...Ping
(Please FReepmail if you want on, or off, this list. I certainly have no desire to increase anyone’s stress-level. Thanks!!!)
Posted on 04/21/2006 7:20:13 AM PDT by FerdieMurphy
It was in his 2003 State of the Union Address that President George W. Bush expressed his administration’s objective to “strengthen global treaties banning the production and shipment of missile technologies.” It was thereafter, between 2003 and 2004, in which the Committee on Foreign Investments in the United States (CFIUS) allowed the last manufacturer in the U.S. that provided a key element instrumental in cruise missile guidance, to be relocated to the Peoples’ Republic of China. During this week’s U.S. visit of China President, Hu Jintao, and his meetings with President Bush and his advisors, it would be apropos to revisit a strategic corporate deal which occurred over a period of several years. With its finality in 2004, the U.S. now remains totally dependent upon China for key rare earth metals and their production necessary in the manufacture of the most crucial of U.S. military warfare.
The CFIUS decision in January 2006, regarding the approval of the Dubai Ports World Company, to take over port operations of the six largest East Coast ports in the U.S., not only raised many U.S. Congressional eyebrows but set off a strew of newly proposed legislation, to include more transparency between CFIUS and the U.S. Congress. But CFIUS has long had a precedent of approving such business transactions, and the ports deal was only the latest of such. As the deal approval became known to the public via AP reporter, Ted Bridis, in February 2006, apparently even he was more in the loop than the lawmakers on Capitol Hill. However, there have been close to 2,000 other deals approved by CFIUS since its inception in 1988, many of which should have involved and concerned the U.S. Congress much sooner.
It is the lack of accountability of the secret CFIUS committee, presided over by the Secretary of the Treasury, which has only of late concerned the U.S. Congress, and with its machinations just recently disclosed to the public. And it was the Dubai Ports deal which exposed the seemingly arbitrary fashion, and unanswerability to any other branch of government which was disturbing. For the decisions CFIUS makes ultimately becomes the responsibility of the U.S. federal government, while possibly compromising its best interests, including U.S. national security.
As it is, the Department of Defense has problems procuring necessary equipment and manufacture of parts from foreign entities, where national security must be weighed over acquisition of parts from offshore. Yet at the same time, the U.S. government has pushed the concept of global trade, often in direct conflict with the protection and national security of the U.S.
Producing powdered neodymium-iron-boron permanent magnets is critical to enabling control of aircraft and more specifically cruise missiles guidance systems as well as the Joint Direct Attack Munition or JDAM bomb, used prominently in the 2003 bombing of Baghdad, which preceded arrival of U.S. ground troops there. Magnequench UG, although still headquartered in Indianapolis, IN, is the sole provider of specialized magnets for military aircraft systems. But it closed down its manufacturing arm permanently in 2004 and finished relocating operations to China at that time, with its operations now solely controlled by Chinese companies with direct ties to the Chinese government.
Magnequench magnets are produced from a unique patented process of sintering specialty metals. They are used by various electronics and aviation companies, but Magnequench’s primary client is the Pentagon, leaving the U.S. in a rather precarious position with China. Enjoying 85% ownership of the world’s market of rare earth metals, required for its magnet production, Magnequench’s factories are now located in Batou, China. It is there that the world’s only operating rare earth mine exists. Thus, China now owns a monopoly on the manufacture of missile magnets which the U.S. military is dependent upon for its most sophisticated technology and weaponry.
Magnequench’s relocation culminated following several years of what started out as a General Motors subsidiary company in 1986. General Motors was responsible for the development of the manufacture of a permanent magnet material in the early 1980’s and began its production in 1987. In 1995, Magnequench’s majority interest was purchased from General Motors by the Sextant Group, which was comprised of two Chinese companies, San Huan New Material and the China National Non-Ferrous Metals Import and Export Corporation. It is reported that few in the industry or in the federal government knew which companies formed Sextant at that time.
Three years later, after commitment from Magnequench CEO, Archibald Cox, Jr., that its two Indiana-based plants would not be shuttered, its assembly line for magnets in Anderson, IN was shipped to China. In 2000, GA Powders, a subsidiary of Magnequench, originally a Department of Energy project, was relocated from Idaho Falls, ID to Tianjin, China. And in 2004 Magnequench’s other Indiana plant in Valparaiso, IN, responsible for production of elements of the JDAM bomb was shut down and shipped to China. Although there was an “agreement with GM” from Cox that the plant would remain in Anderson, IN according to Clyde South, a negotiator for the United Auto Workers Local 662, Magnequench proceeded to eliminate all of its domestic manufacturing jobs anyway.
Under the 1988 Exxon-Florio Amendment to the Defense Production Act, President Bush could have ordered San Huan New Materials to divest its holdings in Magnequench, as it manufactured a strategic asset. The President was pressed to do so by Congressman Even Bayh and Congressman Pete Visclosky, both of Indiana in 2003, but the President chose not to intercede. In 1990, however, President George H.W. Bush ordered China’s government-owned National Aerospace and Export Company to divest its interest in Mamco Manufacturing of Seattle, WA. At that time it was feared that China would use Mamco to acquire its jet fighter technology.
In addition to this particular example of guidance missile manufacture, the acquisition of titanium is also becoming a problem for the military in procuring spare parts and for its manufacture of its aviation vehicles. The Pentagon continues to have conflicts with the Congress on waiving the Berry Amendment. Enacted in 1941 and updated in 1972, it requires that specialty metals, including rare earth metals, titanium and super alloys, be manufactured in the U.S. for its weapons systems, unless otherwise unattainable. But as more and more American companies relocate offshore, the lines drawn become less and less clear.
And while not appropriate to put the blame of the offshoring of strategic assets on any particular President or branch of government at this time, it is appropriate, however, to see how various factions of the three branches of government, along with the loosening of corporate and industry regulations over the years, have cumulatively jeopardized the interests of the U.S. It is important that lawmakers therefore not become hawkish over the observance of our laws only when it becomes convenient to win political capital, but to how best serve the interests of the U.S. For the ramifications of business as usual when it comes to strategic assets could do irreparable future harm to America’s most vital asset, that being the American people.
This strategy has our enemies in total disarray. Meanwhile our Politcal Class just keeps slogging away doing the peoples' business.
Un-freaking-believable!
"This strategy has our enemies in total disarray. Meanwhile our Politcal Class just keeps slogging away doing the peoples' business."
This is where the free traders come in and tell you it's all ok. We can retool. We can compensate. We're not going to war with China. etc, etc.
The average American is under assault from all directions. I watched the History Channel presentation on Rome last night. Rome was big, and powerful and advanced, and the collapse of Rome was unimaginable too.
That's actually quite close to what I was thinking.
This is old news.....to recap, you can get rare earth magnets from 2 places....china and california...the enviro-wacko's in california had the mine there closed for ENVIRONMENTAL reasons. we can re-open it at any time to get what we need. Maybe we need to buy all china has, so they don't have any.
Where's the basket.....I want to jump out!
Magnequench’s factories are now located in Batou, China. It is there that the world’s only operating rare earth mine exists.
If there is really only ONE UNIQUE SOURCE on earth for the rare earth elements required as raw materials, and this source is in China, then they could cut the supply any time they wanted. In that case it wouldn't matter where Magnequench was located. Maybe that is what President Bush was thinking-- makes no sense since the Chinese control the resource anyway. Just a thought.
What a shame CFIUS wasn't around in 1940/41 to farm out the Manhattan Project to Nippon, Inc.
What's the big deal, it's dirt to them as long as defense contractors don't show them how to create the finish product? We may still have some secrets left, maybe.
What Are Rare Earth Elements (REEs)?
The rare earth elements are also known as lanthanides and include the 15 elements in the lanthanide series of the periodic table plus yttrium and scandium. The better known elements are cerium, lanthanum, neodymium, praseodymium, gadolinium, europium and samarium.
What are REEs Used For?
About half of the rare earths produced are used as catalysts in the petroleum and automotive industries. The other half are used in a variety of high-technology applications including permanent magnets used in many types of motors, computer data drives and magnetic resonance imaging instruments; polishing media used in manufacturing microchips and many types of precision optical lenses; phosphors used in television screens, monitors and lamps; as a "doping" material in fibre optics to increase bandwidth; as an alloy with other metals to remove non-metal impurities; in rechargeable batteries; in fuel cells and numerous other applications that take advantage of the REEs unique physical qualities.
Where Are They Found?
In fact, the rare earth elements are not really rare. Gold, for instance, is much rarer and even lead is less common than some REEs. What is rare, is their occurrence in economic quantities compared to other mineral commodities. The REEs are usually found in commercial quantities in the minerals monazite and bastnaesite. China produces over 80% of the world's rare earths - 77% of world production coming from one mine. The United States used to produce approximately 6% of the world's supply from one of the only in-situ rare earth mines in the world at Mountain Pass, California. Mountain Pass, the only producing mine in North America, has recently closed its separation plant, and reduced production of concentrate.
The Hoidas Lake rare earth showings are somewhat unique in that the REEs are found in the silicate mineral allanite and the phosphate mineral apatite as opposed to the monazite and bastnaesite mined in China and California. Should the project prove feasible, Hoidas Lake would likely become the only producer in North America operating at full capacity and join Mountain Pass as one of the only in-situ rare earth mines in the world.
Are REEs Valuable?
In a word, yes. Typically, once the rare earth ore is mined and concentrated, it is further processed (either by the mining company or a third party) into a mixed rare earth powder (as oxides or chlorides for example). This mixed rare earth product can be sold as is or processed further by separating the individual REEs into a purer product (ie cerium oxide or neodymium oxide). Depending on the purity, oxide powder, for example, varies in price from US$3.00 per kg for cerium oxide in a one tonne lot size to US$15,000 per kg for scandium oxide in 100 g quantities. The individual powders can also be further refined into metal and, depending again on purity and lot size, can range in price from US$15.00 per kg for lanthanum metal to US$30,000 per kg for scandium metal. To put this into perspective, gold is currently worth about US$8,800 per kg. However, a high-grade gold deposit might have a gross value of only US$100 per tonne, but a high-grade rare earth deposit could easily have a gross value of US$1,000 per tonne or more.
Who Consumes REEs?
The major consumers of rare earths are Southeast Asia (Japan, Korea, Thailand, China) and the USA. The USA is the world's biggest single consumer of rare earths at approximately 27% of the world total. The USA currently imports over 75% of its RE requirement with the value of rare earth products consumed in the USA estimated in excess of US$1 billion per year.
Could A Saskatchewan-Based Rare Earth Industry Compete With China?
Absolutely. Great Western Minerals has established contacts in Japan and the USA who have indicated in writing that they would be prepared to purchase significant quantities of specific rare earth products from a North American producer in order to reduce their reliance on one source. Quality, proximity to market and security of supply are the major selling points with both Japanese and North American consumers.
As China gears up for their own huge industrial and technological revolution, they are consuming a greater percentage of their own natural resources internally and importing more and more metals etc from the West. China will undoubtedly increase their own use of rare earth elements paving the way for a North American producer to become the major source of rare earth elements to Western consumers.
Saskatchewan has no shortage of global marketing experience. Uranium, potash and farm machinery are some of the provinces well-known export successes. A rare earth industry would be well supported in Saskatchewan, from mining, through processing, right down to the research and development of new applications at the research facilities available in the City of Saskatoon.
So much for DFARS compliance.
What we need to do is find an alternative to the rare earth metal magnets, plain and simple, just like we need to start producing an alternative to petroleum. The sooner we can stick it to the Persians, Arabs, and Venezuelans the better!
More like this is where the protectionists come in and tell you that the free traders tell you it's all ok.
Is this material available in the U.S., or not? If it is, then how hard can it be to find someone to operate/process/mine it at a profit? There isn't a free trader on this board who would argue that the U.S. should not have its own source when it is a matter of national security. The fact that the U.S. does not should make everyone wonder why it doesn't. And it's not very likely that the reason is trade policy.
There may be other sources for rare-earth minerals:
http://www.cbc.ca/story/canada/national/2005/07/26/sask-mine-050726.html
http://www.mineralszone.com/busalliance/xeno.htm
Folks, I just don’t know were to start with this whole article. I has so many misstatements and half truths.
First of all I want you folks at FR that I have been involved with this industry for 22 years and have designed many of the motors and systems that they talk about.
I is not hard nor rare to build these magnets. There are some tricks that you need to know. One: unless they are properly combined with a Getter material they will rust and lose power. Two: unless specifically treated the will when they get to around 140C become demagnetized. This is what the special process that they talk about that has the patents. Patents BTW can be revoked at ANY time by the Congress. This right comes straight from the Constitution.
So don’t Panic. Other materials can also be used such as Samarium Cobalt that will offer almost the same Magnetic Coercively (how’s that for a fancy word ?) .
Note Neo Magnets are available on E-bay but don’t let your kids play with them as the can be dangerous.
ANGRY BUMP
China bought proprietary tech over the last decade to machine and manufacture these items. This as much as anything put us in a bind. Two and maybe three administrations were asleep while this happened.
BUMP! I did too.
should read coercivity
Misleading headline.
Darn spell checker.
Kind of dated. Shut down currently. Isn't it interesting how China tried to snag control of UNOCAL...which owns these mines?
China also just snapped up a Canadian oil company...wonder if they also didn't manage their rare earths resources.
I gave a stick of jeweler's rouge to my son this year that I have had for over 40 years, at the time my dad bought it, that stick was the smallest size for sale; he is likely to use maybe one-sixteenth of an inch of the five inches left on the stick which was six inches long when new.
My guess is that the Pentagon has a few tons of these critical materials stashed somewhere.
It isn't exactly like we use several hundred cruise missles every day.
In theory. In practice look at how ridiculously difficult it has been to get a slight expansion of the existing oil pumping operations to include the 2000 acres in the adjacent little corner of the ANWR in Alaska. Clinton renamed it from, what Alaska National Petroleum Reserve... to Alaska National Wildlife Reserve...and Presto! For all practical purposes, the communists in the Sierra Club have a veto over National Security.
Maybe we need to buy all china has, so they don't have any.
I wonder if that isn't the defacto strategy in not doing ANWR and the other major oil deposits we know about...such as the Shale Oil deposits in the Western Rockies.
Lavoisier was well on his way to determining the atomic table of weights when his funding dried up and he was forced to take a government position as a tax collector, unfortunately for him, shortly after the guillotine was invented the revolution broke out and tax collectors were among the first to experience its remarkable efficacy.
Some substitutes are as rare as these minerals you so blithely propose to displace.
Welcome aboard, we need reasonable minds here.
Scientists aren't always writers, which is the reason for his post, I would guess.
Funny, I read it as though it were coercivity just because it should have been, where's that thread that shows one can make out the meaning as long as the necessary letters are included, regardless of their mixed order?
In fairness, FR's spell check flags coercivity but accepts coercively.
You have that 100% correct brownsfan!
For every dollar in my pocket (after taxes) there are at least 20 people trying to take it. There are people transferring jobs out of the country so I cannot even earn another dollar to replace the one I have.
Both political parties have become nothing but a ruling class and so long as they get elected in significant numbers we will be at the bottom of the food chain.
You have people, many conservatives I am ashamed to say, that think a company's sole purpose is to the stock holders. Well like absolutely everything else in life when taken to the extreme it becomes a bad thing. Keep downsizing, keep shifting production overseas, only worry about the next quarterly report and not the 2-5 year long term implications of your cutting. Eventually you will remove so much of the economic fuel (USA workers) that you will have leveled that playing field by lowering the standard of living in the USA to match the 3rd world scum.
A real titan of industry can grow a company with a good product, reasonable (not cheap) price, and high quality service. There are very few people left that can grow a company and I would say in that group you would not find many MBAs.
Any MBA idiot can make the bottom line look good for about 3 years after that the bottom falls out. The last 3 firms I worked for did that exact same thing. Cut, focus on the quarterly report to keep the stock up, get their bonus, after 3 years bankrupt.
Have you seen this...?
(Please FReepmail if you want on, or off, this list. I certainly have no desire to increase anyone’s stress-level. Thanks!!!)
They did a segment in China. I was amazed at the thousands of American's working and owning business's right there in China! Disco's and restaurants. You name it. We have thousands of our own making huge bucks and living in China.
I am still pinching myself.
the U.S. now remains totally dependent upon China for key rare earth metals and their production necessary in the manufacture of the most crucial of U.S. military warfare.Rare Earth metals are mined, not manufactured.
Our enemies in total disarray? You don't have to look any farther than FR to find a whole bunch of FReepers in total disarray over this!!
This is ridiculous! What IF we have a war with China? What a bunch of dumbasses we have running this country! We are so doomed, it's REALLY pathetic! We are in a race to the bottom!!!
Frankly, when things get this bad, it's way past time for an uprising.
I just love it - outsourcing our national security, only klinton could have thought of it!
LOL. Yes. ...Your 'Tree of Liberty' getting a little dry, is it?
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." -- Thomas Jefferson
As those of us know who use Astroflight brushed electric motors.
With the things that are taking place today, I would have to say yes. Very dry indeed...
Thanks for the ping!
Yes Ma'am!
Dumbasses or traitors!
Perhaps some of both?
Nitpicking.
Then why aren't we using samarium cobalt instead of reliance upon COMMUNIST China?
(Just as a matter of interest: does your keyboard sometimes omit the letter "t"?)
We think this as we whistle whilst walking past the cemetery.
That's what the morons or traitors who put us in these positions hope we continue to think.
The gates have been outsourced to the barbarians.
The reality is that when Magnequench was sold there were only a few years left on the patents. It is common practice in business to sell patents in this manner because it allows the buyer to penetrate and gain market share before the patent expires. This is old technology. While it may have defense applications it is more important for battery powered hand tools. Plus, at the time, and continuing today, there is a huge amount of infringement taking place.
The second piece if misinfo in the article is that the US is totally dependent on China to mine the rare earths. In a few days there will be an companion article published at Sierra Times about how the feds/EPA/BLM shut down Molycorp's Mountain Pass mine, ending the US's ability to produce rare earths. Bull crap. Molycorps settling ponds on BLM land were shut down because of the egregious spill. Those settling ponds, along with Molycorps entire mining and processing operations are now located on Molycorp's private property. As such, San Bernedino county is the lead agency in permitting, not EPA. As such, only an environmental impact assesement, rather than statement is required. Whatever Molycorp wants, the county will give them.
The truth is that Molycorp has no interest in gaining their thirty year permit/restarting operations since rare earth prices are depressed because of a worldwide oversupply.
See #49
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