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The U.S. Rare Earth Industry: Its Growth and Decline
Published online by Cambridge University Press: 12 March 2014
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- Copyright © Donald Critchlow and Cambridge University Press 2014
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1. At the time of the hearing, Karl A. Gschneidner Jr. was the Anson Marston Distinguished Professor of Materials Science and Engineering at Iowa State University, Senior Scientist at the U.S. Department of Energy’s Ames Laboratory, and member of the National Academy of Engineering. He is popularly known as “Mr. Rare Earth.” Mark A. Smith was Chief Executive Officer, Molycorp Minerals, LLC. Stephen W. Freiman was President, Frieman Consulting, Inc., and had been the former Deputy Director of the Minerals Science and Engineering Laboratory, National Institute of Standards and Technology. Steven Duclos was the Chief Scientist and Manager of Material Sustainability at the General Electric Global Research unit. Mr. Terence Stewart, Esq., was Managing Partner of Stewart and Stewart. He had extensive experience in international trade and customs law. See U.S. H.R. “Rare Earth Minerals and 21st Century Industry,” Hearing before the Subcommittee on Investigations and Oversight, Committee on Science and Technology (15 March 2010), accessed 18 August 2002, http://www.gpo.gov/fdsys/pkg/CHRG-111hhrg55844/pdf/CHRG-111hhrg55844.pdf.
2. “Rare Earth Minerals and 21st Century Industry.”
3. Ibid.
4. Karl A. Gschneidner, “Rare Earth Revival,” accessed 13 September 2011, http://innovate.engineering.iastate.edu/2010/04/12/rare-earth revival. See also Cindy Hurst, “China’s Rare Earth Industry: What Can the West Learn?” Institute for the Analysis of Global Security publication (March 2010); Cindy A. Hurst, “China’s Ace in the Hole: Rare Earth Elements,” accessed 10 March 2013 http://www.ndu.edu/press/chinas-ace-in-the-hole.html; Peter C. Dent, “Risky Supply Chain,” Advanced Materials and Processes (August 2009); and Pui-Kwan Tse, “China’s Rare-Earth Industry,” USGS File Report 2011-1042 (2011).
5. Valerie Bailey Grasso, “Rare Earth Elements in National Defense: Background, Oversight Issues, and Options for Congress,” Congressional Research Service Report for Congress No. R41744 (11 April 2012).
6. David Pierson, “China denies reports it will cut exports of rare-earth elements,” Los Angeles Times, 20 October 2010, accessed 22 April 2012, http://articles.latimes.com/pring/2010/oct/20/business/la-fi-china-metals-20101020.
7. Pierson, “China denies reports it will cut exports of rare-earth elements.”
8. Don Lee and Christi Parsons, “US opens trade case against China over rare earth export limits,” Los Angeles Times, 14 March 2012, accessed 22 April 2012, http://articles.altimes.com/print/2012/mar/14/business/la-fi-obama-china-20120314.
9. Goodrich, Carter, “State In, State Out: A Pattern of Development Policy,” Journal of Economic Issues 2, no. 4 (October 1968): 365–83.CrossRefGoogle Scholar
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12. Spedding, “The Rare Earths,” 7; and Paschoa, Anselmo S. and Cunha, Kenya Dias Da, “A Critical Look at NORM in the Monazite Cycle,” The Natural Radiation Environment—8th International Symposium, ed. Paschoa, A. S. (Yaphank, N.Y., 2008), 120.Google Scholar
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14. “Lindsay Chemical Company,” Lehman Brothers Collection, Contemporary Business Archives, Harvard University, accessed 3 March 2012, http://www.library.hbs.edu/hc/lehman/chrono.html?comapny=Lindsay_chemical-company and the United States Environmental Protection Agency cleanup sites homepage, accessed 13 May 2012. http://www.epa.gov.region5/cleanup/lindsaylight/background.html.
15. “Lindsay Chemical Company,” Lehman Brothers Collection.
16. U.S. Bureau of Mines, Minerals Yearbook (Washington, D.C., 1940), 1420; 1941, 1535, and Bloomberg BusinessWeek, “Treibacher Industrie AG,” accessed 13 January 2012. http://investing.businessweek.com/research/stocks/private/snapshot.asp?privecapld=55696451.
17. Charles E. Lindsay to Congress, 17 February 1951, Bourke B. Hickenlooper Papers, JCAE, Box 19, general correspondence, 1951, H-Z, Herbert Hoover Presidential Library.
18. U.S. Bureau of Mines, Minerals Yearbook 1940, 1421.
19. Ibid., 1941, 1535.
20. Ibid., 1944, 1541.
21. Ibid., 1947, 1275; McMahon, Robert J., “Food as a Diplomatic Weapon: The India Wheat Loan of 1951,” Pacific Historical Review 56, no. 3 (August 1987); 372CrossRefGoogle Scholar; and Srinivas Chary, M., The Eagle and the Peacock: U.S. Foreign Policy Towards India Since Independence (Westport, Conn., 1955), 23–39.Google Scholar
22. The expectations from both the United States and India exceeded reality. See Norman Graebner, foreword to The Eagle and the Peacock, vii–vii, and McMahon, “Food as a Diplomatic Weapon,” 349–67.
23. Memorandum: Charles R. Lindsay III to Congress, 17 February 1951.
24. McMahon, “Food as a Diplomatic Weapon,” 370, 374, Merrill, Dennis, Bread and the Ballot: India’s Economic Development (Chapel Hill, 1990), 72.Google Scholar
25. Merrill, Bread and the Ballot, 72.
26. McMahon, “Food as a Diplomatic Weapon,” 372.
27. Hurst, “China’s Rare Earth Industry: What Can the West Learn?” 10.
28. At this time Molycorp went by the name Molybdenum Corporation of America (MCA). In 1974, it changed its name to Molycorp, but for the sake of clarity, I wil use Molycorp throughout the article. Molycorp website accessed 14 August 2012. http://www.molycorp.com/about-us/our-history/, Bureau of Mines 1974, 1118; and Walker, Simon, “Breaking the Rare-Earth Monopoly,” Engineering and Mining Journal (December 2010): 47.Google Scholar
29. Iowa State College became Iowa State University of Science and Technology in 1959.
30. “Rare Earths: The Lean and Hungry Industry,” Chemical and Engineering News (10 May 1965): 82; Spedding, F. H., Voigt, A. F., et al., “The Separation of Rare Earths by Ion Exchange. I. Cerium and Yttrium,” Journal of the American Chemistry Society 69 (November 1947): 2777–81CrossRefGoogle ScholarPubMed; Spedding, F. H., Voigt, A. F., et al., “The Separation of Rare Earths by Ion Exchange. II. Neodymium and Praseodymium,” Journal of the American Chemistry Society 69 (November 1947): 2786–92CrossRefGoogle Scholar; Spedding, F. H., Fulmer, E., et al., “The Separation of Rare Earths by Ion Exchange. III. Pilot Plant Scale Separations,” Journal of the American Chemistry Society 69 (November 1947): 2812–18CrossRefGoogle Scholar; Spedding, F. H., Fulmer, E., et al., “The Separation of Rare Earths by Ion Exchange. V. Investigations with One-tenth Per Cent. Citric Acid-Ammonium Citrate Solutions,” Journal of the American Chemistry Society 72 (June 1950): 2354–61CrossRefGoogle Scholar; Spedding, F. H., Fulmer, E., et al., “The Separation of Rare Earths by Ion Exchange. VI. Conditions for Effecting Separations with Nalcite HCR and One-tenth Per Cent. Citric Acid-Ammonium Citrate Solutions,” Journal of the American Chemistry Society 73 (October 1951): 4840–47CrossRefGoogle Scholar; Spedding, F. H. and Powell, J. E., “The Separation of Rare Earths by Ion Exchange. VIII. Quantitative Theory of the Mechanism Involved in Elution by Dilute Citrate Solutions,” Journal of the American Chemistry Society 76 (May 1954): 2550–57.CrossRefGoogle Scholar Patent number 2798789, patented 9 July 1957.
31. Edward J. Brunenkant, AEC to Frank H. Spedding, Ames Laboratory, 10 December 1965 in RS 18/12/1, box 1, Center for Rare Earths and Magnetics, ISU Archives.
32. U.S. Bureau of Mines, Minerals Yearbook 1965, 773; and “Rare Earths: The Lean and Hungry Industry,” Chemical and Engineering News, 82.
33. “Rare-Earth Information Center,” brochure, 1995. In addition to the Ames Laboratory, many research groups throughout the U.S. engaged in rare earth research. A study of The Rare Earth Information Center News (hereafter RIC News) identified several of them between 1967 (vol. 2) and 1975 (vol. 10). Within the United States, rare earth research groups have been identified at the Bureau of Mines; Arizona State University; the University of Denver; the University of Dayton; Purdue University; and Penn State University. Internationally, research groups that studied rare earths included the University of Dundee, Great Britain; the University of Munich, Germany; the French National Center for Scientific Research; the Academy of Science of the USSR; the University of Genoa, Italy; Hebrew University in Israel; Tohoku University of Japan; and Helsinki University of Technology, Finland.
34. Gschneidner, “The Fraternal Fifteen,” 40.
35. “Rare Earths: The Lean and Hungry Industry,” 85–87, 89; Gschneidner, “The Fraternal Fifteen,” 40; U.S. Bureau of Mines, Minerals Yearbook 1960, 928; 1969, 953.
36. U.S. Bureau of Mines, Minerals Yearbook 1962, 1026; 1964, 895.
37. “Rare Earths: The Lean and Hungry Industry,” 84. RIC News reported that despite expectations, 1968 proved to be a disappointing year for the color TV industry. Although analysts expected growth from $5 million to $7 million, the industry leveled off at $5,600,000; RIC News 4 (December 1969): 3.
38. RIC News 27 (September 1992): 7; and Robinson, Arthur L., “Powerful New Magnet Material Found,” in 1787–1987: Two Hundred Years of Rare Earths, ed. Gschneidner, Karl Jr. and Capellen, J. (Amsterdam; and Ames, Iowa, 1987), 19–22.Google Scholar
39. “Energy product” is defined as the product of coercivity (resistance to being demagnetized) and the saturation magnetization, and is a measure of the potential for strong magnetic energy. Hurst, “China’s Rare Earth Elements Industry,” 12.
40. U.S. Bureau of Mines, Minerals Yearbook 1960, 928; 1965, 767; 1970, 971; 1973, 1071.
41. Robinson, “Powerful New Magnet Material Found,” 19.
42. RIC News 22, no. 4, 1 and 4; and Karl A. Gschneidner Jr., “Rare Earth Minerals and 21st Century Industry,” 9.
43. RIC News 1, no. 4 (December 1966): 7.
44. RIC News 3, no. 1 (March 1968): 4.
45. RIC News 4, no. 2 (June 1969): 1.
46. Ibid.
47. RIC News 15, no. 2 (June 1980): 3.
48. RIC News 13, no. 3 (September 1978): 4.
49. RIC News 17, no. 2 (June 1982): 2.
50. Katherine Bourzac, “Can the US Rare-Earth Industry Rebound? Technology Review, 29 October 2010, accessed 13 September 2011, http://www.technologyreview.com/energy/26655/.
51. For example, Th. Goldschmidt had produced rare earths in Germany since the 1940s; see RIC News 12, no. 3 (September 1977): 1. The French company Rhône Poulenc and the Japanese Company Shin-Etsu produced rare earths in the 1960s, accessed 9 January 2012, http:www.fundinguniverse.com/company-histories/RhonePoulenc-SA-Company-History.html; and RIC News 4, no. 2 (June 1969): 1.
52. National Materials Advisory Board, Commission on Engineering and Technical Systems, National Research Council, Pub. NMAB-426 (Washington, D.C., 1985), 21.
53. RIC News 23, no. 2 (June 1988): 3.
54. Ibid.
55. RIC News 24, no. 1 (March 1989): 5.
56. RIC News 30, no. 4 (December 1995): 4.
57. Current revised estimates have China’s at 97 percent of the world’s reserves. See Marc Humphries, “Rare Earth Elements: The Global Supply Chain,” Congressional Research Service (30 September 2010): 6.
58. RIC News 29, no. 2 (June 1994): 5; and “Can the Rare-Earth Industry Rebound?”
59. RIC News 11, no. 1 (March 1976): 4, as reported in the Peoples Newspaper (October 1975).
60. RIC News 20, no. 1 (March 1985): 4.
61. RIC News 20, no. 4 (December 1985): 4.
62. In 1966, Xu and his wife were imprisoned by the government. He returned to the university in 1972. Xu Guangxian: “A Chemical Life,” in Chemistry World: RSC-Advancing the Chemical Sciences, accessed 12 May 2012, http://www.rsc.org/chemistryworld/News/2009/March/25030902.asp.
63. Hurst, “China’s Rare Earth Elements Industry,” 6–8; and “Xu Guangxian: A Chemical Life.”
64. RIC News 23, no. 3 (September 1988): 3.
65. RIC News 20, no. 4 (December 1985): 7.
66. Ibid.
67. Hurst, “China’s Rare Earth Elements Industry,” 6.
68. U.S. Bureau of Mines, Minerals Yearbook 1978/79, 740.
69. Ibid.
70. Hurst, “China’s Rare Earth Elements Industry,” 11.
71. RIC News 17, no. 1 (March 1982): 5.
72. Fifarek, Brian J. and Veloso, Francisco M., “Offshoring and the Global Geography of Innovation,” Journal of Economic Geography 10 (2010): 563–65.CrossRefGoogle Scholar
73. RIC News 23, no. 3 (September 1988): 5.
74. RIC News 24, no. 2 (June 1989): 6.
75. RIC News 25, no. 3 (September 1990): 6.
76. RIC Insight 4, no. 5 (May 1992): 2; and RIC News 26, no. 1 (March 1991): 2. The Rare Earth Information Center published RIC Insight monthly from 1988 to 2002.
77. RIC Insight 6, no. 12 (December 1993): 1; and 7, no. 1 (January 1994): 2.
78. RIC Insight 8, no. 4 (April 1995): 1.
79. Hurst, “China’s Rare Earth Industry,” 12–13.
80. RIC News 29, no. 2 (June 1994): 5; and “Can the Rare-Earth Industry Rebound?”
81. RIC News 22, no. 1 (March 1987): 1; and RIC News 33, no. 4 (December 1998): 2.
82. RIC Insight 5, no. 7 (July 1992): 1–2.
83. RIC Insight 7, no. 2 (February 1994): 1.
84. RIC News 31, no. 4 (December 1996): 5.
85. Hurst, “China’s Rare Earth Elements Industry,” 11.
86. Fifarek and Veloso, “Offshoring and the Global Geography of Innovation,” 565.
87. Hurst, “China’s Rare Earth Industry,” 19.
88. RIC News 35, no. 3 (September 2000): 4.
89. James B. Hedrick, “Rare Earth Metals,” 117–18 (n.d., n.p.); Hurst, “China’s Rare Earth Elements Industry,” 11, “Rare Earth Elements—Critical Resources for High Technology,” USGS Fact Sheet 087-02, 9, accessed 20 December 2011, http://ppubs.usgs.gov/fs/2002/fs087-02/; Humphries, “Rare Earth Elements,” 10; and David Barboza, “Reform Stalls in Chinese Factories: To Supply the West, Workers Endure Lost Fingers and Low Pay” New York Times, 5 January 2008. For an overview of China’s environmental and safety record, see Cindy Hurst, “The Rare Earth Dilemma: China’s Rare Earth Environmental and Safety Nightmare,” Cutting Edge News, accessed 12 August 2012, http://www.thecuttingedgenews.comn/index.php?article 21777.
90. RIC News 9, no. 1 (March 1974): 4; and 28, no. 4 (December 1993): 9.
91. “Rare Earths: The Lean and Hungry Industry,” 86.
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93. U.S. Bureau of Mines, Minerals Yearbook 1973, 1069; 1975, 1215; 1982, 705; 1984, 752; and 1986, 773.
94. U.S. Bureau of Mines, Minerals Yearbook 1985, 792.
95. Ibid.
96. U.S. Bureau of Mines, Minerals Yearbook 1986, 773; 1987, 719; 1988, 780; 1989, 826.
97. Website for Molycorp, Inc., accessed 11 May 2000, http://www.molycorp.co/AboutUs/OurHistory.aspx.
98. Bureau of Mines, Minerals Yearbook 1991, 1216.
99. Hurst, “China’s Rare Earth Elements Industry,” 11; RIC News 33, no. 2 (June 1998): 3; and “Can the Rare-Earth Industry Rebound?” Between 1998 and 2002, Molycorp recovered rare earths from its stockpiles.
100. Letter from Edward J. Bunenkant, AEC, to Frank H. Spedding, Ames Laboratory, 26 June 1967; and RIC News 3, no. 1 (March 1968): 1.
101. Goodrich, “State In, State Out,” 366.
102. The five companies were American Potash and Chemical Corporation, a subsidiary of Kerr-McGee; W. R. Grace & Company; Molybdenum Corporation of America (Molycorp); Research Chemicals Division, Nuclear Corporation of America; and Ronson Metals Corporation. RIC News 3, no. 1 (March 1968): 1; and RIC News 3, no. 2 (June 1968): 1.
103. RIC News 4, no. 3 (September 1969): 1.
104. K. A. Gschneidner Jr., “Past, Present, and Future of Rare Earth Metallurgy,” in 1787–1987: Two Hundred Years of Rare Earths, 26.
105. Rare Earth Metals Archive, accessed 7 June 2013, https://www.ameslab.gov/dmse/rem/archive.
106. Gschneidner, “Rare Earth Minerals and the 21st Century Industry,” 17.
107. Fifarek and Veloso, “Offshoring and the Global Geography of Innovation,” 563–66.
108. Ibid., 564.
109. Ibid., 574.
110. Goodrich, “State In, State Out,” 366–73.
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In contrast, the U.S. rare earth industry remained relatively diffuse during its lifetime. Molycorp’s operation concentrated on the mining and production of raw materials rather than extending its reach to encompass higher-level manufacturing. The expanded supply of rare earth stocks certainly stimulated and supported advancements in domestic rare earth technologies, but it left Molycorp itself vulnerable to the discovery of “the next lucrative source” of rare earths (just as the United States had grown dependent on India’s supply in the 1940s and China in the 2000s). One can argue that by vertically integrating, it might have had more options to pursue once China entered the picture. China has deliberately avoided such dependence inasmuch as it ultimately intended to use its own rare earth reserves to produce finished goods rather than sell raw materials to the international market. Though China first entered the industry as a supplier of raw materials, it leveraged its stock to bring in foreign corporations and know-how to jump-start its own vertical integration: mining, processing, and producing finished goods as well as developing a healthy intellectual infrastructure, all of which the government firmly backed.
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119. Ostrander and Lowry, “Oil Crises and Policy Continuity,” 389.
120. Wells, “Fueling the Boom,” 73, 79–81; Priest, “The Dilemmas of Oil Empire,” 240; Sabin, “Crisis and Continuity in U.S. Oil Politics, 1965–1980,” 177, 184.
121. Ostrander and Lowry, “Oil Crises and Policy Continuity,” 390.
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125. National Metals Advisory Board, Commission on Engineering and Technical Systems, National Research Council, “Magnetic Materials,” Publication NMAB-426 (Washington, D.C., 1985), 21.
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127. Ibid.; and Karl A. Gschneidner Jr., “Replacing the Rare Earth Intellectual Capital,” accessed 11 March 2013, http;//www.magneticsmagazine.com/main/articles/replacing-the-rare-earth-intellectual-capital/.
128. U.S. H.R. “Rare Earth Minerals and 21st Century Industry.”
129. In 1977, publicly traded Molycorp was acquired by Union Oil of California (UNOCAL). In 2005, the Chevron Corporation purchased UNOCAL and its holdings. At this time, China’s biggest offshore oil and gas producer, China National Offshore Oil Corporation, tried to outbid Chevron for UNOCAL, but it did not succeed. See “China Oil Firm in Unocal Bid War,” accessed 21 January 2012, http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/2/hi/business/412830.stm.
130. “Molycorp to Acquire Leading Rare Earth Processor Neo Material Technologies in #1.3 Billion Deal,” accessed 18 August 2012, http://www.molycorp.com/molycorp-to-acquire-leading-rare-earth-processor-neo-material-technologies-in-1-3-billion-deal/.
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