more and more advanced and
feature sizes are at the nanoscale level, the use of materials
with these unique properties becomes ever more critical.
Our views on this issue are very much informed by our
recent experience with helium and as this committee well knows
and thanks to the leadership of Senator Murkowski and others
and Chairman Wyden this Congress was able to address that issue
last year and get enacted into law one of the few bills that
passed Congress to avoid a major shortage of helium.
Helium is not just used for party balloons and the like,
but is critical to a number of industrial applications
including semiconductors and we were facing major shortages,
major price increases of that essential gas and again there--
for many of our processes there were no known substitutes and
so it was a really dire situation.
But again thanks to the leadership of this committee we
were able to get enacted into law the helium stewardship act
which avoided a very dire situation. But this was a near miss
and so our interest in this bill is very much consistent with
the intent of the legislation, which is to identify critical
materials and develop a policy framework for avoiding future
disruptions in the supply chain.
So we are taking action as an industry and working with a
industry consortium known as SEMATECH and through our global
technology roadmap to identify critical materials and we very
much look forward to engaging in the effort that will take
place under this bill to identify key materials for the
semiconductor industry and develop the appropriate policies.
We very much appreciate this bill and support it and are--
one point we would like to raise for your consideration as you
continue with work on this bill is to ensure that the
definition of critical mineral is broad enough to encompass the
full range of materials that are critical to semiconductors
manufacturing and other industrial applications. We very much
agree with the holistic approach that the bill takes that looks
not only at the extraction step but also processing and other
downstream steps that could serve as bottlenecks in the supply
chain.
So we very much appreciate the opportunity to testify and
we're happy to answer any questions.
Thank you.
[The prepared statement of Mr. Isaacs follows:]
Prepared Statement of David Isaacs, Vice President of Government
Affairs, Semiconductor Industry Association
The Semiconductor Industry Association (SIA), the voice of the U.S.
semiconductor industry,\1\ appreciates the opportunity to testify in
support of the Critical Minerals Policy Act (S.1600). We commend
Ranking Member Murkowski and Chairman Wyden, as well as the large group
of bipartisan co-sponsors, for introducing this important legislation
and for convening this hearing. We look forward to continuing to work
with this Committee to ensure that the U.S. has a secure supply of the
materials that are critical to the manufacture of semiconductors and by
extension the health of the U.S. semiconductor industry and the U.S.
economy as a whole.
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\1\ SIA seeks to strengthen U.S. leadership of semiconductor design
and manufacturing by working with Congress, the Administration and
other key stakeholders. SIA works to encourage policies and regulations
that fuel innovation, propel business and drive international
competition in order to maintain a thriving semiconductor industry in
the United States. Additional information on SIA is available at
www.semiconductors.org.
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Semiconductors are the micro-circuits (sometimes referred to as
``chips'' or ``computer chips") that are the enabling technology for
all modern electronics found in computers and cell phones,
transportation and health care devices, information and communications
systems, and numerous aspects of our national defense. Because
semiconductors are a foundational technology for virtually all areas of
our economy, continued U.S. leadership in semiconductor technology is
essential to America's continued global economic leadership and our
national security. Semiconductors are one of the nation's top
exports\2\ and the industry directly employs about 250,000 employees
and supports approximately 1 million indirect jobs.\3\
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\2\ During the period 2008-12, semiconductors were the second
largest export from the U.S., after aircraft. Source: U.S.
International Trade Commission. Industry Defined By: NAIC Codes 336411
(Aircraft); 334413 (Semiconductors); 336111 (Automobiles); 324110
(Petroleum Refinery Products), Based from total exports revenue.
\3\ http://www.semiconductors.org/clientuploads/Jobs %20Rollout/
Jobs%20Issue%20Paper__April__2013.pdf.
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I. Semiconductor Manufacturing and Critical Materials
Contrary to the popular perception that most high-tech
manufacturing has been offshored to Asia, advanced semiconductor
manufacturing remains strong and growing in the U.S.\4\ The process of
manufacturing semiconductors is incredibly complex, employing
sophisticated equipment and techniques developed by the world's leading
scientists and engineers\5\ and the precise and controlled use of
specific materials, chemicals, and gases that possess unique chemical
and physical attributes. The semiconductor industry is innovating at
the atomic level and each material used in our manufacturing is
carefully selected to meet our technology needs and integrated together
with high precision manufacturing tools to produce high performance
semiconductors. As circuit features reach the nanoscale level,\6\ the
semiconductor industry's use of materials with unique properties
becomes even more critical.
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\4\ The majority of production (56 percent) from U.S. semiconductor
firms is located in the United States, and the U.S. is home to more
leading-edge process technology manufacturing facilities (i.e., 22
nanometer process technology or less) than any other country in the
world. Source: IC Insights, Global Fab Database. SIA member companies
continue to invest and expand in the U.S., with the construction of new
and expanded state-of-the-art fabrication facilities across the
country. Overall, U.S.-based semiconductor companies retain over 50
percent of global market share in a highly competitive market. Source:
SIA/iSuppli/WSTS.
\5\ The industry invests on average 22 percent of revenue in R&D,
amounting to approximately $32 billion in 2012. Source: World
Semiconductor Trade Statistics (WSTS) and IC Insights. Semiconductor
companies receive a large number of patents each year and possess
extensive patent portfolios. Six of top 15 US companies receiving
patens in the U.S. were semiconductor companies. Source: US Patent and
Trademark Office, compiled by IFI CLAIMS Patent Services (January
2013).
\6\ Nanotechnology is the science, engineering, and technology
conducted at the nanoscale, a range from 1 to 100 nanometers (nm). One
nanometer is a billionth of a meter, or 10-9 of a meter.) See http://
www.nano.gov/nanotech-101. Current leading edge chips have over a
billion transistors on a single chip and features of 22 nanometers
(nm), and the industry is engaged in ongoing development at the scale
of 10 nm (i.e., 22 billionths of a meter, or roughly a 4,000th the
width of a human hair). See ``Moore's Law: The rule that really matters
in tech (Oct. 15, 2012) (available at http://news.cnet.com/8301-11386--
3-57526581-76/moores-law-the-rule-that-really-matters-in-tech/).
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The building blocks of advanced semiconductors include a range of
elements, including arsenic, cerium, cobalt, copper, fluorine, gallium,
germanium, indium, phosphorus, silicon tantalum, tungsten, tin,
titanium, and others. Our industry also relies on a number of specific
chemicals and industrial gases in our production process. The materials
utilized in the semiconductor manufacturing process are selected
because they possess unique chemical and physical properties. In many
instances, there are no known alternatives to these materials that
satisfy our functional needs.
The semiconductor industry relies on a complex global supply chain
that consists of numerous suppliers of materials, chemicals, and gases.
Many of these materials are subject to multiple processing steps and
pass through multiple hands prior to shipment to a semiconductor
manufacturing facility (a ``fab'') for use in our manufacturing
process. As a downstream user of these materials, SIA member companies
are typically several steps removed from the extraction of the basic
material, and therefore we believe it is important to adopt a holistic
approach and look at the entire supply chain when assessing potential
vulnerabilities in supply of these critical materials.
Because of our reliance on key materials--and the potential
vulnerabilities in the supply of these materials--we believe that the
Critical Minerals Policy Act is an important bill that warrants prompt
consideration. We support the goal of the bill, which is to identify
minerals that are critical to the American economy and may be subject
to potential supply disruptions, and to develop a framework for
policies to prevent potential disruptions to the supply of these
minerals. Our industry has experienced shortages, price spikes, or
other disruptions of key materials in the past, and we believe that it
should be a national priority to take reasonable steps to improve the
security of supply of critical materials. The implications of a supply
disruption in the semiconductor industry reach far beyond our industry
because so many sectors of our economy are dependent on the electronics
that are enabled by semiconductors. Consequently, the ripple effects of
a supply disruption can adversely impact major elements of the U.S. and
global economy.
Our industry's recent experience with supply shortages in the
supply of helium illustrates the potential adverse implications that
may result in the disruption in the supply of critical materials for
the semiconductor industry. Helium is an essential gas in the
semiconductor manufacturing process, and because helium has unique
functional attributes, there are no known alternatives to this gas for
many of processes in our manufacturing processes. Last year our
industry faced significant shortages in the supply of helium, as well
as substantial price increases, as a result of several factors,
including the pending closure of the Federal Helium Reserve. Our
suppliers were shipping a reduced allocation at dramatically increased
cost to semiconductor fabs, and despite efforts to conserve and recycle
this gas or find alternatives in some processes, our industry was
facing the risk of having insufficient quantities to operate. This
created a very significant risk for our industry and the economy as a
whole.
Fortunately, this Committee recognized the need to resolve this
problem and Chairman Wyden and Ranking Member Murkowski led the
successful efforts in enactment into law of the Helium Stewardship Act
(PL 113-40). We greatly appreciate the leadership of this Committee in
enacting this essential legislation in a timely manner. But this
experience demonstrates the need to work proactively to develop the
appropriate policies to avoid future disruptions to the supply of
critical materials.
Our industry has also faced other disruptions in the supply of
processed materials that are essential to semiconductor production. To
cite one prominent example, in July 1993, an explosion at a Sumitomo
Chemical plant in Japan shut down a factory that supplied over half of
the world supply of a high purity resin used in semiconductor packages.
The value of the resin was estimated to be only 0.26 of a penny per
integrated circuit, but without the resin semiconductor production
would come to a halt, a disruption that the U.S. government recognized
would soon be felt in the computer, automobile, telecommunications
equipment, and other manufacturing industries. Spot prices for one type
of chip, dynamic random-access memory (``DRAM'') memory chip nearly
doubled, and DRAM buyers who did not have long term contracts were
paying in excess of $300 million a week for several weeks after the
explosion. Since 95 percent of world production of the high purity
resin was located in Japan, there was a concerted effort by the U.S.
industry and government to press Sumitomo Chemical and other Japanese
suppliers to allocate remaining inventory and production transparently
and fairly. In part due to long supply chains using sea freight, there
was sufficient inventory to overcome the crisis until the Sumitomo
Chemical resumed operations in November of 1993. This example
illustrates the need for policies that adopt a holistic approach to
assessing the supply chain of critical materials.
These are just a sampling of instances that illustrate the
potential vulnerability of the supply chain.\7\ In order to avoid
future supply disruptions, SIA is pleased that this Committee is taking
action to secure the supply of critical materials for the future.
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\7\ Another example was the result of Hurricane Katrina, which
caused extensive damage to a major liquid hydrogen facility in New
Orleans. Coupled with a previously planned closure of another plant in
Canada, the damage to this plant caused a shortage of supplies of
liquid hydrogen. More recently, the industry is concerned by actions
such as the recent announcement by China to reduce the export quota for
rare earth minerals. See http://www.bloomberg.com/news/2013-12-13/
china-cuts-first-batch-rare-earth-export-quota-for-second-year.html.
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II. Actions by the Semiconductor Industry to Secure Supply of Key
Materials
In light of our recent experience with the shortage of helium, SIA
looks forward to working with the Congress and the Administration to
identify critical materials and develop the appropriate policies to
secure the supply of key materials. Our industry is engaged in ongoing
efforts to identify critical materials used in our processes and avoid
harmful disruptions to the supply of these materials.
1. An industry consortium, SEMATECH,\8\ has a Critical
Materials Council that works to analyze risks to the critical
materials supply chain and develop contingency plans for
dealing with possible disruptions.
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\8\ See http://www.sematech.org/.
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2. The industry's technology roadmap, the International
Technology Roadmap for Semiconductors (ITRS),\9\ includes a
chapter on emerging materials that will be needed for future
innovations in our industry.
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\9\ See http://www.itrs.net/.
SIA is leveraging these ongoing efforts, as well as studies and
reports from government and other experts,\10\ to evaluate the
materials critical to the semiconductor manufacturing process. Our
assessment will consider of a broad range of factors, including the
following:
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\10\ See, e.g., U.S. Department of Energy, Critical Materials
Strategy (December 2011) (available at http://energy.gov/sites/prod/
files/DOE__CMS2011__FINAL__Full.pdf); U.S. Geological Survey Minerals
Information (available at http://minerals.usgs.gov/minerals/).
The nature, type, and amount of usage in the semiconductor
industry
The availability of alternatives to the material to satisfy
the industry's functional requirements
The degree of reliance on imports of the material
The geographic concentration and location of sources of the
material
The nature of the supply chain and potential vulnerabilities
in supply
Known worldwide reserves and anticipated future supplies
Current consumption and expected future demand
Percentage of U.S. consumption of the material, and the
usage in the semiconductor industry as compared with other uses
Price and price trends
Past incidents of supply disruptions or price spikes
As we continue with this process and identify critical materials
and potential vulnerabilities in the supply of these materials, we hope
that our recommendations will be considered for inclusion in the lists
compiled by the Secretary under this bill.
III. SIA Suggestions on the Critical Minerals Policy Act
SIA offers the following suggestions for the consideration of the
Committee as you continue work on S. 1600.
1. Definition of ``critical mineral''
The bill defines a ``critical mineral'' as ``any mineral or
element'' designated as critical, with exclusions for materials that
are fuels or water. While this definition is broad, we believe that it
is important to ensure that this definition is sufficiently broad to
encompass the full range of materials that are critical to the
semiconductor industry. The semiconductor industry relies on a range of
chemicals, gases, and other materials that may fall outside the
definition of a ``mineral'' or ``element.'' For example, drawing on the
recent experience with helium, it is possible that this gas might fall
outside the definition of ``mineral.'' Alternatively, even if it was
captured by the term ``element,'' it is possible that it may be
excluded as a ``fuel,'' since it is typically co-located with natural
gas and extracted as a byproduct of the natural gas extraction process.
There may be other materials or compounds that are essential to the
semiconductor manufacturing process that might inadvertently fall
outside the definition of this term. Accordingly, we request that the
definition of ``critical mineral'' (or ``critical material") is broad
enough to capture the full range of materials that are critical to
semiconductor manufacturing and the U.S. economy as a whole.
2. Definition of ``critical mineral manufacturing''
Section 101(a)(2) defines ``critical mineral manufacturing''
specifically cites a number of important sectors of the economy,
including ``consumer electronics.'' Semiconductors play a pivotal role
in all the listed sectors, including consumer electronics. Nonetheless,
we believe that this term should be broadened to encompass the full
range of electronics that are critical to our economy, not only
consumer electronics. For example, the bill omits transportation and
information technology, two important sectors that are reliant on
innovations enabled by semiconductors. Some of these sectors may not be
consumer focused but still have semiconductors as an essential
component.
We further note that Section 101(a)(2), regarding the draft
methodology for designating critical minerals, employs the same
reference to ``consumer electronics'' regarding ``important uses'' of
these minerals. This list should also be expanded to include a broader
range of sectors that rely on semiconductors, information technology,
and electronics.
3. Criteria for Designation as ``Critical''
Section 101(a) sets forth the factors to be considered in the
methodology for designation as ``critical,'' with a focus on minerals
that may be subject to supply restrictions and are used in important
economic sectors. SIA agrees with this general approach, and suggests
that these criteria should be made more detailed to encompass a broader
range of factors that could warrant a designation as a critical
mineral. Pages 3-4 of our testimony lists a number of factors that we
believe should be considered. We also urge the Committee to take a
holistic approach to evaluating the supply chain that supplies critical
materials to the semiconductor industry and other sectors, because
vulnerabilities in the supply may occur far beyond the extraction of
the material.
4. Policy Changes to Address Critical Minerals
Section 102 enumerates certain policy changes in response to the
designation of a mineral as critical, such as changes to the National
Materials and Minerals Policy, Research and Development Act of 1980.
Similarly, Section 106 calls for a study by the National Academies of
Science to update its report on ``Hardrock Mining on Federal Lands.''
We agree that these measures may be appropriate, but the bill should
address the full range of policies that could impact critical
materials, whether or not they pertain to minerals and minerals
extraction. Once again, drawing on the helium example, we suggest that
the bill should be broad enough and flexible enough to trigger
appropriate revisions to policies relating to helium, such as the
Helium Stewardship Act.
5. Recycling, Efficiency, and Supply
Section 106 calls for the Secretary of Energy to conduct a research
and development program ``to promote the efficient production, use, and
recycling of critical minerals throughout the supply chain.'' We agree
that such a study could be beneficial to improving the efficiency in
the use of critical materials. Among other things, reforming the rules
governing the import and export of used electronics for recycling could
facilitate the recovery of valuable materials contained in these
products. We should exercise caution, however, before imposing new or
ill-advised mandates on the use, labeling, reuse, or recycling of these
materials.
6. Alternatives
Section 107 calls for the Department of Energy to conduct a study
on potential alternatives to critical minerals. We strongly support
research to evaluate alternatives to certain critical materials.
Because our industry selects materials because of their unique physical
and chemical properties, there may not be suitable alternatives in the
semiconductor industry. Nonetheless, we support additional research in
this area.
We note that the study called for in Section 107 appears to be
limited solely to critical minerals in energy technologies. This is
certainly one essential area for study, but the bill should call for an
assessment of potential alternatives in the full range of critical
mineral manufacturing.
Thank you for the opportunity to offer this testimony on behalf of
the U.S. semiconductor industry, and we look forward to working with
the Committee as it works on this important bill.
Senator Manchin. Thank you Mr. Isaacs.
STATEMENT OF GREGORY CONRAD, EXECUTIVE DIRECTOR INTERSTATE
MINING COMPACT COMMISSION, AND ON BEHALF OF ALASKA DEPARTMENT
OF NATURAL RESOURCES, ANCHORAGE, AK
Mr. Conrad. Good morning Mr. Chairman, Ranking Member
Murkowski.
My name is Gregory Conrad and I serve as executive director
of the Interstate Mining Compact Commission which is a
multiple--multi-governmental organization representing the
natural resource and environmental protection interest of our
26 member States.
I'm pinch hitting today for Robert Swenson, the Deputy
Commissioner of the Alaska Department of Natural Resources who
was supposed to appear before you but due to weather in Juneau
had several flights canceled and was unable to be here and he
sends his apologies.
On behalf of Governor Sean Parnell the State of Alaska and
the 26 member States of the IMCC we appreciate this opportunity
to testify in strong support of S. 1600. As State governments
we have a significant stake in this debate and we applaud this
bipartisan effort to revitalize the United States critical
minerals supply chain and reduce the Nation's dependence on
foreign supply. In the face of growing resource nationalism
abroad, it is crucial that the United States take steps to
account for, protect and further bolster domestic sources of
critical minerals.
Developing our Nation's mineral wealth in a manner that
maximizes access to minerals while maintaining environmental
responsibility must be a fundamental component of our efforts
to sure up national mineral resource security.
My testimony today will address why this legislation is
necessary and timely. In particular I will outline
complimentary efforts the State of Alaska is undertaking
through its strategic minerals initiative launched by Governor
Parnell in 2011.
Some of these same efforts are also being pursued in
similar ways by other IMCC member States. Recognizing the
Nation's need for domestic production of strategic and critical
minerals and the significant minerals potential in Alaska,
Governor Parnell announced a 5 part initiative to assess,
incentivize, and develop strategic minerals in Alaska.
This initiative includes undertaking a statewide assessment
of Alaska's strategic mineral potential, supporting the
development of known and highly perspective strategic mineral
occurrences through infrastructure partnerships and incentives,
improving the structure and efficiency of the permitting
process, deepening partnerships in cooperation with the Federal
Government and other stakeholders to encourage domestic
exploration, development, and processing of rare earth elements
and other strategic minerals, and attracting new investment in
markets for Alaska's abundant mineral resources.
Our hope is that this committee can use Alaska's strategic
minerals initiative as an example of successful government
investment in the mineral sector, engage the level of
investment needed to address the national effort.
Our first critical component of Alaska's strategic minerals
initiative was the State's strategic and critical minerals
assessment project compiling existing datasets was a first key
step in the process, and it allowed the State to focus limited
funds on highly perspective State lands that are open to
mineral exploration. Partnering with Federal agencies was also
an important step to ensure that geopolitical boundaries do not
hinder the geological analysis.
The State's efforts to provide publicly available high
quality and consistent digital geologic datasets will allow
policymakers and land managers to make informed decisions, spur
minerals exploration, and subsequent mine development, and
ultimately reduce the Nation's reliance on foreign supply.
Since project initiation in 2012 Alaska has spent $3.8
million on field investigations and as a result over 3.9
million acres have been assessed and more than 1.6 million
acres of high resolution air borne geophysics has been required
for a total of 5.5 million acres of mapping.
To contemplate similar programs for our nationwide effort
significantly more funding and boots on the ground will be
necessary. S. 1600 would move us in this direction in
meaningful ways but enhanced funding is a must.
Turning to another significant aspect of S. 1600 Governor
Parnell initiated a statewide permitting initiative in 2010
that called on State resource agencies to evaluate their
permitting process to make them more timely, predictable, and
efficient. Legislative support has been essential for Alaska to
make these improvements, and in Fiscal Year 2012 the Alaska
Legislature provided significant funding for the State to
create efficiencies in the permitting process.
Since 2011 Department of Natural Resources has been able to
reduce its backlog on permits and authorizations by more than
50 percent. Alaska has also worked with miners and several
State and Federal agencies to modernize Alaska's mine
permitting forms. This change has simplified the process for
miners, eliminated or simplified duplicative and confusing
technical terms, and will improve application processing by
reducing areas-errors and increasing readability. We believe
that S. 1600 would similarly provide relief in this manner.
As domestic needs and supply constraints evolve it is
imperative the government is ready with the data and regulatory
environment necessary to address the unique challenges and meet
the Nations need for domestic resources. S. 1600 is a much
needed bipartisan effort to address this and is an example
through Alaska's efforts on how this effort might work on a
national scale.
In closing I would like to submit a statement for the
record reflecting the position of IMCC on this important
legislation.
Thank you for the opportunity to testify today.
[The prepared statement of Mr. Swenson follows:]
Prepared Statement of Robert Swenson, Deputy Commissioner, Alaska
Department of Natural Resources, Anchorage, AK
I. Introduction
Chairman Wyden, Ranking Member Murkowski, and honorable members of
the Senate Committee on Energy and Mineral Resources--My name is Robert
Swenson and I am Deputy Commissioner of the Alaska Department of
Natural Resources (AK DNR). On behalf of Governor Sean Parnell, thank
you for this opportunity to testify in strong support of the Critical
Minerals Policy Act of 2013. We applaud this bipartisan effort to
revitalize the United States' critical minerals supply chain and reduce
the nation's dependence on foreign supply.
I have also been entrusted by the 26 member and associate-member
states of the Interstate Mining Compact Commission (IMCC) to convey
their views to the Subcommittee today, and to express their gratitude
for your leadership in this area, as well as their strong support for
S. 1600.
Strategic and critical minerals (SCM) are those minerals determined
to be essential for use in the United States but subject to potential
supply disruptions. The U.S. Geological Survey (USGS) maintains a list
of critical minerals that is updated on the basis of supply risk and
changing technologies. The list includes rare-earth elements, the
platinum-group metals, graphite, and 13 other elements or element
groups. It is worth noting that these are just a subset of the 36
elements identified by the USGS for which the United States imports
more than 70 percent of its supply, and that this list will change over
time based on supply and the evolution of demand.
II. Overview of Today's Testimony
My testimony today will address why this legislation is necessary
and timely. I will also outline very similar and complementary efforts
the State of Alaska is undertaking through its strategic minerals
initiative launched by Governor Parnell in 2011. My primary objective
is to share specific examples of how government investment can
significantly improve our understanding of resource potential, ensure
protection of the environment, and encourage private sector investment
to help meet our mineral commodity needs.
Before getting into substantive matters, I would like to briefly
mention my professional background as it pertains to this testimony and
provide some information about the IMCC.
As the State Geologist and now Deputy Commissioner of AK DNR, a
state agency employing more than 1,100 resource professionals, I have
been in charge of designing and implementing the State of Alaska's
strategic and critical mineral effort. The AK DNR workforce includes
scientists with expertise in conducting geological mapping and airborne
geophysical studies as well as experts in permitting who work to ensure
that exploration and development is conducted in a manner that is
compatible with Alaska's unique environment and stringent regulatory
standards.
The IMCC, of which the State of Alaska became a full member last
year, is a multi-state organization that represents the natural
resource and related environmental protection interests of its member
states. Twenty-one states have ratified their membership in the IMCC
through acts of their respective state legislatures, and five others
participate as associate members while they pursue enactment of state
legislation ratifying their membership. A primary focus of the IMCC is
liaising with Congress and the federal government to promote a
cooperative effort between state and federal agencies in advancing
responsible mining development and environmental protection.
As the primary regulators of mineral production activity within
their borders, the IMCC member states have a vital interest in the
development of all minerals, particularly those of strategic and
critical importance to the United States. Even where minerals are
produced on federal lands, states often work in concert with our
various federal agency partners to ensure that these minerals are mined
in an efficient and effective manner, while also protecting the
environment and balancing impacts on other resources such as the land,
water and air.
III. Significance of S. 1600
In its findings, S. 1600 declares that ``the United States lacks a
coherent national policy to assure the availability of minerals
essential to manufacturing, national economic well-being and security,
agricultural production, and global economic competitiveness. We
strongly agree with this finding. The bill seeks to establish a new
critical minerals policy that:
Facilitates domestic production;
Promotes investment-quality, environmentally-sound domestic
mining, processing and minerals recycling;
Establishes a national assessment for mineral demand, supply
and needs; and
Addresses permitting inefficiencies that impact the minerals
sector
Our Nation's federal agencies (e.g., the USGS, the U.S. Bureau of
Land Management (BLM), and the U.S. Forest Service (USFS) ), will take
a lead role in implementing this new policy and, to be successful, they
will need to establish strong partnerships with the states that have
the resource base to support a strategic minerals sector and the
regulatory systems and expertise to develop those resources.
As shown in Figure 1* in the appendix to this testimony, as of
2012, the United States relied on imports for most of its strategic and
critical minerals. Figure 1 is a graph from the U.S. Geological
Survey's 2013 mineral commodity summary of 63 mineral commodities
important to the United States. The figure shows that our nation relies
on imports for 100 percent of 17 of the 63 minerals and relies on
imports for more than 50 percent of 25 additional minerals. Our
reliance on imported minerals, however, is not due to an absence of
resource potential.
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* All figures have been retained in committee files.
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In fact, while much additional work and investment is needed to
develop domestic supplies, many U.S. regions contain significant
potential for strategic and critical minerals. To help understand
Alaska's potential, we have modified Figure 1 to include current, past,
and potential production, and highlight the commodities that are
currently on the USGS list of SCMs.
IV. Alaska's Strategic and Critical Minerals Initiative
The State of Alaska is blessed with vast mineral potential on its
lands. Based on USGS estimates, if Alaska was a country, it would be in
the top 10 for:
Coal (17 percent of the world's coal; 2nd most in the world)
Copper (6 percent of the world's copper; 3rd most in the
world)
Lead (2 percent of the world's lead; 6th most in the world)
Gold: (3 percent of the world's gold; 7th most in the world)
Zinc: (3 percent of the world's zinc; 8th most in the world)
Silver (2 percent of the world's silver; 8th most in the
world)
In addition, Alaska has more than 70 known occurrences of rare
earth elements (REEs) and multiple occurrences of SCM s, as noted on
Figure 2. We expect that continued exploration will lead to additional
discoveries.
Recognizing the nation's need for domestic production of SCMs and
the significant minerals potential in Alaska, Governor Parnell directed
the Department of Natural Resources to hold an inaugural Alaska
Strategic and Critical Minerals Summit on September 30, 2011. During
the summit, the governor announced Secure Alaska's Future: Strategic
Minerals, a five-part initiative to assess, incentivize and develop
strategic minerals in Alaska. This initiative includes:
Undertaking a statewide assessment of Alaska's strategic
mineral potential;
Supporting the development of known and highly-prospective
strategic mineral occurrences through infrastructure
partnerships and incentives;
Improving the structure and efficiency of the permitting
process
Deepening partnership and cooperation with the federal
government and other stakeholders to encourage domestic
exploration, development, and processing of REEs and other
strategic minerals.
Attracting new investment and markets for Alaska's abundant
mineral resources
I will now give you a brief summary of these efforts as an example
of what can be done with proper leadership, cooperation, and funding.
My hope is that this Committee can use Alaska's Strategic Minerals
Initiative as an example of successful government investment in the
minerals sector and gauge the level of investment needed to address a
national effort.
Statewide Assessment
Following Governor Parnell's 2011 directive, and with funding
approved by the Alaska Legislature, the Alaska Division of Geological &
Geophysical Surveys (DGGS) embarked on a program to better characterize
Alaska's SCM endowment. The schedule and timetable for completion of
the division's Strategic and Critical Minerals Assessment project is
shown in Table 1**, and Exhibit A of the appendix provides a list of
products that will be made available through this project.
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** All tables and exhibits have been retained in committee files.
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Compiling existing data sets was a key first step in the process
and it allowed the state to focus limited funds on highly-prospective
state lands that are open to mineral exploration. Partnering with
federal agencies was an important step to ensure that geopolitical
boundaries do not hinder the geological analysis.
High-quality, district-scale geological data is lacking for most
areas of Alaska with known SCM occurrences. The most basic and useful
data--geologic maps--are generally not available at a scale useful for
mineral exploration (1:63,360 or 1'' = 1 mile). Much of the other
available public data occurs in a patchwork of coverage of varying
quality, vintage, and scale. The state's efforts to provide publicly
available, high quality and consistent digital geologic datasets will
allow policy makers and land managers to make informed decisions; spur
mineral exploration and subsequent mine development; and ultimately
reduce the nation's reliance on foreign supply. S. 1600 would greatly
enhance and support these types of efforts and initiatives on both
state and federal lands.
The Strategic and Critical Minerals Project proposal calls for
spending $2.73 million a year for five years (subject to the
availability of funding). Since project initiation in 2012, DGGS has
spent $3.8 million on field investigations.
Results of the Assessment Program
The Strategic and Critical Minerals Project has produced a
significant amount of data since its initiation in 2011. In geologic
mapping at both reconnaissance and detailed scales, over 3.9 million
acres have been assessed, and more than 1.6 million acres of high
resolution airborne geophysics has been acquired, for a total of 5.5
million acres of mapping. To put this into context, the Commonwealth of
Virginia contains approximately 27.4 million acres within its
boundaries. With the available funding over a 3 year period we have
been able to cover about 20 percent of the area of Virginia. In
addition to the mapping effort, the state has performed modern
geochemical analysis (focused on the full suite of elements) of nearly
10,000 archived and new samples collected during the mapping effort.
Much of this geochemical work has been in cooperation with the USGS,
which has significantly broadened the aerial coverage and distribution
of the information, as shown in Figure 3.
To contemplate similar programs for a nationwide effort,
significantly more funding and `boots on the ground' would be
necessary. Certainly, there is a tremendous variability in the level of
data coverage and data quality across the nation, and, as a result,
performing comprehensive resource assessments will require a
coordinated effort and the creation of a robust funding mechanism
between states and federal agencies. S. 1600 would move us in this
direction in meaningful ways.
Federal funding through Statemap and data preservation
An excellent example of cooperative funding and leveraging of state
and federal dollars to acquire geologic information is the National
Geologic Cooperative Mapping Program. This national program has been a
cornerstone of cooperation between State Geologic Surveys and the USGS
and has been supported by Alaska and IMCC over the years. Another key
federal program that helps to archive samples and other forms of legacy
geologic and geophysical data is the National Geological & Geophysical
Data Preservation Program. A tremendous amount of valuable information
was acquired at a very low cost in Alaska by sampling archived
materials from both the State and USGS collections. It is imperative
that these cost-effective programs are maintained and sufficiently
funded to address the evolving geologic needs of the nation, including
the strategic minerals assessment program. Again, the provision in S.
1600 will facilitate this type of work greatly.
V. Alaska's Efforts to Improve Permitting
Statewide Permitting Reform
Governor Parnell initiated a statewide permitting initiative in
2010 that called on state resource agencies to evaluate their
permitting processes to make them more timely, predictable and
efficient. This effort began in earnest in 2011.
The Department of Natural Resources has pursued permitting reform
in several ways: investing in our staff, modernizing our technology,
and working with the Alaska Legislature to enact statutory changes.
Through our work on this over-arching permitting initiative, we are
also addressing the governor's Strategic Minerals initiative, which
also called on state officials to make the permitting process more
structured and efficient.
Legislative support has been essential for us to make these
improvements. In FY12, the Alaska Legislature provided approximately
$2.7 million in operating funds and $2.5 million in capital funding for
our Division of Mining, Land & Water to create efficiencies in its
permitting process. In FY12 and 13, the Legislature approved funding to
fill vacant positions focused on permitting.
What progress have we made? Since 2011, the Department of Natural
Resources has been able to reduce its backlog of permits and
authorizations by more than 50 percent. Furthermore, the Alaska
Legislature has approved several bills introduced by Governor Parnell
to modernize our statutes. One of those bills, enacted in 2013,
authorizes state agencies to evaluate the possibility of administering
the federal program for permitting dredge and fill projects in surface
waters and wetlands. Under this program, the state, rather than the
U.S. Army Corps of Engineers, would administer many Clean Water Act
Section 404 permitting responsibilities in cooperation with the U.S.
Environmental Protection Agency. While this would be a major
undertaking and significant new expense for the state, assuming primacy
for this federal program may make permitting projects, including mining
projects, in Alaska more efficient, timely, and certain.
Specifically related to mining, our Department has worked with
miners and several state and federal agencies to modernize Alaska's
mining permit application forms. Three previous versions of application
packets used for hardrock exploration, mechanical placer mining, and
suction dredge operations were consolidated into one uniform
application packet in an updateable Adobe format. These new application
packets are now available online for use during the 2014 mining season.
This change has simplified the process for miners, eliminated or
simplified duplicative and confusing technical terms, and will improve
application processing by reducing errors and increasing readability.
We believe that S. 1600 would similarly provide relief in this same
manner.
Large Project Coordination
Alaska employs an interagency Large Mine Permitting Team (LMPT)
approach to the review of permits and authorizations for mining
projects. This team-based approach, to our knowledge, is unique in the
nation. It is a voluntary process, at the applicant's expense, whereby
the applicant enters into an agreement with DNR's Office of Project
Management and Permitting (OPMP) to provide a Large Project Coordinator
(LPC), who acts as the State's primary point on contact for the
project. The LPC coordinates the participation of the technical LMPT
members from the different state regulatory agencies, who are also
funded by the applicant via the funding agreement with OPMP. When a
federal Environmental Impact Statement (EIS) is required under the
National Environmental Policy Act (NEPA), OPMP typically signs on as a
Cooperating Agency on behalf of all of the state agencies and
coordinates their participation in the NEPA environmental review. The
LPC works to minimize duplication of effort by the agency
representatives and to coordinate, to the degree possible, the
permitting requirements and timelines of the different state and
federal agencies. The State of Alaska has long felt that a federal
coordinator similar to the State's LPC could help to coordinate federal
permitting.
Alaska's coordinated team approach helps to increase permitting
efficiencies and to ensure that permitting requirements are not
overlooked. The funding agreement with OPMP also provides a means for
hiring 3rd party contractors, if the state agencies lack the in-house
technical expertise for reviewing and evaluating project proposals and
supporting documents. A recent addition to Alaska's approach to mine
permitting has been the requirement for Health Impact Assessments (HIA)
which objectively evaluate the potential impacts to human health, both
negative and positive, from mine development. The HIA program is housed
in the Alaska Department of Health and Social Services and is staffed
by public health professionals.
Because resource development projects and environmental protection
are equally important to Alaska, we have invested a lot of attention to
our permitting processes and feel we have a system that is thorough,
balanced and efficient. In recent years, the LMPT has participated in
the EIS for the Greens Creek Tailings Expansion, the re-issuance of
authorizations and financial assurances for the Kensington Gold Mine,
and modifications to the Fort Knox Gold Mine's Plan of Operations and
Waste Management Permit. S. 1600 seems to embrace this same type of
approach for federal projects and should also facilitate the permitting
of projects on federal lands.
VI. Working with Federal Agencies and Industry
One of the most cost-effective ways to gather new data in remote
areas with high costs of data acquisition is through partnerships and
grant programs that leverage the limited funding of all interested
parties. Methods for leveraging can include data sharing, direct
contribution to expand programs, cost sharing through competitive grant
programs, and the cooperative use of archived samples and data sets
where results are shared by all parties.
In Fall 2013, DGGS leveraged its Wrangellia airborne survey by
coordinating with a mineral exploration company, allowing the company
to fly an airborne survey that overlapped a portion of the survey area.
DGGS has obtained the results from the company's survey, at no cost,
and will incorporate it in our analyses and make it available to the
public. DGGS made a similar arrangement with CIRI, an Alaska Native
regional corporation, for a 100-square-mile area adjacent to the
state's Farewell survey area. DGGS will remain flexible and work
cooperatively with other private, industry and government partners to
leverage limited funding. This is an example of the multi-stakeholder
approach that S. 1600 means to utilize.
DGGS maintains close working relationships with the USGS and the
U.S. Bureau of Land Management (BLM) as part of the state's SCM
project. Specifically, DGGS and the USGS signed two memoranda of
understanding (MOU). The first is a cooperative agreement to evaluate
Alaska's Strategic & Critical Minerals potential. Work includes: 1)
statistically identifying SCM-related elements with high values in
statewide geochemical data in order to identify areas with high SCM
potential; 2) identifying areas in Alaska with geology favorable for
finding SCM-related mineral deposits, and; 3) re-analyzing historic
USGS samples and obtaining modern geochemical analyses to facilitate
mineral exploration for SCM.
The second MOU with the USGS is a cooperative agreement to enhance
DGGS geophysical surveys. The agreement formalizes a cooperative
program for the USGS and DGGS to 1) collaborate on new processing of
existing and any future DGGS airborne geophysical survey data, 2)
collaborate on development of new interpretative products (appropriate
to both agencies), and 3) provide for the ability to share appropriate
confidential geophysical data and information between the geophysical
personnel of both agencies.
DGGS also has an informal cooperative agreement with the BLM to
document, archive, and make publically available (on DGGS's web site)
all of the historic US Bureau of Mines Strategic & Critical Minerals
data and publications in Alaska.
S. 1600 appears to encourage this same type of cooperation among
state and federal agencies to stimulate mineral production on both
state and federal lands. We are particularly supportive of those
provisions in S. 1600 that would require enhanced coordination between
federal government agencies such as BLM and USFS and state government
agencies that have similar responsibilities for the development of
mineral resources. We believe that renewed and revitalized efforts in
this regard would avoid duplicative reviews, minimize paperwork and
result in timelier processing of permit applications. The bill also
recognizes and gives credence to the critical role played by the states
with jurisdiction over mining projects.
VII. Summary
As domestic needs and supply constraints evolve, it is imperative
that government is ready with the data and regulatory environment
necessary to address the unique challenges and meet the nation's needs
for domestic resources. For its part, the State of Alaska has invested
in the assessment of its resources for many years. Historically, the
federal government has made significant investments in these critical
activities as well. However, to the recent failure to prioritize the
USGS minerals program have created a situation where these assessments
are difficult or nearly impossible to implement at a national scale.
The Critical Minerals Policy Act of 2013 is a much needed
bipartisan effort to address this situation. The bill before you speaks
to unique risks concerning the supply chain of critical and strategic
minerals that are important for national security, protection of the
environment, and economic well-being of the nation. By addressing the
data requirements for resource assessments and examining the permitting
process for inefficiencies that may unnecessarily hinder responsible
development, this legislation will help remove some of the barriers to
environmentally sound domestic production, and provide the raw
materials for new technologies that will provide a host of benefits to
the nation.
As stated in the bill, the federal government cannot accomplish
these tasks alone. It is critical that state and federal agencies work
in close cooperation, leveraging their expertise and funding to
maximize efficiency. Providing sufficient federal funding and matching
grant opportunities would be a crucial part of the legislation and
should be contemplated for all sections of the bill, including Section
103; Resource Assessment.
Alaska's strategic minerals initiative is a good example of how
this effort might work on a national scale. While Alaska's work isn't
finished yet, it has: gathered the data needed to assess the mineral
potential of more than 5 million acres of highly-prospective State
land; addressed inefficiencies in the regulatory framework; coordinated
permitting; and increased the domestic exploration and production of a
host of mineral commodities, including strategic and critical minerals.
The investment history depicted in Figure 4 shows that these efforts
have been successful. In Alaska, exploration expenditures--the front-
end risk money that leads to the next discovery and potential
development--have exceeded $100 million dollars for each of the last
eight consecutive years, and exceeded $300 million per year for three
of those years.
The experience in many of the IMCC member states, particularly in
the West, has been similar and highlights the importance of a
coordinated approach for mineral development and related environmental
protection. The efforts and investment contemplated by the Critical
Minerals Policy Act of 2013 will help the Nation achieve similar
results.
Thank you again for the opportunity to testify before this
committee.
Senator Manchin. Thank you sir.
Ms. Thomas.
STATEMENT OF JENNIFER THOMAS, DIRECTOR, FEDERAL GOVERNMENT
AFFAIRS, THE ALLIANCE OF AUTOMOBILE MANUFACTURERS
Ms. Thomas. Thank you Chairman Manchin and Ranking Member
Murkowski.
My name is Jennifer Thomas and I am director of Federal
Government Affairs to the Alliance of Automobile manufacturers,
which is the trade association that represents 12 auto makers
that make roughly 3 out of every 4 new vehicles sold in the
U.S. every year.
On behalf of the alliance I appreciate the opportunity to
offer our views on S. 1600, the Critical Minerals Policy Act of
2013 and the need for reliable and affordable access to the
minerals that are vital to automobile production.
To meet the aggressive 54.5 miles per gallon fuel economy
standards by model year 2025 auto makers are fully engaged in
developing more advanced technology vehicles, more efficient
power trains and lighter vehicle bodies. This new generation of
sophisticated and fuel efficient vehicles will be increasingly
reliant on a variety of commodities, many of which appear to
meet the bills definition of a critical mineral.
For example various lighter weight high strength steel
alloys contain a variety of minerals including chromium,
nickel, and manganese, and are utilized to reduce the vehicle's
weight while maintaining the integrity of a vehicle. Platinum
group metals are essential components of a vehicles catalytic
converter, significant reducing carbon monoxide, hydrocarbon,
and nitrogen oxide emissions.
Small quantities of rare earth elements have been used in
conventional vehicles for many years, but hybrids, plug-
institutions, and EV's use larger quantities of rare earth
elements in their electric motors and their more complicated
hybrid battery systems.
Simply put minerals are the building blocks of richly every
automobile on the road today. Ensuring affordable and reliable
access to them is key to the continued success of the
automotive sector.
We commend Senators Murkowski, Wyden, and Udall for
crafting comprehensive and bipartisan legislation that will
help create a more secure and domestic supply chain for
critical minerals.
According to the U.S. Geological Survey, U.S. manufacturers
and diverse industries are more than 50 percent reliant on
imports for than 3 dozen minerals commodities. This dependency
leaves the U.S. industries susceptible to potential supply
disruption in producing countries, as a result of political
instabilities or a significant growth in internal demand.
The Critical Minerals Policy Act promotes policies to help
ensure robust and secure supply chain of domestically produced
critical minerals. The Alliance supports the requirements
outlined in Title 1 to establish a list of minerals critical to
the U.S. economy and create analytical and forecasting
capabilities to provide accurate and timely mineral information
to avoid supply shortages, mitigate price volatility, and
prepare for increased demand.
Every auto maker maintains a process to manage risks
throughout its vast global supplier network and the existence
of impartial analysis and forecasting for critical minerals
similar to what EIA produces for a variety of energy sources
will help industry identify risks early and ultimately manage
them.
Automakers also support the DOE research programs
established in Sections 106 and 107 that would facilitate the
efficient production, reuse, and recycling of critical minerals
as well as programs that would identify and develop suitable
alternatives and thereby reducing the demand of--for critical
minerals. Given the diversity of sources impacted by the
availability of minerals, DOE is the right agency to coordinate
with stakeholders in developing best practices and innovative
approaches for using existing minerals efficiently and for
introducing viable and affordable alternatives when necessary.
We greatly appreciate the opportunity to offer our views on
the Critical Minerals Policy Act and the need for a robust and
stable critical minerals market. Whether it's the aluminum in
automotive frames, the platinum in catalytic converters, or the
lithium in electric vehicle batteries minerals are essential
components in every vehicle on the road today.
This sensible bipartisan legislation will help ensure
reliable, affordable domestic access to critical minerals,
while promoting recycling, reuse and the development of viable
alternatives to help reduce their demand.
Thank you again and I'll be happy to answer any of your
questions.
[The prepared statement of Ms. Thomas follows:]
Prepared Statement of Jennifer Thomas, Director, Federal Government
Affairs, The Alliance of Automobile Manufactures
Thank you, Chairman Wyden, Ranking Member Murkowski and members of
the Committee. The Alliance of Automobile Manufacturers (Alliance) is a
trade association of twelve car and light truck manufacturers comprised
of BMW Group, Chrysler Group LLC, Ford Motor Company, General Motors
Company, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi
Motors, Porsche Cars, Toyota, Volkswagen Group and Volvo Cars.
Together, Alliance members account for roughly three out of every four
new vehicles sold in the U.S. each year. Auto manufacturing is a
cornerstone of the U.S. economy, supporting eight million private-
sector jobs, $500 billion in annual compensation, and $70 billion in
personal income-tax revenues. On behalf of the Alliance, I appreciate
the opportunity to offer our views on S. 1600, the Critical Minerals
Policy Act of 2013, and the need for reliable and affordable access to
the minerals that are vital to automobile production. We applaud the
Committee for the thoughtful and bipartisan approach it has taken to
address this important policy issue.
Today's automobile is among the most sophisticated technology owned
by consumers. Not only is it advanced from electronics, computer and
connectivity standpoints, but it must also be durable and reliable. An
automobile must function consistently and well in the harshest climate
conditions from freezing cold to desert heat, running on the roughest
roads from urban potholes to unpaved country and off-road conditions,
performing at highway speeds and in congested city streets for as much
as a 150,000-mile lifetime, all while meeting thousands of regulatory
requirements. Virtually every aspect of the modern automobile is now
high-tech, uses advanced materials and is developed through cutting-
edge processes. To keep pace with ever-growing consumer demands for
sophisticated new technologies, Booz & Co. found auto industry R&D
spending climbed from $7.4 billion to $102 billion in 2013. By
comparison, the entire global aerospace and defense industry spent
roughly $25.5 billion in the same year.\1\
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\1\ Jaruzelski, B., Loehr, J., and Holman, R. The Global Innovation
1000: Navigating the Digital Future. Booz & Co. Issue 73. Winter 2013.
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To meet the aggressive 54.5 miles per gallon (mpg) fleet fuel
economy standards by model year (MY) 2025, automakers are fully engaged
in further refining the production of vehicles and the implementation
of advanced technologies--developing more hybrids, plug-in hybrids,
battery electrics, fuel cell vehicles, more efficient power trains, and
lighter vehicle bodies. This new generation of sophisticated, high-tech
and fuel-efficient vehicles will be increasingly reliant on a variety
of commodities, many of which appear to meet the bill's definition of a
critical mineral. For example, various lighter-weight, high-strength
steel alloys contain a variety of minerals, including molybdenum,
chromium, nickel, and manganese, and are utilized to reduce vehicle
weight while still maintaining the integrity of a vehicle. Platinum
group metals (PGMs) are essential components of a vehicle's catalytic
converter, significantly reducing carbon monoxide (CO), hydrocarbon
(HC), and nitrogen oxide (NOX) emissions. Finally, rare
earth magnets are used in the electric motors found in most hybrid and
electric vehicles and in the nickel metal hydride batteries utilized in
current generation hybrid electric vehicles. Some current and many
future hybrid and electric vehicles are expected to utilize lithium ion
batteries and while they do not contain rare earth elements (REEs),
lithium ion batteries do contain minerals such as cobalt and manganese,
in addition to lithium. Simply put, minerals are the building blocks of
virtually every automobile on the road today. Ensuring affordable and
reliable access to them is key to the continued success of the
automotive sector.
Automobile manufacturing is among the most capital-intensive
industries. Automakers and suppliers must make substantial investments
at the front end on research, design, development, testing and
certification before a vehicle enters production. New technologies
carry significantly higher costs, at least initially, as they are
developed and refined for use on the various types of vehicles needed
by American consumers. Additionally, production cycles in the auto
industry are five years or longer and not all vehicles are reengineered
at the same time. This need for longer lead times requires increased
transparency and certainty throughout the global supply chain. Any
unexpected disruptions have the potential to result in significant
economic harm.
We commend Senators Wyden and Murkowski for crafting comprehensive
legislation that will help create a more secure domestic supply chain
for critical minerals. According to the U.S. Geological Survey, U.S.
manufacturers and others are more than 50 percent reliant on imports
for more than three-dozen mineral commodities, including REEs,
titanium, and cobalt. This dependency leaves U.S. industries
susceptible to potential supply disruptions in producing countries as a
result of natural disasters, political instability or market
manipulation. The Critical Minerals Policy Act promotes policies to
help ensure a robust and stable supply chain of domestically produced
critical minerals and, thus, provides industries reliable and
affordable access to critical minerals.
The Alliance supports the requirements outlined in Title I of the
Critical Minerals Policy Act to establish a list of minerals critical
to the U.S. economy. Following this designation, the legislation calls
for an analytical and forecasting capability to be established to
identify critical mineral supply and demand to ensure ``informed
actions be taken to avoid supply shortages, mitigate price volatility,
and prepare for demand growth and other market shifts.'' Every
automaker maintains a process to manage risk throughout its vast global
supplier network. The existence of impartial analysis and forecasting
for critical minerals, similar to what the U.S. Energy Information
Administration (EIA) produces for various energy sources, will help
industry identify risks early and ultimately manage them.
Mineral-dependent industries must manage and mitigate risks of
shortages or price spikes through a variety of means, including
diversifying suppliers to the maximum extent possible, using minerals
efficiently throughout the production process and establishing
aggressive recycling programs to recapture supplies when vehicles are
taken off the road. Automakers support the Department of Energy (DOE)
R&D programs established in Sections 106 and 107 of Title I that would
facilitate the efficient production, use, and recycling of critical
minerals and identify and develop alternative materials that can be
used to reduce the demand for critical minerals. Given the diversity of
sectors potentially impacted by the availability of certain minerals,
DOE is the right agency to coordinate with stakeholders in developing
best practices and innovative approaches for using existing critical
minerals efficiently and for introducing viable and affordable
alternatives when necessary.
We appreciate the opportunity to offer our views on the Critical
Minerals Policy Act and the need for a robust and stable critical
minerals market. Whether it's the aluminum in automotive frames, the
platinum in catalytic converters, or the lithium and nickel in electric
vehicle batteries, minerals are vital components in every automobile on
the road today. This sensible, bipartisan legislation will help to
ensure reliable and affordable domestic access to critical minerals,
promote recycling, and identify and develop viable alternatives to
reduce the demand for critical minerals. The Alliance stands ready to
work with the Committee on this important energy and natural resources
policy. Thank you again and I will be happy to answer any of your
questions.
Senator Manchin. Thank you.
STATEMENT OF RODERICK G. EGGERT, PROFESSOR OF ECONOMICS AND
BUSINESS, COLORADO SCHOOL OF MINES, AND DEPUTY DIRECTOR,
CRITICAL MATERIALS INSTITUTE, AN ENERGY INNOVATION HUB OF THE
DEPARTMENT OF ENERGY
Mr. Eggert. Thank you Ms.--thank you Mr. Chairman and
Ranking Member Murkowski.
My name is Rod Eggert I'm a professor of Economics and
Business at Colorado School of Mines. I also am deputy director
of the Critical Materials Institute, the DOE Energy Innovation
Hub that Mr. Danielson discussed in Panel 1. I also chair the
National Research Council Committee that prepared the 2008
study, ``Minerals, Critical Minerals and the U.S. Economy''.
Let me begin with my summary thoughts and then provide an
explanation, my summary thoughts. S. 1600 aligns well with the
recommendations of the 2008 National Research Council Study on
critical materials. Also the recommendations on the 2011 expert
review panel report on energy critical elements prepared by a
panel of the American Physical Society and the Materials
Research Society.
S. 1600 also aligns well with my previous testimony and
published statements on policy in this area. Especially
noteworthy I think are its wholistic and comprehensive nature
and its focus on the entire supply chain.
Now for my explanation, as an economist I believe in the
power and effectiveness of markets and so my inclination is to
favor market solutions rather than government interventions.
But markets are not panaceas, governments have the
responsibility to facilitate market activities, especially in
situations when markets are not or do not work well.
In the case of critical minerals and materials there are 4
areas in which I think government activities can play an
important even essential role: first in the area of
international trade, policy and government activities should
promote undistorted trade when trade distortions distort
markets. This is an important issue in a number of mineral
markets, but as I realize this is outside the scope or the
purview of this committee's activities, I won't say anything
further on this issue.
Second, policy and government activities should strive for
more efficient processes for the regulatory review of potential
new mineral development activities. Foreign sources are not
necessarily more risky than domestic sources but when they are,
domestic sources of mineral resources can help offset risky
foreign sources. Sections 104 & 105 of the proposed legislation
would be an important step in this regard.
Third, policies and government activities are essential in
facilitating collection and dissemination in analysis of
information. There's a long tradition of government providing
basic information on which sound private and public decisions
are made and Sections 101, 103, and 108 address information and
analysis.
Fourth and finally policy and government activities should
facilitate research and education. Research and education are
traditional public goods, that is investments that the private
sector acting alone is likely to undersupply because the
benefits of these investments are diffuse, difficult to
capture, often easy to copy, risky, and far in the future. Over
the longer term R&D is perhaps the key to eliminating the
supply risks associated with critical minerals and materials.
Sections 106 and 107 would help focus R&D attention on a
critical minerals and materials. Section 109 would help
reinvigorate--Section 109 which focuses on education and work
force would help reinvent--reinvigorate our intellectual on
academic infrastructure in mineral resources and materials
which has to some degree withered in the recent past.
So overall and to repeat my evaluation I support S. 1600,
it aligns well with a number of recent expert review studies on
this issue as well as my own previous published statements on
critical minerals and materials.
Thank you for the opportunity to testify today, I'd be
happy to answer any questions.
[The prepared statement of Mr. Eggert follows:]
Prepared Statement of Roderick G. Eggert, Professor of Economics and
Business, Colorado School of Mines, and Deputy Director, Critical
Materials Institute, An Energy Innovation Hub of the Department of
Energy
Good morning, Mr. Chairman, members of the Committee, ladies and
gentlemen. My name is Rod Eggert. I am a professor of economics and
business at Colorado School of Mines, as well as deputy director of the
Critical Materials Institute, an energy innovation hub of the U.S.
Department of Energy. My area of expertise is the economics of mineral
resources. In addition to my current activities related to critical
minerals and materials, several years ago I participated in two review
panels relevant for today's hearing. I chaired the committee of the
U.S. National Research Council that prepared the 2008 report Minerals,
Critical Minerals, and the U.S. Economy. I served as a member of the
committee of the American Physical Society and the Materials Research
Society that prepared the 2011 report Energy Critical Elements:
Securing Materials for Emerging Technologies. I also testified
previously on critical minerals and materials before a Subcommittee of
this Committee (2010), a House Committee (2011), and a committee of the
European Parliament (2011).
I organize my remarks into three sections. First, I describe the
context for current concerns about critical minerals. Second, I present
my views on appropriate roles for government in light of these
concerns, which reflect my previous testimony and published papers.
Third, I comment on S. 1600 itself.
Context
Mineral-based materials and products are becoming increasingly
complex. Early cell phones in the 1980s consisted of materials that
used approximately 30 elements from the periodic table; today's smart
phones contain 60-70 mineral-derived elements. General Electric uses
more than 70 of the first 83 elements of the periodic table in its
products or processes used to make these products. In contrast, as
recently as three decades ago, a typical household owned products
containing perhaps only 30 or so of these elements.
New technologies and engineered materials create the potential for
rapid increases in demand for some elements used previously and even
now in small quantities. The most prominent-although by no means only-
examples are neodymium and dysprosium in permanent magnets for
electronics and high-efficiency motors; europium, terbium and yttrium
in advanced lighting systems; lithium in batteries; and gallium,
indium, and tellurium in thin-film photovoltaic materials.
These technological developments raise two concerns. The first is
that supply will not keep up with demand growth due to the time lags
involved in bringing new production capacity online or more
fundamentally the basic geologic scarcity of certain elements. The
second concern is that supply is insecure or risky because of fragile
supply chains. The causes of fragility are several and vary from case
to case: industry concentration; reliance on imports from politically
risky countries, some of which impose export restrictions on primary
raw materials; and reliance on by-product production. In both cases,
mineral availability-or more precisely, unavailability-is a potential
constraint on the development and deployment of emerging and important
technologies, especially in the energy, electronics, transportation and
defense sectors.
Roles for Government\1\
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\1\ See Eggert (2010) and Eggert (2011), as well as two expert-
panel reports in which I participated (APS/MRS 2011, NRC 2008). My
testimony today overlaps considerably with views I expressed in
previous testimony before (a) the Subcommittee on Energy, Committee on
Energy and Natural Resources, September 30, 2010, (b) the Committee on
Industry, Research, and Energy of the European Parliament, January 26,
2011, and (c) the Subcommittee on Energy and Mineral Resources,
Committee on Natural Resources, U.S. House of Representatives, May 24,
2011.
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As an economist, I believe in the power and effectiveness of
markets. Markets provide strong incentives for private investments that
re-invigorate supply and reduce supply risks. Markets encourage users
of critical materials to obtain ``insurance": for example, in the short
term, users can maintain stockpiles, diversify sources of supply,
develop jointsharing arrangements with other users, or develop tighter
relations with producers. Over the longer term, users can undertake
research and development to develop alternative materials that use less
of, or no, elements subject to significant supply risks. Scarcity and
supply risk encourage investments in mineral exploration and mine
development (potentially funded by users seeking secure supplies),
improved manufacturing efficiency, and recycling of manufacturing
wastes and end-of-life products.
But markets are not panaceas. Government plays essential roles in
facilitating market activities. For mineral resources, government can
play four important roles that facilitate well-functioning markets and
help ensure reliability of material supplies in the short term and
availability of mineral resources in the long term:
1. Encourage undistorted international trade.--The
governments of raw-materialimporting nations should fight
policies of exporting countries that restrict rawmaterial
exports to the detriment of users of these materials. The U.S.,
European, and Japanese filings with the World Trade
Organization against China and its restrictions on rare-earth,
molybdenum, and tungsten exports are examples.
2. Improve regulatory-approval processes for domestic
resource development.--Foreign sources of supply are not
necessarily more risky than domestic sources. But when foreign
sources are risky, domestic production can help offset the
risks associated with unreliable foreign supplies. Developing a
new mine in the United States appropriately requires an
approval process that allows for public participation and
consideration of the potential environmental and social effects
of proposed mining. This process is costly and time consuming--
arguably excessively so, not just for mines but for
developments in all sectors of the economy. I do not suggest
that mines receive preferential treatment, rather that
attention be focused on developing better ways to assess and
make decisions about the various commercial, environmental, and
social considerations of project development.
3. Facilitate provision of information and analysis.--I
support enhancing the types of data and information the federal
government collects, disseminates and analyzes. Sound decision-
making requires good information. Government plays an important
role in ensuring that sufficient information exists. The
Department of Commerce and Department of Labor collect and
publish information on the state of the national economy that
informs public and private decision making, as does the Energy
Information Administration in the realm of energy. With respect
to mineral resources and material supply chains, I recommend
(a) enhanced focus on those parts of the mineral and material
life cycle that are under-represented at present including
reserves and subeconomic resources, by-product and co-product
primary production, stocks and flows of materials available for
recycling, in-use stocks, material flows, and materials
embedded in internationally traded goods and (b) periodic
analysis of mineral criticality over a range of minerals. At
present, the markets for most critical minerals are less-than-
completely transparent, in large part because the markets are
small and often involve a relatively small number of producers
and users, many of which find it to their competitive advantage
to keep information confidential.
4. Facilitate research and education.--I recommend that the
federal government develop and fund pre-commercial activities
that are likely to be underfunded by the private sector acting
alone because the benefits of these activities are diffuse,
difficult to capture (easy to copy), risky, and far in the
future. Over the longer term, science and technology are keys
to responding to concerns about the adequacy and reliability of
mineral resources and mineral-based materials, to improving our
ability to recycle essential yet scarce elements, and to
developing alternatives to these elements.
Education and research go hand in hand. Educational programs,
especially those at the graduate level, educate and train the
next generation of scientists and engineers, who in the future
will respond to concerns about newly emerging critical
minerals. Education and research in the geosciences, mining,
mineral processing and extractive metallurgy, environmental
science and engineering, manufacturing, and recycling can
mitigate supply risks and increase material availability.
Improvements in materials design-fostered by education and
research in materials science and engineering-can ease the
pressures imposed by those elements and materials subject to
supply risks or limited availability. Government, in addition
to simply funding education and research, can play an important
role in facilitating collaborations among universities,
government research laboratories, and industry.
These views on appropriate roles for government are not mine alone.
A common conclusion of essentially all recent studies on critical
minerals and materials is to urge governments to improve and expand
activities related to information and analysis, education, and research
(for example, APS/MRS 2011, European Commission 2010, NRC 2008).
S. 1600, The Critical Minerals Policy Act of 2013
My views above form the conceptual lens through which I consider S.
1600, the Critical Minerals Policy Act of 2013. My specific comments:
1. Overall.--S. 1600 covers three of the four areas I discuss
above. The fourth area, promoting undistorted international
trade in mineral resources and materials, is outside this
Committee's purview.
2. Section 101 Designations.--This section is consistent with
my third role for government. I support efforts to identify
minerals that are most critical in the sense that they are both
(a) subject to potential supply restrictions and (b) important
in use. NRC (2008) recommends this sort of evaluation and
periodic re-evaluation. Japan and the European Union already
carry out this type of evaluation from the perspective of the
Japanese and European economies (see European Commission 2010).
Periodic re-evaluation is essential, as what is ``critical''
changes over time as materials, products, and market conditions
evolve and change.
3. Section 102 Policy.--The amendments to the National
Materials and Minerals Policy, Research and Development Act of
1980 are appropriate and consistent with my views on the role
of government.
4. Section 103 Resource Assessment, Section 108 Analysis and
Forecasting.--These sections represent actions that are
important parts of information and analysis, my third role for
government.
5. Section 104 Study, Section 105 Agency Review and
Reports.-- The actions these sections require would be an
important start to improving the efficiency of the process of
regulatory approval for domestic mineral development (my second
area of government action).
6. Section 106 Recycling, Efficiency and Supply, Section 107
Alternatives.--These sections are consistent with my fourth
role of government. They would require the Secretary of Energy
to conduct programs of research and development. The Department
of Energy already funds programs in the areas identified in
Section 106 and 107. Passage of S. 1600 would provide greater
justification for, and allow for possible expansion of, these
activities.
7. Section 109 Education and Workforce.--This section is
consistent with my fourth role of government in the area of
critical minerals. Over the last several decades, 8 the Unites
States has lost a significant amount of its intellectual
infrastructure in the area of mineral resources.
8. Section 110 International Cooperation.--Although
international cooperation is not part of my conceptual
framework for government involvement in critical minerals, I
support it. The United States is not the only nation facing
supplychain risks for mineral resources and downstream
materials. No nation can expect to be, nor should strive to be,
self-sufficient. Japan, the European Union, and several
individual European countries, in particular, have ongoing
activities in this area. There is much to learn from their
efforts, and we have a responsibility to work together with our
allies on mutually beneficial activities that help ensure
supply chains of critical raw materials
Senator Manchin. Thank you, and what we'll do is I'll start
out with a few questions if I may and then Senator Murkowski
will fill right in.
General Latiff, I know you spent over 30 years on active
duty with the Air Force and spent most of it working on
research and development weapons systems acquisitions. So you
truly understand how critical these minerals are. In your
opinion is there adequate domestic supply right now or do we
have to rely on the world's supply?
Mr. Latiff. To answer your first question Senator, I do
understand how critical they are having made several large
programs, which had material shortages, I do know. I also
maintain a working relationship with a number of people who are
still in the acquisition business.
In terms of domestic supply the answer is clearly no. Most
of what we get somewhere along the line in the supply chain is
touched by foreign countries.
Senator Manchin. If I may interrupt, for domestic supply is
it we don't have the resources in our country or we can't
extract the resources because of our laws, rules, regulations,
things of this sort?
Mr. Latiff. I think it's both, there are many cases in
where we're dependent for the basic materials, but there are
many cases where we also have supplies or reserves in this
country. But to the problem you point out, we can't extract
them or process them in many cases. Then in making the final
products we also again then have to send them overseas.
Senator Manchin. Can I ask you another question then?
Mr. Latiff. Yes sir.
Senator Manchin. What prohibition does the United States--
what prohibition do we have against foreign countries owning
U.S. critical minerals coming and buying our reserves and
controlling those reserves? If we've identified that as a
critical mineral for our Nation, the consumption of our Nation,
and the--and wellness of our Nation and yet we have laws and
rules that prohibit us from extracting it for whatever reason,
and we can't find the balance between the environment and the
need of our Nation.
Then we allow foreign countries to come in and control that
supply if you will, is there any laws that you know of that we
prohibit them from buying critical minerals deposits?
Mr. Latiff. Senator I would defer, I do not have the
knowledge of the laws.
Senator Manchin. Would anybody on the committee know that,
Mr. Sims?
Mr. Sims. Senator there is a process in Federal law that's
governed by a government entity called The Committee on Foreign
Investment in the U.S. We know it as CFIUS. I'm not an expert
on CFIUS, but I do know that that committee, that process has
purview when there are proposed to be significant foreign
investments in U.S. assets that are considered critical of
some--at some level. So there is a process and know the CFIUS
committee looks at a lot of potential investments. The history
shows that sometimes they let those investments happen and
other times they don't.
Senator Manchin. The reason I know that much, Virginia we
have law for some of the world's best coking coal to make
steel. Most of that has been purchased by foreign countries,
and I don't--I didn't know there was any interference
whatsoever with that, it was just a matter of transaction, as
if they were dealing with a neighbor next door.
Mr. Sims. Yes.
Senator Manchin. It didn't make any sense to me whatsoever
to set here and watch that happen, but--and you--Senator Wyden
asked you the question I think you answered it you know why--
the reasons and everything. You're probably in a better
position to evaluate these minerals I mean the deposits that we
have they are so critical to our economy and to the everyday
use of Americans. You find it extremely hard to get through the
permitting process and the review and the EPA process.
Are they working with you or do you feel like you're
fighting them continuously? Don't be afraid because I--we fight
them every minute of every day.
Mr. Sims. No I appreciate that Senator, I appreciate that.
I have to say that it took us 15 years to get Mountain Pass,
California back up and running in making rare earth prior to
that Mountain pass----
Senator Manchin. What--you know what were you producing,
what are you extracting?
Mr. Sims. Rare earth elements.
Senator Manchin. OK.
Mr. Sims. In virtually all deposits of rare earths all of
the naturally occurring rare earths are all combined together,
so you make one you've got to make most of the others----
Senator Manchin. Sure.
Mr. Sims [continuing]. If not all of them. I experienced--
Senator Manchin. The things your products--things that your
raw material is used for give me an example of some of--
Mr. Sims. Advanced wind turbines, automobiles, the little
ear buds that my kids put in so they can claim that they're not
hearing me.
Senator Manchin. Everything that we depend for quality of
life we have today.
Mr. Sims. Absolutely, absolutely.
Senator Manchin. It almost took you 15 years to get through
the permitting process.
Mr. Sims. It is, but I would say Senator, it's fair to say
that part of that was our fault as well.
Senator Manchin. Sure.
Mr. Sims. We actually worked very cooperatively, we tried
to and I think successfully with a lot of local stakeholders
and we changed our permit application as we went forward in
response to request by stakeholders. That helped us get to the
end result. We also changed our technology and advanced it as
we went forward so we had to apply for different permits. It
was a give and take, it took a little longer than we would have
liked, but we did get through the end of the process.
Senator Manchin. My time is up and I'll go for the second
round, I want to turn it over to Senator Murkowski who I'm a
proud cosponsor on this bill with her and I appreciate she
bringing it back to our attention.
Senator.
Senator Murkowski. Thank you.
It's encouraging to hear from each of you, your support for
the legislation. As I mentioned in my opening comments I think
we--there's been a lot of give and take and going back and
forth and trying to build a bill that is reasonable, rational,
and has support and gagging from the various industries and
academia that you represent, it's clear that we've struck the
right cord. Now we need to work a little bit with the
administration here so that we can get a positive yes answer
from DOE, but we'll work on that.
Mr. Isaacs I want to specifically note your comments and
how the issue with the helium bill and how we were really on
the edge of something bad happening if we were not to have
dealt with that situation in a timely manner and how that kind
of feeds into not only this debate about how we proceed with
our critical minerals, but hopefully making sure that we're
connecting the dots.
Again, whether we're talking about the auto industry or
semiconductors the acknowledgement that these critical minerals
which I think the only thing that a lot of us used to know
about them was that they were difficult to pronounce and all
seemed to end an um. But beyond that what are they, what do
they do and I think that there's clearly a growing awareness,
but we have more to do in helping people understand the
significance and the importance of these critical elements, so
the connect with what we did with helium I think is
particularly important.
Mr. Sims relating the situation with Molycorp I think is
helpful to us here on the committee, 500 permits, 15 years to
kind of work everything through should tell us something, but I
also appreciate you saying look that not all of this was
government inaction in fairness there were other factors in
play here. I am assuming that you have read our 40 page bill
and I would be curious to know what your reaction is to the
permitting section of the bill, do you think we hit the right
note here?
Mr. Sims. Senator Murkowski I think you did, I mean I think
when Congress looks at any of these issues related to reforms
or permitting processes you have to look through that--you have
to look through the lens of what's politically possible as
well. This bill does not seek to make any major changes in
underlying law like NEPA Etcetera. But there are a lot of
things that can be done without those changes being made, it
would be highly controversial, but a lot of things could be
done in the process itself and I think the bill points to
those.
I think at the end of the day whatever the law says about
permitting it really comes down as we found to whether you can
build a level of trust between the permit applicant, the
regulator, and other stakeholders at the table. Having said
that to have as your bill does call for performance metrics of
how the process is working is very important. To have--it
points to--it encourages folks to look creatively--I think
within the confines of current law as to how to make this
process better. One thing that could be done now is for example
to have the various considerations by Federal agencies of NEPA
applications to be done concurrently as opposed to
consecutively.
Now there are cases when that doesn't work, but most cases
where it does that would make a very big difference. I'm sure
most folks in my situation would say it'd make a huge
difference that doesn't require any change in fundamental
underlying law. So I think your bill is encouraging folks to be
creative on both sides of the table as to how to make that go
faster.
Senator Murkowski. Let me ask you Mr. Conrad for the Alaska
perspective and I appreciate you pinch hitting here for Mr.
Swenson. This is the time of year that Juneau is sucked in,
maybe it's because the legislature is in session but that's
neither here nor there.
You hit on several initiatives that the Governor has
advanced in terms of statewide assessment which I think is
critically important, I'm curious to know if you think that
when it comes to the data that is so important in making sure
that we have collected sufficient amounts of geologic data to
really form out the actions moving forward when it comes to
accessing our critical minerals, also if you could speak to the
permitting issue that Mr. Sims has just addressed.
When we think about the hurdles to accessing our--any or
our minerals in the state of Alaska, there are hurdles that are
out there but I think the most significant that I hear from
people about is the permitting process. If you can speak to not
only the data collection and whether or not we're doing a good
job there and also from a permitting perspective if we are
moving ourselves up from that dead last position that I
mentioned in my opening comments in terms of getting responses
on our mineral opportunities.
Mr. Conrad. Thank you Senator.
The States have also been--often been we refer to is the
laboratories of democracy, the laboratories of invention and I
think Alaska is a perfect example of the State that has taken
great strides to address both of those issues. To first
identify the importance of the need for modern data and how we
are able to access that data, which is sometimes a matter of
resources and sometimes a matter of technology. Often a matter
of working cooperatively with other stakeholders and
particularly our Federal partners to achieve the type, and the
level, and the quality of data that we need.
Alaska has made great strides in that area has identified
not only the need, but how to go about finding this data,
addressing this data and the innovative approaches that are
necessary to make that happen.
On the permitting side, again Alaska has had great success
in using a cooperative approach within its--within the State
itself in developing an interagency approach to how permitting
should be handled within the States to coordinate among all the
agencies that are critical to the development and the
permitting of a mine, especially a large scale mine.
Again I think has demonstrated that that kind of an
approach at the Federal level would be very helpful in
achieving the type of coordination that we need to move that
process forward and more effectively. We believe that S. 1600
addresses both of those matters in significant ways. If we can
couple that with some additional funding to assist with some of
this work that we need to do particularly in the data area,
we'll be well on our way to making, we believe--
Senator Manchin. Right.
Mr. Conrad [continuing]. Some significant strides here.
Senator Murkowski. Good, good, thank you.
I--we'll have another question----
Senator Manchin. Sure, sure.
Senator Murkowski [continuing]. But I'll defer it to you.
Senator Manchin. Just very quickly, so you're saying that
basically the Mining Compact Commission endorses the
legislation as written?
Mr. Conrad. Yes in our statement that I've supplied for the
record.
Senator Manchin. Thank you very much.
Also, to Mr. Isaacs this--maybe you and Ms. Thomas might
want to chime in on this one, but changing, you know we hear so
much about changing the cooperate tax laws and it'll bring
industry, and bring jobs back, and bring manufacturing back.
But we're finding out now if we don't have the critical
minerals here to provide we can do all we might and you can't
come unless you have the resources here to do what you need to
do.
Do you think it's adequate, I mean we have adequate
supplies to be able to bring you back if we have balance in our
corporate laws too our corporate tax laws that would give you
the incentives to bring those jobs back to America?
Mr. Isaacs. Senator first of all semiconductor
manufacturing is alive and well in the U.S. We are the world
and either the number, No. 2, or number 3 exporter of the
United States, so--and the industry continues to grow and
particularly at the leading edge of advanced semiconductor
manufacturing. But having said that, there's obviously a host
of policies including----
Senator Manchin. Are you concerned about supply?
Mr. Isaacs. Yes, absolutely and we employ a global supply
chain that's highly complex, and therefore, domestic supply is
critical, but it's only part of the holistic approach that
needs to be taken, which you know we really need to be taking a
global look at this and making sure that the supply chain is
secure around the world.
Senator Manchin. What would--where is the--where's your
largest suppliers? Where do you buy most of your raw materials?
We'll just say the industry itself, what country does it
depend on, next to us?
Mr. Isaacs. I'm not sure I can fully answer that question,
but you know----
Senator Manchin. We hear----
Mr. Isaacs [continuing]. One thing to keep in mind----
Senator Manchin [continuing]. So much about China.
Mr. Isaacs. One thing to keep in mind is that we are
typically several steps removed from the extraction of the raw
material from the ground. I think the helium situation was a
rare instance where we were maybe one or 2 steps removed from
the extraction from the ground. But in most cases we depend on
various steps of extraction, processing, refining to get the
type of material that we need. So where it's originally--the
original source of the material we'd have to do some more
research into that.
Senator Manchin. If you could do that for us it would help
because I'm sure you're falling and in case we have for our
trade agreements or any type of relationships we have with some
of these countries that we depend on heavily, it doesn't go
quite right.
What position does that put our country in, our government
we've seen what we've done with energy, with oil hasn't been
too good when we needed it, so we hope we don't get in a
situation with rare earth minerals too and we would hope you
would advise us on that where your dependency is and what
critical factor it would have if you couldn't get it.
Mr. Isaacs. Yes, thank you and as I mentioned before we are
working with our industry technical consortion to look at the
materials in our supply chain and look at the sources of those
materials and we hope to feed that into this process.
Senator Manchin. Ms. Thomas do you want to comment on
supply, what you believe it should have on your supply chain as
far as the manufacturing and volume goes?
Ms. Thomas. I would just add that we are also very
concerned about supply shortages and you know we also have a
very complex global network of suppliers and you know greater
transparency in sharing of real time information is very
valuable to--throughout the supply chain, so I think the
information that would be generated through a lot of the
programs and this legislation would provide you know valuable.
Senator Manchin. Can you give us a little bit of an
inventory, maybe you can check with your suppliers basically on
what--I mean on your manufacturers where their supply chain
comes from. Most of the minerals are in----
Ms. Thomas. Sure I mean----
Senator Manchin [continuing]. Much of the material they
use.
Ms. Thomas. Yes, that's a question more for our suppliers
and I'd certainly be happy----
Senator Manchin [continuing]. I hope you would.
Ms. Thomas [continuing]. To get back to you with that.
Senator Manchin. That would help us along as we proceed.
Dr. Eggert, I know that legislation expands academic
programs related to critical minerals including the traditional
academic programs and also our work force training which is so
needed. How do you see the investment education impacting the
development of our critical minerals? How would you see that
happening?
Mr. Eggert. I think an investment in education is
essential. It takes a number of complimentary ingredients to
develop a mine to create a successful mineral processing or
manufacturing activity. It's not just the raw material, but
it's an educated and trained work force and in many of the
minerals and materials disciplines we've allowed the academic
infrastructure to some degree to wither over the last several
decades. So I think a trained and educated work force is an
essential ingredient in mining and manufacturing.
Senator Manchin. An investment that pays off right?
Mr. Eggert. Yes.
Senator Manchin. Thank you.
Thank all of you for your testimony.
Senator Murkowski. Dr. Eggert let me continue with you I'm
assuming coming from School of Mines that you have to a certain
extent, tracked historical levels of mining activity throughout
the country? Is that fair?
Mr. Eggert. To some degree yes.
Senator Murkowski. Can--then to the degree that you're
able, can you give the committee any assessment in terms of
what you have seen over a period of time, how mining activity
in the industry within the country has changed and the reasons
that we've seen decline or increase in certain areas, and I
don't expect you to give me more than 45 seconds here, so if
you can distill it, what changes we're seeing and why?
Mr. Eggert. OK, first the level of investment in the mining
industry tends to be very selectable to the United States and
elsewhere and the United States in that regard has not been
much different than other countries around the world. Having
said that the U.S. share of total worldwide mineral investment
has as a general rule been declining, part of that I think can
be attributed to the more stringent environmental and other
social permitting requirements necessary for mineral
development.
But also to be fair over the last several decades a number
of other countries have opened up their borders to mineral
investment. Areas that had been underexplored in the past, a
past when Canada, the United States, Australia, South Africa
were the major destinations of investments. So part of the
declined in the U.S. share of investment I think has to be
attributed to good opportunities elsewhere.
Senator Murkowski. Let me ask you Mr. Conrad from the
Alaska perspective just some of the trends that we're seeing
within the state in terms of the private investment that we
recognize is key, you cannot make any of this happen unless
you've got the investment side. What has helped to either bring
new companies, new investment to this state, what has hurt
investment opportunities within the mining industry?
Mr. Conrad. Thank you Senator Murkowski.
Let me just give you an overview perspective that Bob
Swenson provided to me in preparation for the hearing and where
he noted that the mining investment in Alaska right now is
primarily on state and private land as opposed to Federal land.
If you look at some of the figures that are provided in his
testimony you would note that the total area of state mining
claims and prospecting sites for 2012 was about 4,500,000
acres, whereas the total area on Federal lands for 2012 was
about 168 thousand acres.
That's attributable primarily from his perspective, and I
think in general from Alaska's perspective to the need for
governmental support in supplying the kind of modern data that
we need and do not yet have, land access, and then permitting
efficiencies in terms of attracting investment. When those
things don't line up well, it has a negative impact on that
investment activity.
Senator Murkowski. One question and this will be my last, I
put it out to all of you it's what I asked both on the first
panel and this was the issue of forecasting and better--trying
to better understand what we might need in terms of these
critical minerals. Again recognizing that we're doing a lot of
work to find substitutes, a lot of work to reuse, recycle, but
the issue of being better able to forecast.
Again we've got different industries that are represented
at the table here, but how can we do a better job of forward
thinking in terms of being able to anticipate what it is that
we will need so that we avoid the threat of an imminent crisis
like we almost had with helium? I'll throw it out to whoever
wants to start.
Mr. Isaacs, I'll pick on you.
Mr. Isaacs. We very much rely on the USGS and other expert
sources of information and again we as I mentioned earlier we
have an exercise called the International Technology Roadmap
for Semiconductors which includes a chapter that looks at
emerging materials that will be critical to the next generation
of semiconductors, so that's our attempt to forecast to the
future and what we'd like to do is integrate that effort with
the exercise under this bill to identify the materials that are
most critical for our industry and develop the appropriate
policies to avoid vulnerabilities going forward.
Senator Murkowski. So Mr. Sims from the producer side you
know you're getting push from industry that says we need it, we
need it, how do we get more folks like Molycorp engaged?
Mr. Sims. I think it's fair to say that at least in our
little world of rare earths that virtually all independent
forecast show significantly increasing demand for most of
those, so the signals is out to us as producers to try to
produce more and to try to do more recycling which we're
involved with and some other technologies. Getting the capital,
the private capital necessary to bring some of these projects
online is difficult.
We went through a several year process of raising about
over $1.5 billion all in the private capital markets, that is
not easy to do. But there are companies that are out there
trying to do it right now and a lot of it depends on the value
and the perceived quality of the resource. But in terms of
downstream forecasting of demand anything the government can do
that would help us in the private sector understand the broader
perspective that would be very helpful.
Senator Murkowski. General Latiff from the defense side,
the security side.
Mr. Latiff. Senator the number of DOD Weapons Systems is
small enough, but it's not going to drive demand significantly
for a lot of these minerals, so I'll answer a different
question and that is that some of the weapons systems that we
have are so critically dependent on some of these materials for
their performance, and so it is important to the DOD to know
what future availability of these materials is going to be as
they plan their weapons systems which go out as you know for
many years.
Senator Murkowski. Right.
Anybody else want to weigh in?
Ms. Thomas.
Ms. Thomas. Yes I'll just add that it would be extremely
helpful to the automakers and our suppliers in providing you
know information on availability and allow us to identify risks
early on and ultimately manage them properly.
Senator Murkowski. OK, good.
Dr. Eggert you can wrap it up.
Mr. Eggert. A supplementary point, I think many of the
markets for the minerals and materials that we're talking about
are not very transparent. The supply chain risks are often
hiding because the final purchaser is 5 or 6 steps removed from
the initial mining and to some degree, and I don't want to
overstate the point, but to some degree it's like what happened
with--during the financial crises the risks were buried and not
obvious to all involved and through forecasting and scenario
building one can help make these supply chains more transparent
and allow all participants to better manage their risks.
Senator Murkowski. That's an excellent point. It's a good
way to end this conversation.
The awareness of the significance of critical minerals in
all aspects of our life I think that that is growing, but I do
think that the legislation that we have presented before the
committee here is one that will help us build on that. But the
whole aspect of transparency and just how far removed
throughout this chain you have the actual minerals themselves
versus the application.
I think this goes exactly to what you were speaking of
Senator Manchin when you asked you know from semiconductor
perspective or from the perspective of the auto industry where
you're getting your stuff from. Most of it is just so far
removed that we just don't make that connection. We need to
figure out how we better make that connection so that that risk
is fully informed and with that I thank you and thank all the
members of the panel here.
Senator Manchin. Now I will just follow up and say thank
you all for attending and your insight and hopefully you can
get us some information and find out exactly the effect this
going to have because I truly believe with the policies we have
in this country allowing foreign countries to own these vital
resources that we need, and we're going to be dependent on many
generations to come and basically what would effect--if we
shutdown what would it effect the economics of this country.
That would be vital for us to know that if you could help
us with that we'd appreciate it. I do appreciate all of your
input. Does anybody have any final comments they want to make
before we close this out?
If not, meetings adjourned.
[Whereupon, at 12:10 p.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Response of David Isaacs to Question From Senator Wyden
Question 1. As the Committee learned from the helium situation, the
supply of raw materials to manufacturing industries like yours doesn't
get a lot of national attention until suddenly you don't have them.
Like helium, there really aren't a lot of substitutes for some of these
critical minerals in the manufacturing process; but unlike helium, the
specific minerals that are critical vary from industry to industry.
What's the best approach to make sure that Federal Government is
working closely with industries like yours to make sure that our
efforts are focused on the right minerals and processing and
manufacturing processes?
Answer. We believe that close consultation between government and
industry will be essential in identifying the right critical minerals
and the appropriate policies needed to avoid future supply disruptions.
We recommend that the government should actively engage with a wide
range of industry sectors and solicit the views of industry experts in
materials and supply chain management on these matters. As stated in
our testimony, the semiconductor industry would welcome the opportunity
to engage with the appropriate government officials on this issue.
Accordingly, the government should establish a forum for a structured
dialogue with industry experts, perhaps in the form of an advisory
committee or similar entity.
In addition, it will be critical to ensure that the list of
critical minerals remains current and is adjusted in response to
changing circumstances, so the consultation between government and
industry must happen on an ongoing basis. In this regard, we note that
Section 101(e)(1) of the Critical Minerals Policy Act (S.1600) provides
that the list of critical minerals should be reviewed and updated every
5 years. The dialogue between government and industry should be
integrated as part of this process.
Response of David Isaacs to Question From Senator Barrasso
Question 1. In your testimony, you discuss the importance of helium
to semiconductor manufacturers. You explain that S. 1600's definition
of ``critical mineral'' might not include helium. You note that helium
is a byproduct of natural gas and that the bill's definition of
``critical mineral'' excludes: ``fuel minerals, including . . . natural
gas.'' You go on to say that: ``the bill should be broad enough and
flexible enough to trigger appropriate revisions to policies relating
to helium.
Would you please elaborate on why it is essential that the bill
address helium and policies associated with helium production?
Answer. SIA believes that the enactment into law of the Helium
Stewardship Act was critical in ensuring a continued supply of this
critical gas to the semiconductor industry and other users of helium
throughout the economy. Passage of the helium law last year
successfully addressed concerns about the supply of helium, at least
for the next several years. The SIA testimony did not intend to focus
solely on helium or suggest that this bill should address policies
related to helium. Instead, our intent was to use helium as an example
and urge the Committee to ensure that the bill would cover the full
range of materials that are critical to semiconductor manufacturing, in
order to avoid future supply disruptions and price with regard to other
materials. The SIA testimony raised the potential for helium and other
similar materials to fall outside the definition of ``critical
mineral,'' and stated:
There may be other materials or compounds that are essential to the
semiconductor manufacturing process that might inadvertently fall
outside the definition of this term. Accordingly, we request that the
definition of ``critical mineral'' (or ``critical material'') is broad
enough to capture the full range of materials that are critical to
semiconductor manufacturing and the U.S. economy as a whole.
Similarly, our testimony stated that the designation of a material
as critical should result in consideration of a broad range of policy
changes to avoid potential disruptions to the supply of this material,
not simply policies relating to mining. Our reference to the Helium
Stewardship Act was intended as an example of one such policy change
that should be contemplated in the future once a material is designated
as critical. We did not intend to suggest that the Critical Minerals
Policy Act needed to revisit the Helium Stewardship Act at this time.
______
Responses of Robert H. Latiff to Questions From Senator Wyden
Question 1. Although the Committee on Energy and Natural Resources
doesn't have jurisdiction over the defense agencies, Sen. Murkowski and
I recognize the need to make sure that national security is part of a
national program to address critical minerals. What are your
recommendations to ensure that defense agencies are working closely
with civilian agencies like the Department of Energy and the Department
of Interior on this problem?
Answer. I know that in developing the annual stockpile reports to
Congress, DLA (DOD) coordinates with Dept. of Commerce on usage rates
of various materials. I think that research portfolios, while not
necessarily de-conflicted, are at least shared, say between DOD and
DOE, on these topics. I think there is evidence of coordination at many
levels and on many topics. The Defense Production Act Committee is an
example. Such high level committees have numerous working level groups
below them. However, in my experience, agencies, lacking any higher
level of guidance, while willing to coordinate, will tend to protect
organizational equities. There really needs to be active and sustained
involvement by the Executive Office of the President and OMB. While not
precisely associated with this question, I think the President's
Initiatives for Advanced Manufacturing and for the Materials Genome
Initiative are related, and are steps in the right direction. These are
emphasized from the top of the Executive Branch to all appropriate
agencies. A similar Presidential priority placed on materials security,
in the form of a ``Critical Materials Availability Initiative'' would
be a welcome counterpart to S. 1600. Also, perhaps, an annual report to
Congress by the Director of the Office of Science and Technology Policy
(OSTP) might spur more sustained efforts by all agencies.
Question 2. Although there is obviously a strong connection between
critical minerals and national security, the use of those minerals is
generally known. Do you see any reason why the list of critical
minerals should be classified and not available to the public?
Answer. As you know, the DOD conducts scenario planning in its
effort to determine what materials may be critical and in short supply
under certain conflict conditions. Based on those analyses, DOD reports
to Congress what it believes might need to be stockpiled in the event
of future wartime scenarios. While unlikely, the DOD, so as not to
reveal strategic thinking on particular conflict scenarios, may have
good reasons to classify such a report to Congress. However, the
overall determination on an ongoing basis for those materials important
to us and for which the nation needs to take action to insure their
availability, should be widely known. I see absolutely no reason for
such a list of critical materials to be classified. On the contrary, it
needs to be open and available and act as a guiding document.
Question 3. One of the key tenants of a strong military has always
been to stay ahead of the opposition technologically. As you point out
in your testimony, critical minerals are literally critical to national
security since so many of our weapons systems rely on them. Recently,
the Defense Authorization Bill called on the Pentagon to increase its
stockpiles of critical minerals. That might be a short-term solution to
the problem, but wouldn't you agree that in the long-term, the U.S. has
to have a more comprehensive strategy toward dealing with this problem?
Answer. I absolutely agree with this sentiment. In general, I think
the DOD has made significant progress in the last several years in
thinking about and trying to deal with these issues. There have been
substantial improvements in DLA's methodologies to address the
stockpile needs, there has been the creation of the Strategic Materials
Protection Board (albeit off to a slow start), and I think there have
been a lot of dedicated materials experts at lower levels within the
Department who have recognized problems of resource dependency and have
worked steadily to mitigate them. However, I think DOD leadership has
been slow to react and it is still not clear to me that DOD has
coherent plans beyond stockpiling a few key materials and supporting
Defense Production Act projects for some key suppliers. Stockpiling is
a short-term fix and is subject to many variables. It doesn't solve the
problem of having to depend on others for either raw materials,
materials processing, or component manufacturing for which we may not
have the domestic capability. I would like to see a more coherent
approach to working with other government agencies to insure domestic
supplies and processing capabilities for the most important materials.
______
Response of Jennifer Thomas to Question From Senator Wyden
Question 1. As the Committee learned from the helium situation, the
supply of raw materials to manufacturing industries like yours doesn't
get a lot of national attention until suddenly you don't have them.
Like helium, there really aren't a lot of substitutes for some of these
critical minerals in the manufacturing process; but unlike helium, the
specific minerals that are critical vary from industry to industry.
What's the best way to make sure that Federal Government is working
closely with industries like yours to make sure that our efforts are
focused on the right minerals and processing and manufacturing
processes?
Answer. The Alliance appreciates the opportunity to provide input
on ways the Federal Government and industry can work together on the
very important issue of critical mineral availability. Automakers
design and build vehicles to synthesize a variety of systems and
individual parts to meet an array of individual customer needs and
demands and to comply with thousands of pages of international, federal
and state regulations. The average automobile has 30,000 unique
components and each individual component is comprised of multiple
chemicals, minerals and mixtures. Each automaker works with a global
network of more than 1,000 suppliers, spanning multiple sectors from
electronics to textiles. Many automotive components are obtained from
suppliers as finished products, which are then integrated into the
vehicle. As such, it is essential that any coordination on the issue of
critical mineral availability and processing begin at the supplier
level, where component composition decisions are made.
Many policies outlined in S.1600, the Critical Minerals Policy Act
will help spur much-needed cooperation between government and industry
on this important issue. For example, this legislation will establish
analytical and forecasting capabilities to better identify critical
mineral supply and demand. This will help mitigate supply shortages,
price volatility, and unexpected demand growth. Such analysis and
forecasting for minerals, similar to what the U.S. Energy Information
Administration (EIA) produces for various energy sources, will help
industry identify potential risks early and ultimately manage them.
Additionally, the Department of Energy (DOE) research programs created
in S.1600 would facilitate the efficient production, use and recycling
of critical minerals. These programs would also identify and develop
alternative materials that can be used to reduce the demand of critical
minerals. To effectively implement such programs, the Alliance
recommends that DOE coordinate closely with the diverse stakeholders in
order to develop best practices and innovative approaches for using
existing minerals more efficiently and for introducing viable and
affordable alternatives when necessary.
The Alliance commends the Committee for the thoughtful and
bipartisan approach it has taken to address this important policy
issue. Minerals have long been vital to automobile production and the
more sophisticated, high-tech and fuel-efficient automobiles of
tomorrow will be increasingly reliant on critical minerals. We stand
ready to work with the Committee to ensure a reliable and affordable
critical minerals market.
______
Response of Jim Sims to Question From Senator Barrasso
Question 1a. In your testimony, you state that Molycorp: ``walked a
regulatory pathway that took 15 years and more than 500 permits to
restart rare earth production in California.'' You explain that:
``[i]ncreased regulatory certainty is a must if the U.S. is to
encourage greater private sector investment in domestic mineral
exploration.'' You note that S. 1600: ``recognizes that much can be
done to make permitting processes more efficient.'' Finally, you say
that the bill: ``should spark new thinking and innovative ideas for
reasonable reforms.'' What are the additional steps Congress should
take to expedite the permitting process for critical minerals projects?
Answer. There are a variety of pathways that the U.S. Government
can take to make these processes more efficient. Perhaps one of the
most important would be to require/encourage/incentivize applicants and
federal agencies to work together on concurrent permit reviews under
NEPA, rather than the consecutive reviews that are generally done now.
That would save all parties a great deal of time and resources.
Requiring publicly available performance metrics of federal agency
actions and review of permits would be a very significant reform. This
would allow officials from both political parties to look
dispassionately at the relative efficiency of these government
processes. It also is likely to identify areas where improvements can
and should be made.
Also, thought should be given to requiring disclosure of the
various economic and societal costs of inaction, or delay, in
permitting processes. This might be a contentious proposal, but it
would provide policymakers and the public with additional information
to consider in the debate that often surrounds individual critical
materials projects.
Question 1b. Should Congress take steps to expedite the review
process under the National Environmental Policy Act?
Answer. NEPA processes can undoubtedly be improved, as can
virtually all federal statutes of this complexity and impact on the
economy and the environment. However, any such reforms should be the
result of a legislative process that includes buy-in from both
political parties. While this is very difficult, attempts to push
through NEPA reforms without some level of bipartisan cooperation are
doomed to failure, in my view, and can actually set back the overall
thrust to greater efficiency. This is why I believe that S. 1600 is a
good step forward, given that it may shed important light on data and
trends that would better inform future debates on the larger permitting
regime.
______
Response of Roderick Eggert to Question From Senator Wyden
Question 1. Colorado School of Mines is one of the few schools in
the country with academic classes and programs focused on critical
minerals, and you've been teaching there for over 25 years. General
Latiff's testimony says essentially that the number of technical papers
and the number of people being trained in these disciplines are
dropping compared to the rest of the world. The U.S. isn't keeping up.
What are the training and education needs that must be met in order to
have a workforce that is prepared to operate within a more robust
critical material industry?
Answer. The primary needs are in the following areas: economic
geology, mining engineering, mineral processing and extractive
metallurgy, and materials science and engineering. Perhaps just as
important are (funded) research opportunities that attract faculty
members and students in more traditional disciplines to research on
critical materials (for example, chemistry, chemical engineering, and
physics).
Responses of Roderick Eggert to Questions From Senator Barrasso
Question 1A. In your testimony, you say that we should ``[i]mprove
[the] regulatory-approval processes for domestic resource
development.'' You explain that the approval process: ``is costly and
time consuming-arguably excessively so, not just for mines but for
developments in all sectors of the economy.'' Finally, you state that
S. 1600 would be ``an important start to improving the efficiency'' of
the regulatory approval process. Would you please elaborate on how the
regulatory approval process is far too costly and time-consuming to
mineral producers?
Answer. A major issue, perhaps the most important issue, is the
number of permits and approvals required and the lack of an orderly
process to coordinate applications and reviews of applications. Other
countries, such as Australia and Canada, are able to achieve comparable
or better results, in terms of allowing for public participation and
incorporating public views into regulatory reviews, with simpler and
less-cumbersome processes.
Question 1B. To what extent does the National Environmental Policy
Act (NEPA) contribute to these excessive costs and delays?
Answer. I do not feel qualified to comment specifically on NEPA.
Question 1C. Should Congress take steps to expedite the review
process under NEPA?
Answer. Again, I do not feel qualified to suggest specific
modifications to NEPA.
Question 2. In your testimony, you argue that the United States
should: ``[e]ncourage undistorted international trade.'' You explain
that: ``raw material-importing nations should fight policies of
exporting countries that restrict raw material exports.'' You note that
the U.S., Europe, and Japan have fought China's export restrictions on
critical minerals at the World Trade Organization.
Over the last year, this Committee has debated the costs and
benefits of exporting liquefied natural gas (LNG). The Committee will
soon debate the costs and benefits of exporting crude oil.
Isn't it fair to say that our nation's own restrictions on LNG and
crude oil exports undermine our credibility when advocating for free
trade of other raw materials-such as critical minerals?
Answer. I do not support restrictions on LNG and crude oil exports.
Response of Roderick Eggert to Question From Senator Franken
Question 1. Critical minerals are essential for a wide range of
technologies today. But technology, as you know, is changing rapidly.
My concern is that figuring out which minerals will be critical in the
future is difficult, particularly for rapidly evolving high-tech
applications. How can we ensure that the process for designating
minerals as ``critical minerals'' is flexible enough to take into
account the potential for future changes to which minerals are actually
critical?
Answer. (1) I agree that figuring out which materials may become
critical in the future is difficult and will not become an exact
science. The process of monitoring potentially critical materials
inevitably will require judgment, as well as attention to technological
developments that may dramatically influence demand for specific
elements and materials. What I suggest is a continuing monitoring
capability to reduce the likelihood of being surprised, which is what
happened with rare-earth elements.
(2) More specifically, establishing an external advisory or review
board with rotating membership, responsible for reviewing and vetting
draft lists of critical minerals, would help ensure that new viewpoints
are considered by whomever in the federal government is responsible for
undertaking identification of critical minerals.
______
Responses of David Danielson to Questions From Senator Murkowski
Question 1. Many of us look to the Department of Energy to be an
advocate for our energy supply within the councils of our government.
There's a corollary concern present here, however: because so many new
energy technologies rely so heavy on critical minerals, we also need
your Department to be an advocate for our domestic mineral supply. Can
you make that commitment to us? In the interagency process, are you
willing to highlight the importance of, and push for actions that would
facilitate, a steady, affordable, and domestic supply of minerals?
Answer. The Department is committed to ensuring a sustainable
domestic supply chain for the clean energy economy, including the
foundational materials supporting clean energy technologies. The
Department's Critical Materials Strategy reports make clear that
diversified global supply chains are essential for a sustainable clean
energy economy.
The Critical Materials Institute (CMI) at Ames National Laboratory
is a lead contributor to the Department's research and development on
critical materials issues. CMI addresses materials criticality problems
by developing technologies spanning the supply chain and across the
lifecycle of materials.
DOE takes an active role in interagency coordination,
collaboration, and planning in the critical materials space to help the
U.S. government make better strategic decisions, and will continue
interagency leadership as co-chair of the National Science and
Technology Council Subcommittee on Critical and Strategic Mineral
Supply Chains. This Subcommittee facilitates a strong, coordinated
effort across federal agencies to identify and address important policy
implications arising from strategic minerals supply issues. Areas of
focus for the Subcommittee include identifying emerging critical
materials, improving depth ofinformation, and identifying R&D
priorities. The Subcommittee also informally reviews and examines
domestic and global policies that affect the supply of critical
materials, such as permitting, export restrictions, recycling, and
stockpiling.
Question 2. Is the Department working on any follow-up reports to
supplement its 2010 and 2011 Critical Mineral Strategy documents? If
so, please describe the expected timing of their release and the
expected scope of their content.
Answer. By the end of2014, the Department of Energy plans to assess
whether an update to the 2011 Critical Materials Strategy is needed,
given the related research and development and coordination work
underway.
In addition to the Critical Materials Strategy reports, the
Department of the Interior, through the USGS Mineral Resources Program,
provides annual collection, analysis, and the dissemination of data
that document production and consumption for about 100 mineral
commodities, both domestically and internationally for 180 countries
(http://minerals.usgs.gov/minerals). This full spectrum of mineral
resource science allows for a comprehensive understanding of the
complete life cycle of nonfuel mineral resources-resource formation,
discovery, production, consumption, use, recycling and reuse.
Question 3. The Department has allocated hundreds of millions of
taxpayer dollars to develop high-density energy storage devices that
utilize lithium metal. Yet global demand for lithium is rising,
particularly in China, and the United States is already heavily
dependent on imports. Has the Department analyzed any potential supply
chain impacts that we could face with regard to lithium? Could we see a
situation similar to what has happened with rare earth elements? How
could that impact our ability to commercialize new technologies that
rely upon this metal?
Answer. In 2010 and 2011, the Department released Critical
Materials Strategy reports which, in addition to identifying critical
materials, identified lithium as a ``near critical'' material. The
reports identified lithium because of its important role in batteries
for hybrid and electric vehicles. While lithium does not face the same
magnitude of risk to supply chain disruption as rare earth elements,
the Department is still applying the three pillars of the Critical
Materials Strategy to lithium research and development.
The Department is currently addressing this issue by reducing
criticality risks for lithium. Because of the projected importance of
lithium supply for clean energy applications, the Department will
continue R&D in this important area to mitigate potential supply chain
constraints. For example, within the Office of Energy Efficiency and
Renewable Energy the Geothermal Technologies Office has funded the
development of technologies to cost effectively extract minerals such
as lithium, manganese and zinc from geothermal brines- to improve
domestic production at reduced costs and to increase the overall value
of geothermal electricity generation. The Vehicle Technologies Office
has supported a project to expand lithium carbonate and lithium
hydroxide production to supply the domestic battery industry as well as
a project to recycle lithium batteries for resale of lithium carbonate.
Question 4. Given the range of new technologies that are expected
to account for larger and larger shares of lithium consumption, does
the Department believe we could face constraints or even a shortage in
the supply of lithium available for more traditional applications such
as batteries? Has the Department done anything to help mitigate such a
scenario? What steps, if any, does the Department believe are warranted
to prevent that from happening?
Answer. As mentioned above, the Department is addressing potential
supply constraints with regard to lithium. Currently, the Department's
research efforts focus on diversifying supply, developing substitutes,
and driving recycling of lithium. Because there are significant
additional low cost potential sources of lithium from desert brines,
lithium has a lower risk of supply disruption than certain rare earth
elements, even under high global electric vehicle deployment scenarios.
However, because dramatic increase in global lithium battery production
could lead to asupply-demand mismatch in the next five years, the
Department is applying the three pillars of the Critical Materials
Strategy to lithium research and development.
The Critical Materials Institute at Ames National Laboratory
conducts research and development (R&D) addressing supply diversity,
substitutes, and recycling for lithium. Other national laboratories
also contribute to lithium R&D. For example, the Joint Center for
Energy Storage Research (JCESR), the Energy Innovation Hub for Battery
and Energy Storage, is addressing lithium substitutes. Launched in
December 2012, JCESR is managed by the Department's Office of Science
and is led by Argonne National Laboratory. The mission of JCESR is to
develop new battery chemistries beyond lithium-ion and to deliver
electrical energy storage with five times the energy density and one-
fifth the cost oftoday's commercial batteries within five years.
Within the Office of Energy Efficiency and Renewable Energy, the
Vehicles Technology Office has supported a project to expand lithium
carbonate and lithium hydroxide production to supply the domestic
battery industry, and the Geothermal Technologies Office has funded the
development of technologies to cost effectively extract minerals such
as lithium from geothermal brines to improve domestic production at
reduced costs and to increase the overall value of geothermal
electricity generation.
Finally, the Department's Advanced Research Projects Agency- Energy
also supports R&D on a broad array of novel battery technologies that
do not use the lithium-ion platform.
______
Responses of David Danielson to Questions From Senator Franken
Question 1. Rare earths are critical to the high-tech sector and
the energy sector. But in many cases, we are dependent on imports from
China. In recent years, we've seen large price increases for these rare
earth elements, and we need to make sure that our dependency doesn't
harm our manufacturing sector. This is one of the reasons why I am a
cosponsor of S. 1600, the Critical Minerals Policy Act of 2013. Can you
talk about which particular clean energy technologies are most
dependent on rare earth elements?
Answer. The Department's 2010 and 2011 Critical Materials Strategy
reports identified five rare earth materials-neodymium, europium,
terbium, dysprosium, and yttrium- as critical materials currently
essential for America's transition to cost-competitive clean energy
technologies and subject to supply risk. Neodymium and dysprosium are
used for magnets, which are found in electric vehicle motors and wind
turbine generators. Europium, terbium, and yttrium are used in
phosphors for efficient lighting. In addition, another rare earth
element, lanthanum, is used in nickel metal hydride batteries. However,
as lanthanum is relatively abundant, DOE did not identify it as
critical in its Critical Materials Strategy reports.
Question 2. How does our dependence on China impact these sectors
of the clean energy economy?
Answer. While China has been and continues to be a dominant source
for critical materials, the on-going challenge is developing a secure
domestic supply chain or substitutes for these critical materials so
that as clean energy technologies are developed and deployed in the
United States they can also be manufactured in the United States. The
vulnerability associated with global dependence on critical materials
underscores the importance of the Department's research and development
activities in this area. The Department's Critical Materials Strategy
and coordinated R&D efforts address supply chain disruption risks by
diversifying supply, developing substitutes, and driving recycling of
critical materials.
Question 3. What have been the major barriers that have prevented
us from mining, separating, and refining rare earth elements for use
here in the United States?
Answer. One of the primary barriers to upstream domestic critical
materials development has been the high capital requirements associated
with overcoming the technical challenges at this stage in the supply
chain. This barrier to entry has led to a natural monopoly of
processing operations concentrated in certain countries.
The Department addresses processing innovations through research
and development (R&D) to help reduce processing capital requirements.
For example, the Critical Materials Institute is considering new, lower
cost ways to extract, separate, and process rare earth metals from ores
and recycled materials, such as neodymium for permanent magnets and
europium for lighting.
Appendix II
Additional Material Submitted for the Record
----------
Statement of Dr. John G. Parrish, Chair (AASG), California Geological
Survey, Department of Conservation, Sacramento, CA
Thank you for the opportunity to submit written testimony for the
record on S. 1600, the Critical Minerals Policy Act of 2013. This
testimony is presented on behalf of the Association of American State
Geologists (AASG). Our organization represents the State Geologists of
the 50 United States and Puerto Rico. Founded in 1908, AASG seeks to
advance the science and practical application of geology and related
earth sciences in the United States and its territories, commonwealths,
and possessions. AASG strives to optimize the role that State
Geological Survey agencies play in delivering benefits to the people of
the United States in relation to developing economic prosperity,
understanding and mitigating natural hazards, protecting the public's
property and lives, as well as appreciation and preservation of our
natural environmental heritage.
AASG recognizes the hard work of Chairman Wyden, Ranking Member
Murkowski, the cosponsors of the Critical Minerals Act of 2013, and the
members of this Committee. We commend your efforts to strengthen our
nation's capacity to address the challenges associated with critical
minerals and we would like to emphasize the role that State Geological
Surveys can play in tackling this important issue.
AASG POSITION STATEMENT ON MINERAL RESOURCES
AASG strongly supports adequate funding of mineral resources
programs within relevant Federal agencies, including the Departments of
Agriculture, Defense, Energy, Health and Human Services, Interior, and
Labor. Further, AASG advocates that, as appropriate, these programs be
implemented through Federal-State partnerships to achieve mutually
beneficial goals relative to mineral resources.
BACKGROUND
Minerals and mineral materials provide the fundamental components
for manufactured goods, agricultural fertilizers, and construction. The
U.S. economy, defense systems, and our lifestyle depend on stable
supplies of minerals. Mineral resources are commercially quarried or
mined in every state in the United States. Crushed stone, sand and
gravel, needed for concrete and asphalt, are widely distributed, but
many other commodities have been concentrated by geological processes
and occur only in certain locations. With its large land area and
diverse geological settings, the United States has many key mineral
resources necessary for society to function. The locations of mineral
resources are not all known.
Recent discoveries of world-class deposits of gold, copper, and
zinc in the United States and continued exploration by mining companies
illustrate that the U.S. remains a prime target for new mineral
resource discovery.
Two studies by the National Research Council, Minerals, Critical
Minerals, and the U.S. Economy, and Managing Materials for a 21st
Century Military, and a 2011 report by the American Physical Society on
Energy Critical Elements, find that the United States lacks sufficient
information about its mineral needs and supplies. Up-to-date, accurate,
geological mapping is critical to fulfilling State and Federal
responsibilities for stewardship of our natural resources. Geologic
maps and investigations are essential to an understanding of natural
processes responsible for the formation of mineral deposits and the
hydrological-chemical consequences of mining and land reclamation.
State Geological Surveys are uniquely positioned to help address
the need for geological maps and studies, and to collect, preserve, and
disseminate the geological information that is needed to ensure
adequate domestic supplies of critical minerals.
S. 1600, THE CRITICAL MINERALS ACT OF 2013
AASG strongly supports adequately funded mineral resources programs
within the relevant Federal agencies and we support the aims and
actions outlined in Sections 101 (methodology for identifying critical
minerals), 103 (resource assessment), 108 (analysis and forecasting),
and 109 (education and workforce) of S. 1600.
We urge you to recognize the specific expertise of State Geological
Surveys and to consider the following items:
Establish a grant program in strategic and critical mineral
resources similar to the National Cooperative Geologic Mapping Program
(NCGMP). The NCGMP, which was established under the National Geologic
Mapping Act of 1992, is the primary source of funds for the production
of geological maps in the United States. For over two decades, funds
from the NCGMP have supported cooperation between Federal, State, and
university partners to deliver modern geological maps. The maps
produced under this program are one of the most valuable tools for
assessing the mineral wealth and mineral potential of the nation. We
urge you to consider creating a parallel program to enable effective
cooperation between Federal, State, and university experts on
understanding strategic and critical mineral resources.
Amend the National Geological and Geophysical Data Preservation
Program Act of 2005 (42 USC 15908) to specifically mention and
authorize funding for maintaining information on critical minerals.
State Geological Surveys and other organizations, including Federal
agencies, already hold information, such as written records, maps,
drill core, rock samples, and exploration and mining records, that
relate to critical minerals. These collections reflect substantial
investments by industry and government over more than 150 years, yet
these irreplaceable records are currently at risk of disposal or ruin
because more than 25 percent of the nation's geological data
repositories are currently at or near their storage capacity.
Dedicating funds to preserving and providing access to existing
information on critical minerals would be highly cost effective and
would provide on-demand access to a trove of valuable information.
Thank you for the opportunity to present this testimony to the
Committee.
______
Statement of Interstate Mining Compact Commission, on S. 1600
The Interstate Mining Compact Commission (IMCC) submits this
statement in support of S. 1600, The Critical Minerals Act of 2013.
IMCC is a multi-state governmental agency representing the natural
resource and related environmental protection interest of its 26 member
states. The Commission is comprised of duly appointed representatives
of the Governors of their respective departments of Natural Resources
or Environmental Protection. As such, the member states ofiMCC have a
vital interest in the development of minerals, particularly those of
strategic and critical importance to the United States. Furthermore,
one of IMCC's primary functions is to support effective communication
and collaboration between our member state regulators and their
counterparts in the federal agencies, especially where it pertains to
permitting for mineral extraction and related activities. In pursuit of
both these goals, IMCC believes that this bill will have a significant
benefit and therefore lends its full support.
In the face of growing ``resource nationalism'' abroad, it is
crucial that the US take steps to account for, protect, and further
bolster domestic sources of critical minerals. Developing our Nation's
mineral wealth in a manner that maximizes access while maintaining
environmental responsibility must be a fundamental component of efforts
to shore up national mineral resource security. One of the strategies
employed by S. 1600 in pursuit of that goal is the streamlining of
supply chains through elimination of unnecessary permitting
requirements. Parallel permitting requirements convolute these supply
chains, reducing our Nation's access to domestic sources of vitally
important natural resources to the ultimate detriment of national
resource security. The US should endeavor to realize the immense
benefits potentially derived from intentional, conscientious
development of our Nation's rich supply of mineral resources, both on
state and federal lands. IMCC believes S. 1600 to be a significant step
in the right direction.
In addition to the interest in enhancing our states' and thus our
Nation's mineral wealth, IMCC member states have a more specific
interest in supporting S. 1600. As primary regulators of mineral
production activity within their borders, designing efficient but
responsible permitting processes is a top priority. Even where minerals
are produced on federal lands, the states often work in concert with
various federal agencies in regulating minerals under applicable
federal laws. Arriving at the optimal design for these often
interrelated permitting processes is contingent on real and frequent
collaboration among state and federal agencies. IMCC is therefore
particularly supportive of provisions in S. 1600 designed to enhance
this vitally important coordination. Through these collaborative
efforts, state and federal agencies will hopefully be able to eliminate
some of the redundant permitting and processing mechanisms currently in
place in certain arenas. As Sections 102(a)(9) and 105(a)(3)(C) of the
bill indicate, parallel permitting requirements lead to duplicative
efforts on the part of our member state regulators and our federal
colleagues. Expediting these permitting processes by minimizing
unnecessary delays, preventing unnecessary paperwork, and avoiding
duplication of effort, will allow all those involved to work smarter
rather than harder. This in turn contributes to the ultimate goal of
mineral regulation: to ensure that these resources are mined in an
efficient and effective manner while also protecting the environment.
For all of these reasons, IMCC urges the Subcommittee to move
forward with markup and passage of S. 1600, the Critical Minerals
Policy Act of 2013. We welcome the opportunity to work with the
Subcommittee and contribute to this legislative initiative and thank
you for the opportunity to submit this statement. We would be happy to
answer any questions or provide additional information.
______
Statement of Materior Corporation, Mayfield Heights, OH, on S. 1600
The Materion Corporation (Materion), headquartered in Mayfield
Heights, Ohio, respectfully submits the following comments to the
United States Senate Committee on Energy and Natural Resources
regarding S. 1600, the Critical Minerals Policy Act of 2013.
Materion supplies highly engineered advanced enabling materials to
leading and dynamic technology companies across the globe. Our product
offerings include precious and non-precious specialty metals, precision
optical filters, inorganic chemicals and powders, specialty coatings
and engineered clad and plated metal systems.
Our products, services and expertise help enable our customers'
technologies. We supply sophisticated thin film coatings for hard disk
drives, specialty inorganic chemicals for solar energy panels, bio-
compatible materials for implantable medical devices, specialty alloys
for miniature consumer electronics components, optical filters for
thermal imaging, critical components for infrared sensing technology,
special materials for LEDs and much more.
Materion is the free-world's only integrated ``mine-to-mill''
supplier of beryllium-based products. Materion owns and operates its
beryllium mine in Delta, Utah, and has characterized a 70+year supply
of beryllium ore. Small deposits of beryllium ore are found in
Kazakhstan and China, but Materion mines in excess of 70 percent of the
world's supply. Currently, China does not export its supply of
beryllium.
Beryllium is a metallic element that has extremely unique
properties. To name just a few, it is onethird lighter than aluminum,
has six times the specific stiffness of steel and is transparent to X-
rays. Adding up to 2 percent beryllium to copper imparts springiness
comparable to steel and corrosion resistance like stainless steel, yet
retaining the electrical and thermal conductivity properties of copper.
For these and other reasons, beryllium is the only material to be
defined by the U.S. Department of Defense (DoD) as both strategic and
critical to the United States. Beryllium is also defined as a critical
material by the European Commission.
Beryllium materials are used in research and industrial
applications where reliability and superior performance are required.
The final seal capping the leaking oil well in the Gulf of Mexico was a
large ring of copper beryllium. The James Webb Space Telescope,
launching this decade, has 16 beryllium mirrors to capture the images
from space. The 2012 Nobel Peace prize for physics used atoms of
beryllium to create a computer chip with the computing capacity of
every computer on earth today. In short, beryllium can do things that
no other element on earth can do.
Materion offers the following comments on S. 1600, the Critical
Minerals Policy Act of 2013.
1. Materion strongly supports developing a critical minerals
policy as US leadership in innovation and technology is
inextricably linked to reliable access to and use of critical
minerals.
As stated, the intent of S. 1600 is, ``To facilitate the
reestablishment of domestic, critical mineral designation,
assessment, production, manufacturing, recycling, analysis,
forecasting, workforce, education, research, and international
capabilities in the United States, and for other purposes.''
As a producer and key supplier of critical materials,
Materion sees great value in US policies that would strengthen
both domestic capabilities and international trade to ensure
adequate supply of these materials. Materion supports these
goals.
2. Beryllium should be designated as a critical mineral under
the provisions of the Critical Minerals Policy Act of 2013.
According to the text of S. 1600, the Secretary of Interior
is directed to develop a draft methodology for assessing and
determining a list of not more than 20 critical minerals. The
methodology would be published in the Federal Register for
notice and comment. The assessment would be based on potential
international supply restrictions and the importance of use,
including energy technologies, defense, agriculture, consumer
electronics and health carerelated applications.
This limited interpretation of what would constitute a
critical mineral under the bill and in the implementing
regulations may disqualify beryllium even though it is of
critical importance for use and innovation in the energy,
defense, consumer electronics and health care marketplace.
Beryllium should not be penalized by a designation protocol
because Materion has worked hard to ensure an adequate long-
term supply.
Unnecessary over-regulation of beryllium is the greatest
threat to the key markets for beryllium and the future
sustainability of a US supply. Worldwide supply of beryllium to
the free world comes primarily from a single source in the US--
Materion. Small deposits of beryllium ore are found in
Kazakhstan and China, but Materion mines in excess of 70
percent of the world's supply. China does not export its supply
of beryllium. The company estimates a 70+year supply of
beryllium ore.
Since beryllium ore is mined and processed domestically, the
primary current threat to US supply is not due to foreign
trading partners restricting imports of this critical mineral
into the US. Rather, unnecessary over-regulation of beryllium
is the greatest threat to the key markets for beryllium and the
future sustainability of a US supply. Regulatory overreach has
the potential to disrupt the beryllium business balance that
enables Materion to supply strategic and critical applications
of this mineral for defense and commercial customers. If US
production becomes infeasible due to US or foreign regulatory
policies, the US could be held hostage by China or Kazakhstan
who would not be able to meet world demands. A constrained
supply of beryllium for the US would very likely follow the
pattern that has occurred with other critical minerals; e.g.,
rare earths and China domination.
3. Notwithstanding the potential definitional restriction of
a critical mineral under S. 1600, the US Department of Defense
(DoD) has determined beryllium to be the only strategic and
critical material for US national security.
See: (Report required by Section 843 of Public Law 109-364:
Report of Meeting, Department of Defense, Strategic Materials
Protection Board, December 12, 2008). DoD's determination is
based on the fact that:
High purity beryllium is both a strategic and
critical material.
High purity beryllium is essential for important
defense systems, and it is unique in the function it
performs. High purity beryllium possesses unique
properties that make it indispensable in many of
today's critical U.S. defense systems, including
sensors, missiles and satellites, avionics, and nuclear
weapons.
There is significant risk of supply disruption.
Without DoD involvement and support, U.S. industry
would not be able to provide the materials for defense
applications. There are no reliable foreign suppliers
that could provide high purity beryllium to the
Department.
DoD stated, `` . . . beryllium meets all the conditions for being a
critical material,'' and concluded, ``the Department should continue to
take those special actions necessary to maintain a long term domestic
supply of high purity beryllium.'' (emphasis added) Those special
actions included the U.S. government investing $80+ million in a Title
III Defense Production Act project with Materion to ensure a reliable
supply of beryllium in the US.
A 2013 Rand Corporation report, Critical Materials, Present Danger
to U.S. Manufacturing, identified beryllium as a highly concentrated
critical material although primary production is in the US.
The Senate Committee on Energy and Natural Resources should include
provisions in S. 1600 specifically designating materials deemed
strategic and critical to DoD as a critical mineral to align with US
national security interests.
4. The European Union (EU) has also designated beryllium as a
critical material and has publically expressed concerns on the
impacts of over regulation of beryllium, in key emerging
technologies in the electronics industry.
The European Commission (EC) listed beryllium as one of
fourteen critical materials (European Commission Critical Raw
Materials for the EU--Report of the Ad-hoc Working Group on
defining critical raw materials, 2010). Raw materials are
designated as being ``critical'' when the risks for supply
shortage and their impacts on the economy are higher compared
to other raw materials.
According to the EC paper,
The most significant threats originate from perceived
risks associated with the use of beryllium in
electronic products. EU regulatory fears and NGO-
propagated ``banning'' of the use of materials
containing beryllium lead to unwarranted attempts to
find substitutes that do not offer the same qualities
with respect to performance, sustainability and
environmental protection. The data that authorities
rely on is not current and does not reflect the most
recent scientific studies. In general, authorities are
reluctant to break from the past and are not open to
new scientific studies even if they are conducted in
accord with OECD guidelines or originate from proven
workplace strategies. Because the cost of beryllium is
high compared with that of other materials, it is used
in applications in which its properties are crucial. In
some applications, certain metal matrix or organic
composites, high-strength grades of aluminum, pyrolytic
graphite, silicon carbide, steel, or titanium may be
substituted for beryllium metal or beryllium
composites. Copper alloys containing nickel and
silicon, tin, titanium, or other alloying elements or
phosphor bronze alloys (copper-tin-phosphorus) may be
substituted for beryllium-copper alloys, but these
substitutions can result in substantially reduced
performance.
5. Materion offers the following recommendations to revise S.
1600 for the Committee's consideration.
Materion urges the Committee to carefully craft the criteria
for designation of a critical mineral in S. 1600 by giving
greater weight to the criticality of a mineral versus its
current supply limitations. Supply limitations come and go with
market demands and, therefore, there is no basis for over-
weighting supply in the designation criteria. Minerals deemed
both strategic and critical to US national security interests
should be mandated for inclusion in the designation process
developed by the Department of Interior. Consistency among
Cabinetlevel departments regarding a concise regulatory policy
for beryllium as a critical mineral is absolutely necessary.
Its strategic importance to national defense and its
contribution to enhanced public safety, energy independence,
innovation, and unique applications that foster economic growth
and job preservation warrant beryllium being designated as
critical.
We recommend the following.
(a) S. 1600 should be amended to allow beryllium to be
designated as a critical mineral. For any material DoD
designates as strategic and critical, the Secretary of the
Interior should automatically designate it as critical as well,
and it should be included in the initial list of 20 substances.
US national security interests should take precedence. Keep in
mind that beryllium is a key material in every atomic weapon
and is critical to our armed forces in its use in fighter
aircraft, tanks, weapons guidance systems, night vision
systems, spacecraft, and satellites. The use of beryllium not
only protects those who serve our country, but also gives them
a tactical advantage.
For example, a third provision could be added to Section 101
stating: ``Notwithstanding the methodology to be developed by
the Secretary of the Interior, any mineral deemed strategic and
critical to US defense or national security is automatically
designated as a critical mineral and should be included as part
of the Department of the Interior's published list.''
(b) For the reasons stated above, the legislation should
include a provision that specifically requires the Department
of the Interior to consult with the Department of Defense.
(c) Alternatively, at a minimum, the two criteria for a
substance to qualify as a critical mineral in the Department of
Interior methodology should be amended from an AND to an OR.
[Section 101(a)(1) and (2)].
While this option may open the criteria for consideration of
a much broader group of minerals, it would allow for the
consideration of those minerals strategic and critical to
national security that are not threatened by traditional
international supply restrictions.
6. Beryllium uses are hallmarks of innovation that are only
possible through critical minerals that give the US
technological advantages over other countries.
Beryllium is a very unique critical mineral that provides
functionality in a number of high-tech applications on which
both commercial and defense customers rely. The following
discussion describes many of the leading edge technology
applications of the strategic and critical mineral beryllium.
Approximately 80 percent of the beryllium used goes into
copper beryllium alloys, that are used to exploit an unmatched
combination of physical properties to produce highly reliable
components of systems that protect lives and where failure
could be either life-threatening or would provide lower
performance and reduced quality of life.
Copper beryllium alloys are used for the manufacture of high
performance, electrically conductive terminals such as:
--Extremely reliable automobile connectors for air bag crash sensor
and deployment systems, anti-lock brake systems, and new
drive-by-wire technologies.
--Life-saving medical applications such as the connections in
medical operating rooms and monitoring equipment.
--Critical connections and relays in electrical, electronic and
telecommunications equipment where failure would disrupt
the communications of emergency services like firefighters
and police.
--No-fail aircraft and spacecraft electrical and electronic
connectors, which enable, for example, fly-by-wire
commercial airliners to achieve previously impossible fuel
efficiencies.
--Household appliance temperature and other function controls that
provide reliability and safety to consumers while
minimizing energy and water use.
--Relays used for telephone exchanges and controlling industrial,
domestic and automobile electrical equipment.
Copper beryllium alloys are used for the manufacture of
mechanical components such as:
--Critical aircraft components such as altimeter diaphragms.
--Extremely long service life fire sprinkler water control valve
springs that must react to fires after decades of
inactivity to save lives and control fire damage.
--Non-magnetic equipment components used in oil & gas exploration,
production and directional drilling equipment to improve
extraction efficiencies and reduce land despoliation at
drill sites by reducing the number and footprint of drill
sites.
--Coal and mineral mining equipment bearings that operate longer
underground.
--Mine detection and minesweeping systems that keep the global
forces safe.
--Undersea fiber optic cable signal amplification ``repeater''
housings that carry more simultaneous transmissions than
ever conceived of in the original cable systems.
--Low-friction, high-strength aircraft landing gear bearings,
control rod ends and wing aileron/flap bearing bushings
that allow significant weight loss to reportedly lower
global fuel consumption and reduced associated carbon
dioxide emissions.
--High thermal efficiency, reduced icing, aircraft components such
as pitot tubes to provide enhanced aircraft safety for
passengers.
--Electrode holders and components of welding robots for automated
automobile and appliance welding allowing better working
environments for factory workers.
--Property modifier for aluminum and magnesium castings with
enhanced properties that reduce weight to achieve fuel and
pollution reduction in automobiles and trucks.
--Plastic and metal casting molds with enhanced thermal efficiency.
Approximately 20 percent of the beryllium used is in the form
of pure metal, as a metal matrix composite containing over 50
percent beryllium or as a beryllium oxide ceramic.
--X-ray transparent windows used to control and focus X-ray beams
in all medical, scientific and analytical devices
incorporating X-ray sources, providing finer resolution
thereby allowing earlier cancer detection in mammography
and other medical interventions.
--Gyroscope gimbals and yokes for use in guidance, navigational and
targeting systems used on aircraft, armored vehicle and
marine missile systems providing levels of precision that
give our forces tactical advantages and minimize collateral
damage.
--Satellite-mounted directional control devices for astronomical
and other telescopes and instruments to provide accurate
GPS locations signals and a wealth of scientific,
agricultural and climatic data.
--Satellite structural components that reduce weight, provide
unmatchable rigidity at deep space low temperatures and
enable longer, more capable space missions.
--Mirrors for terrestrial and space-mounted astronomical telescopes
that expand our knowledge of the universe, including the
mirrors on the James Webb Telescope. Beryllium mirrors were
not originally used on the Hubble telescope, but NASA
eventually had to use small beryllium mirrors to clear up
Hubble's blurred vision during a Hubble repair space
mission.
--Beryllium is critical for the success of the multi-national ITER
fusion energy project located in Cadaraches, France that
offers the opportunity to provide sustainable energy
sourced from non-radioactive nuclear fusion. Beryllium is
the only material that can withstand the heat to control
the fireball-like plasma inside the chamber.
--Medical isotope production nuclear reactors produce critical
isotopes for treatment of many types of cancer as a result
of the unique neutron beam reflective capabilities of
beryllium.
--Substrates for mounting high-powered civil aviation radar systems
and power amplifiers that need cooling to prevent self
destruction.
--Mobile telephone infrastructure equipment.
--Medical excimer laser beam focusing and control components,
allowing surgeons unprecedented fine control of the high-
energy laser beam during surgery.
Preserving beryllium and other critical minerals for today's
leading and life-saving technologies along with tomorrow's innovations
must be a top priority to distinguish us from international
competitors.
Materion thanks the Senate Energy and Natural Resources Committee
for considering these comments in crafting its Critical Minerals
legislation and looks forward to a continuing dialogue on this
important issue. We would be pleased to meet with the Committee, and we
are always available to respond to any and all questions.
______
Statement of Dr. P. Patrick Leahy, Chair, The Minerals Science &
Information Coalition, on S. 1600
Thank you for the opportunity to submit written testimony on S.
1600, the Critical Minerals Policy Act of 2013, and on the importance
of the federal government's mineral science and information functions.
This testimony is presented on behalf of the Minerals Science &
Information Coalition (MSIC), a newly formed group of minerals and
materials interests united to advocate for reinvigorated minerals
science and information functions in the federal government. Initial
members include the Geological Society of America, Industrial Minerals
Association--North America, National Stone, Sand and Gravel
Association, Society for Mining, Metallurgy, and Exploration, Inc.,
Portland Cement Association, National Electrical Manufacturers
Association, National Mining Association, Society of Economic
Geologists, and the American Geosciences Institute. Other organizations
are in the process of joining the Coalition. The Coalition represents
trade associations, scientific and professional societies, groups
representing the extractive industries, processors, manufacturers,
other mineral and material supply-chain users, and other consumers of
federal minerals science and information.
MSIC commends Chairman Wyden, Ranking Member Murkowski, the
cosponsors of the Critical Minerals Act of 2013, and the members of
this Committee for recognizing the national importance of critical
minerals and for your efforts to address this complex issue.
BACKGROUND
Minerals and mineral materials are the starting point for many
supply chains that are vital to the nation's economy and national
defense. Supply chains can be long, complex, and vulnerable to
disruption for many reasons. This vulnerability is highlighted by
recent crises in the global supply of just two commodities--rare earth
elements, caused by Chinese export restrictions, and helium, caused by
uncertainty surrounding the Federal Helium Reserve in Texas.
Restrictions in the supply of rare earths threatened the production of
components that are essential for U.S. defense and weapons systems, in
addition to a vast array of communications, clean energy, electronics,
automotive, and medical products. A shortage of helium threatened high-
tech manufacturing, including the semiconductor industry; it also had
impacts in the medical, aerospace, welding, and weather forecasting
sectors. The nation's experiences with rare earth elements and helium
are a wake-up call to us all.
Both the private and the public sector realize that we must reduce
risk to our supply chains. But we cannot do this without accurate,
timely information on the nature, location, and characteristics of our
domestic mineral resources, and on the worldwide supply of, demand for,
and flow of minerals and materials. This information is the foundation
for identifying and forecasting existing and emerging vulnerabilities,
and for sound decision making by business leaders and policy makers.
Given the vital national importance of minerals science and
information, MSIC notes with alarm the consistent, severe decline in
funding for the Mineral Resources Program at the U.S. Geological Survey
(Fig.1)* This program is the sole federal source of scientific
information and statistics on mineral resources, production,
consumption, and environmental effects. The program's products are used
extensively by industry, academia, policy makers, and the public, yet
its funding has been cut by 30 percent, in constant dollar terms, over
the past decade.
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* All figures have been retained in committee files.
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The Coalition sees a significant need for national minerals
forecasting capabilities. Forecasts based on reliable information would
help industry and the government to forestall and mitigate possible
disruptions to the flow of essential raw materials and components and
would strengthen our national resilience.
MSIC asserts that investment in minerals science, information, and
forecasting is in the national interest.
S. 1600, THE CRITICAL MINERALS ACT OF 2013
We support the aims of S. 1600 to strengthen and improve our
understanding of critical minerals and to develop a robust scientific
and statistical information and forecasting system to identify and
anticipate threats to supply chains.
In particular, the Mineral Science & Information Coalition endorses
the actions proposed in Sec. 101, to develop a methodology for
identifying critical minerals, Sec. 103, on resource assessments, Sec.
108, on analysis and forecasting, and Sec. 109, on education and
workforce.
We urge you to continue your efforts to reinvigorate our national
capacity to characterize, quantify, and forecast the sources, nature,
and flow of minerals and mineral materials in support of national
defense, a robust, resilient manufacturing sector, and a thriving
economy.
Thank you for the opportunity to present this testimony to the
Committee.
______
National Electrical Manufacturers Association,
January 31, 2014.
Hon. Ron Wyden,
Chairman, Committee on Energy and Natural Resources, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Committee on Energy and Natural Resources, Washington,
DC.
Re: Committee on Energy and Natural Resources Hearing on Critical
Minerals Policy Act (S. 1600)
Dear Chairman Wyden and Ranking Member Murkowski,
Thank you for the opportunity to provide the following brief
remarks on behalf of the National Electrical Manufacturers Association
(NEMA) on the legislation considered today by the Committee on Energy
and Natural Resources: The Critical Minerals Policy Act (S. 1600).
NEMA is the association of electrical equipment and medical imaging
manufacturers. Founded in 1926 and headquartered in Rosslyn, Virginia,
its 400-plus member companies manufacture a diverse set of products
used in the generation, transmission, distribution, and end use of
electricity as well as medical diagnostic imaging. Worldwide annual
sales of products in the NEMA scope exceed $140 billion.
According to the U.S Geological Survey, the U.S. was 100 percent
dependent on foreign sources for 17 mineral commodities in 2012 and
more than 50 percent dependent on foreign sources for some 24 more.
Challenging supply conditions and volatile prices of basic mineral
inputs can be a significant threat to U.S. electroindustry companies,
including in sectors such as lighting, electric motors, energy storage,
superconducting materials, and medical imaging, as well as closely
related industries including wind and solar electricity generation and
hybrid and electric vehicles. The full scale of the threats remains
uncertain, since these materials are used in various parts of product
supply chains. However, while in many cases only small amounts of a
specific mineral or mineral derivative may be present in a piece of
manufactured equipment, its presence can be critical to performance of
that equipment.
In general, NEMA supports U.S. policies that provide greater
assurance to electroindustry companies of stable, continuous and
affordable supplies of critical minerals. More specifically, NEMA
welcomes and supports the Critical Minerals Policy Act as a
multifaceted strategy to modernize U.S. federal policy on mineral
resources, information, research and know-how.
The approach taken in S. 1600 is necessary to address this threat
to U.S. electroindustry companies and jobs.
First, the legislation would direct the Department of the Interior
to establish a methodology for determining, on an ongoing basis, the
mineral resources that are most critical to the U.S. economy, including
manufacturers. The methodology will be created through a public process
informed by input from businesses, associations and other stakeholder
organizations and will be reviewed periodically. It is our
understanding that a White House chartered interagency working group
has already developed a draft methodology but it has not yet been made
public.
Although each company that uses minerals may have their own methods
and information, the federal government plays an important role by
providing objective information and guidance to policy-makers, market-
makers, and other interested parties.
Second, the Act provides a set of policies across multiple federal
agencies to address issues associated with the discovery, production,
processing, use and re-use of critical minerals. For example, the White
House is directed to establish a forecasting capability that will
enable mineral policies to keep up with mineral markets and federal
agencies to take steps to support economic competitiveness while
maintaining environmental protections. In addition, the Interior and
Agriculture Departments are tasked to ensure that federal permitting
and review processes for proposed mining activities are even-handed and
not stacked against well-designed and wellmanaged extraction and
processing activities.
Thirdly, the legislation addresses the challenges our country faces
to make better use of the mineral and human resources already at hand.
Specifically, the legislation directs the Department of Energy to
continue and deepen its information, research, and development
activities on alternative materials and reclamation and recycling of
critical minerals that have already moved through the manufacturing
supply chain and have reached the end of the consumer value chain. This
is of particular interest to NEMA manufacturers of fluorescent lighting
products as well as equipment that employs permanent magnets. It is
also important that the legislation tasks that State Department with
integrating critical minerals supply chain issues into international
dialogues and cooperation activities.
In addition, the legislation directs the Department of Labor to
assess the portion of the U.S. workforce trained in mineral-related
skills and identify present and future gaps in U.S. know-how. It also
directs the Departments of Labor and Interior to collaborate in
developing approaches that will enable more U.S. workers to become part
of a vital U.S. minerals supply chain.
In summary, we believe the Critical Minerals Policy Act provides a
comprehensive and balanced approach to updating U.S. law and policy
related to minerals that are most critical for NEMA manufacturers. NEMA
commends yon both for introducing this legislation and for holding the
NEMA Testimony for Record of January 28, 2014 Hearing on S. 1600 Senate
Committee on Energy and Natural Resources hearing of the full Committee
to begin the process of moving it forward. We look forward to working
with you to achieve passage by the Committee and the full Senate as
soon as possible.
Thank you again for the opportunity to provide these brief remarks.
Respectfully,
Kyle Pitsor,
Vice President, Government Relations, National Electrical
Manufacturers Association (NEMA).
______
Statement of Randall J. Scott, President and Chief Executive Officer,
Rare Element, Lakewood, CO
Rare Element Resources Inc. appreciates the opportunity to comment
on S. 1600, ``The Critical Minerals Policy Act,'' a bill our company
strongly supports. We wish to briefly describe reasons for supporting
S. 1600 and then detail why our advanced Bear Lodge Critical Rare
Earths Project is poised to become America's next source of Critical
Rare Earths (CREEs) by 2016.
S. 1600--We welcome the funding that S.1600 provides to improve the
mineral project permitting process in the United States. Unfortunately,
over the past two decades, the U.S. has become wellknown globally for
imposing increasing levels of delay and uncertainty on companies that
wish to create new sources of strategic and critical minerals as well
as high-tech and family-wage jobs and tax revenues on American soil. In
our experience, agencies such as the Forest Service, which manages the
lands where our Bear Lodge Project is located, lack important resources
including personnel. S. 1600 gives assurance that regulatory agencies
have sufficient in-house technical staff plus sufficient funding to
access competent outside experts to bolster agency talent and move
permits through the National Environmental Policy Act (NEPA) process in
a timely fashion.
Private capital, talent and time are precious and critical
commodities in their own right. Unnecessary delays and stranded capital
do nothing constructive to advance a critical rare earths project such
as the Bull Hill Mine at our Bear Lodge Project toward its goal of
becoming the next domestic critical rare earths producer, one that will
be a strong American answer to Chinese global dominance in this sector.
Today there is a likelihood of inexplicable permitting delay that
has unfortunately become the norm from federal agencies. By bringing
accountability and resources to agencies doing the permitting, S. 1600
gives a greater assurance of certainty to companies such as ours that
are working to meet the national goal of reestablishing a secure
domestic rare earths supply chain.
In short, Rare Element Resources believes S. 1600 is a valuable and
overdue step toward assurance of renewed domestic critical minerals
production. Its prompt enactment will be a key factor in keeping the US
competitive with our partners and a step ahead of those unfriendly to
us around the world.
The Bear lodge Project--We are working to bring into production the
Bear Lodge Critical Rare Earths Project in the Black Hills National
Forest in northeastern Wyoming, with a goal of project commissioning in
late 2016. Our focused exploration work over the past eight years has
given America a growing, longlife rare earth district, with competitive
grades of heavy and critical rare earths. With timely permitting and
advancement of the Forest Service's ongoing Environmental Impact
Statement (EIS), we believe the Bear Lodge Project can be America's
primary source of critical rare earths beginning in 2016, making it a
significant, valuable and secure domestic complement to the production
from Molycorp's Mountain Pass Mine that is more weighted in the lighter
rare earth elements.
Mine commissioning at the Bear Lodge Project by 2016, while
possible, is not assured. The EIS process has begun, and the Bear Lodge
Project deserves a high level of urgency on the part of the Forest
Service to complete the NEPA process in an accelerated and streamlined
fashion.
The Department of Energy has expressed the need to ``accelerate and
streamline'' the federal permitting process through the entire critical
minerals supply chain, beginning with mining. In his Global Threat
Assessment to the Senate Intelligence Committee in March 2013, the
Director of National Intelligence specifically cited ``regulatory
hurdles'' as a factor limiting the United States' ability to counter
China's monopoly on rare earth elements.
We call for no shortcuts. Rather, focused attention, accelerated
and streamlined urgency will allow the Forest Service to provide a
Record of Decision by early 2016, leading to construction,
commissioning and first production. This Committee is urged to stress
to the Forest Service the importance of meeting this 2016 goal.
Why the Bear Lodge Project has become a Critical National Resource
The Bull Hill Mine near Sundance, WY and the hydrometallurgy
plant at nearby Upton, WY combine to be North America's most
advanced rare earths development project.
The mine has a small footprint of less than 900 acres in an
excellent location with adjacent infrastructure, power,
transportation, skilled labor and strong local and statewide
support.
It is poised to begin production of 5,000 -10,000 tons of
rare earths annually by late 2016.
The Bear Lodge Project will be a viable, secure domestic
source of such critical rare earths as Neodymium, Dysprosium,
Europium, Yttrium and Terbium for at least 25 years.
The Forest Service has chosen the EIS Project Manager and
third-party EIS contractor, and expects to produce a Draft EIS
in 4Q 2014 and a final Record of Decision in 1Q 2016.
Growth potential in the Bear Lodge Rare Earths district is
excellent, with adjacent exploration targets indicating further
heavy rare earth enrichment.
Multiple economic and strategic benefits can come from the
Company's patent-pending metallurgical processing technology
that produces a 97 percent pure-bulk rare-earths concentrate
that is free of uranium and thorium.
The process technology also enables process chemical
recycling and regeneration, giving lower capital and operating
expenses as well as a zero-discharge hydrometallurgy facility
and small tailings footprint.
Evaluation of rare earth elemental separation from the
concentrate has begun.
Rare Element Resources has entered into a non-disclosure
agreement with the DOE's Ames and Idaho National Laboratories
under the auspices of DOE's Critical Materials Institute for
rare earths separation research.
The detailed design and economic analysis portions of the
Feasibility Study have begun.
Innovative American mining companies such as Rare Element Resources
need a timely ``Yes'' or ``No'' after we have invested private capital,
talent and innovation to identify domestic resources and technologies
that can help answer America's critical minerals needs. S. 1600 is a
bold step toward ensuring that federal agencies can have the financial
and personnel resources they need, and for these reasons Rare Element
Resources strongly supports S.1600 and urges its prompt passage.
Rare Element Resources Ltd. is a publicly traded mineral resource
company focused on exploration and development of rare earth deposits,
specifically those with significant distribution of critical rare
earths. Headquartered in Lakewood, CO, the company was incorporated in
1999. Its common shares are traded on the New York Stock Exchange
Market (the ``NYSE MKT'') under the symbo ``EE'' and on the Toronto
Stock Exchange (the ``TSX'') under the symbol ``RES.''
______
Statement of Ken Collison, Chief Operating Officer, Ucore Rare Metals,
This is written testimony submitted for the hearing record on
S.1600, the Critical Minerals Policy Act. My name is Ken Collison,
Chief Operating Officer for Ucore Rare Metals, Inc. (Ucore). Ucore is
actively developing the Bokan- Dotson Ridge Rare Earth Project
(project) located on Prince of Wales Island in Southeast Alaska. The
project is in the final stages of evaluation and design and is
anticipating initiating the NEPA permitting review process early in
2014. The Bokan- Dotson Ridge project is particularly enriched with
heavy rare earth elements, including the critical elements Dysprosium,
Terbium and Yttrium. Approximately 40 percent (by weight) of the rare
earth elements contained on the Dotson Ridge property are heavy rare
earths elements, as disclosed in the Company's Nl43-101 compliant
Preliminary Economic Assessment, released in January 2013.
Ucore sincerely appreciates the recent initiatives in Washington to
address the increasing lack of availability of rare earth products and
magnet-making materials for domestic military and defense applications.
Concerns regarding the withdrawal of ongoing supplies of Critical Rare
Earth Oxides produced almost exclusively in China and consumed by US
military contractors, has attracted significant legislative
initiatives.
The Critical Minerals Policy Act, submitted by Senators Lisa
Murkowski (R- AK), Ron Wyden (D- Ore), Mark Udall (D- Col.), Dean
Heller (R- Nev.) and 13 others, if fully enacted, will prevent supply
shortages of critical materials and reduce US dependence on foreign
sources through the revitalization of a domestic supply chain,
including domestic production from near term facilities such as the
BokanDotson Ridge project in Alaska. The bipartisan bill outlines
mineral-specific actions for several elements, including yttrium and
scandium, materials scheduled to commence production at the Bokan
project by as early as 2017.
Dotson Ridge is the richest domestic source of three heavy rare
earth elements-dysprosium, terbium, and yttrium-which are critical to
several advanced weapon systems, such as stealth helicopters and
precision-guided weapons. Both dysprosium and yttrium are critical to
multiple US defense systems. Dysprosium is a crucial ingredient in
neodymium-iron-boron magnets as a means of increasing coercivity,
applications of which include aircraft actuator motors in flight
control systems, landing gear, and munitions. Yttrium is critical to
the defense industry applications such as the manufacture of various
ceramic and glass materials required in jet engines. The Joint Strike
Fighter (JSF) development program relies on both Dy andY as critical
input components.
Currently, all of the world's commercially-available heavy rare
earth elements are produced in China. Ongoing production and export
quotas have limited the availability of these materials to global
markets. According to a March 2012 report from DOD, yttrium, terbium,
and dysprosium are all considered to be ``critical to the production,
sustainment, or operation of significant United States military
equipment,'' as well as ``subject to interruption of supply, based on
actions or events outside the control of the government of the United
States.'' Yttrium, in particular, was shown to be in deficit when
considering projected future domestic supply.
Thank you for the opportunity to submit testimony on this important
bill.
______
Statement of Dennis Watson, Mayor, City of Craig, Alaska
This is written testimony submitted for the hearing record on
S.1600, the Critical Minerals Policy Act. My name is Dennis Watson,
Mayor of Craig, Alaska located on Prince of Wales Island in Southeast
Alaska. Craig has a population of 1200 and is the largest community on
America's third largest island which has a total population of 4,000.
There are total of ten communities on the island, many of which are
connected by road to one another as a result of the road system built
during the better days of timber harvest.
I mention these roads because my testimony on this bill is about
the need to evaluate surface transportation access to American sites
that can supply critical minerals including rare earth minerals. As the
Committee knows, Alaska is blessed with an abundance of minerals which
it has supplied to the Nation since it was acquired from Russia in the
19th century. Southeast Alaska and Prince of Wales have historically
been part of this tradition, and a number of successful mines have been
developed on the Island.
Now, there is a great prospect for development of new mines on
Prince of Wales Island. One of these is a potential rare earth mineral
mine which could provide a lot of rare earth minerals to our nation's
economy and security. That mine is called the Bokan-Dotson Ridge
project.
``The Bokan property is particularly enriched with heavy rare
earth elements, including the critical elements Dysprosium,
Terbium and Yttrium. Approximately 40 percent(by weight) of the
rare earth elements contained on the Dotson Ridge property are
heavy rare earths elements, as disclosed in the Company's NI43-
101 compliant resource estimate, released in March of 2011.''
See http://ucore.com/projects/bokan-mountain-alaska/project-
overviewSo and attachment
So, the development of this property has great potential for the
nation and is just what Sen. Murkowski and the cosponsors of this bill
intend that the study authorized by this bill evaluate. The City of
Craig strongly supports the Bokan--Dotson Ridge project and has
requested the Alaska Congressional delegation to sponsor a bill, S.181,
to allow surface transportation access to the mine site. As I said
above, Prince of Wales has an extensive road system, more than most
places in rural Alaska. However, even though the Bokan-Dotson Ridge
project is located on Prince of Wales Island, there is no road
connecting the project site with the rest of the POW road system. Even
more frustrating is the fact that the current state of federal land
management most likely prevents construction of a road without specific
legislation action by this Committee because much of the area on which
a road could be sited is now located in a Roadless area since over 90
percent of Southeast Alaska has been declared'' roadless'' by an ill-
advised federal court decision which voided a long standing out of
court settlement that had exempted Southeast Alaska from the rest of
the nation's roadless issues.
We urge this committee to do two things:
1. Please include a study of transportation issues for critical
minerals , particularly rare-earth minerals in this bill. This bill is
intended to identify how the United States may find and develop a
secure, domestic supply of these critical minerals. However, if the
minerals exist but federal land management policy prevents or
substantially retards the ability to develop and transport these
mineral to a logical production site, then this policy needs to be
identified in this report and needs to be adjusted to accommodate these
needs.
The Study should identify these access problems and recommend
specific changes to allow these critical/rare earth minerals to be
developed with logical and economic access.
2. Please schedule a hearing on S.181 which provides a solution for
this specific surface transportation problem for the critical rare
earth minerals at Bokan-Dotson Ridge. That bill is a bipartisan bill
which was introduced by Ranking Member Murkowski and Sen. Begich almost
a year ago, January 30, 2013, Yet, there has been no hearing on this
bill. There has been a hearing on the companion bill, HR. 587 in the
House Natural Resources Committee and we are hoping that the bill will
be marked up soon.
The bills are identical and are very simple-they provide an
exception to the Roadless Rule To permit construction of a road between
the Bokan- Dotson Ridge project and another precious metals mine. The
bill does not authorize and funding for construction. The bill seeks
only to solve the Roadless problem. It is not an earmark for road
construction. The mine's sponsors understand and support this bill.
They are not looking for federal subsidy but the mine needs this
surface access to make its transportation more viable and to allow
Prince of Wales Island residents to work as employees.
Additionally, this would allow local residents of the island to
obtain year round employment at the mine. Right now the only access is
by boat which is just not very practical for daily commuting from
communities on the Island which has an annual unemployment rate of 12.8
percent through November 2013..
Attached for the record are many letters and resolutions of support
from all over the State and region. This project is supported by local
communities which form the Prince of Wales Community Advisory Council
and encompass most of the communities on the Island as well as the
Southeast Conference and Ketchikan and Alaska State Chambers of
Commerce. In summary, the Bokan-Dotson Ridge mineral prospect has a
real chance to make a difference in America's rare earth mineral
supply. But the Committee and the Congress need to look directly at the
surface transportation issues affecting this and other mineral
properties.
Thank you for the opportunity to submit testimony on this important
bill. I hope that I will have the opportunity soon to testify at a
similar hearing on S.181, and hopefully in person.