_{Source: www.mineweb.com}

While the U.S. could have some rare earth mining by 2012, a federal government report warns the U.S. lacks the facilities for more rare earth material processing.

RENO, NV -

In a report presented Wednesday to the Senate and House Committees on Armed Services, the General Accounting Office (GAO) warned that the U.S. lacks the ability for more rare earth material processing.

And, it may take up to 15 years to rebuild a U.S. rare earth material supply chain, depending on a number of factors.

In 2009, China produced about 97% of all global rare earth oxides. The GAO found that the United States has the expertise but lacks the manufacturing assets and facilities to refine oxides to metals.

For example, the U.S. is not currently producing neodymium iron boron permanent magnets and has only one samarium cobalt magnet producer. And, the GAO advised, "China's market dominance may affect future U.S. availability of rare earth materials."

‘While China is currently exporting rare earth oxides and metals, some rare earth industry officials believe that in the future China will only export finished rare earth material products with higher value," the report said.

Rebuilding a U.S. supply chain of rare earths metals is dependent on several factors. Only one rare earth deposit, the Mountain Pass mine near Las Vegas, could begin mining rare earths by 2012. Other U.S. rare earths deposits are still in early exploratory stages of development.

"Once a company has secured the necessary capital to start a mine," the GAO advised, "government and industry officials said it can take from 7 to 15 years to bring a property fully online, largely due to the time it takes to comply with multiple state and federal regulations."

Other factors which may impact the rebuilding of a U.S. rare earth supply chain would include capital investment, the ability to develop processing plants, and environmental concerns which could make rare earth minerals extraction difficult and costly.

The GAO advised that some academic experts believe new processing technologies are needed in order to compete with Chinese producers on price, and that those technologies may not be available for up to four years and "will require large start-up costs."

Another concern is that Japanese and other foreign companies currently own key technology patents for manufacturing neodymium iron boron magnets. As a result U.S. companies must wait for the patents to expire.

In its report GAO noted that the Department of Defense has begun to assess its own dependency on rare earth materials, that it plans to complete by the end of September. The GAO found that the use of rare earth materials is widespread in defense systems such as precision-guided munitions, lasers, communications system, radar systems, avionics, night vision equipment and satellites.

"GAO analysis shows that subcontractors at the lower tiers of the supply chain use rare earth materials sourced from China to produce components used in larger defense systems."

The agency found that DOD has not yet identified national security risks due to rare earth material dependencies, but is in the process of determining such risks.

Other government agencies are also starting to address rare earth risks, the GAO said. They include the Department of Commerce, the Office of Science and Technology in the Executive Office of the President, and the Department of Energy.

"Rare earth industry and defense contractors have raised concerns about the Chinese monopoly for rare earth minerals," the GAO said.