Mining Expert McGroarty to Moneynews: US ‘Handed’ China a Monopoly on Rare-Earths

Thursday, 14 Feb 2013 01:35 PM

By Dan Weil and John Bachman

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The United States has conceded a monopoly to China on rare-earth minerals, key elements in computers, smart phones, defense and clean energy equipment, says Daniel McGroarty, president of the American Resources Policy Network, a nonprofit think tank of mining experts.

“We’re tremendously dependent on foreign supply when it comes to the rare earths,” he tells Newsmax TV in an exclusive interview, referring to the group of 17 elements that are not often found concentrated.

In fact, China provides about 95 percent of global supply, he notes.

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The United States ceased production of rare-earths minerals about a decade ago, though now a company called Molycorp has jumped back into the fray.

The problem is that the United States is tied for last with Papua, New Guinea, in an annual study of how long it takes to get a mine in operation.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

“It takes on average seven to 10 years from the discovery of a resource to actually bring it into production, seven to 10 years to get through the permitting process. In other countries like Australia, it takes 18-24 months,” McGroarty, principal at Carmot Strategic Group, explains.

“The United States is just costing itself in every sense of that term when we don’t bring mines into production more readily.”

It’s not that the United States lacks rare-earth supply, McGroarty maintains. We have 13 to 15 percent of the world’s known reserves.

“But we have been producing zero,” he notes. “So it’s not a monopoly that the Chinese have gotten by some sort of imagination. It’s rather a monopoly that we have handed them, and they simply exploited it. We need to get back in the game.”

Part of the problem domestically is federalism, he says. U.S. companies must deal with local, state and federal regulators, while in other countries it can be one-stop shopping for regulatory approval.

“We can streamline the system so that parts of the permitting process can run concurrently,” McGroarty says. In other words, the federal, state and local permitting processes can take place at the same time.

Another issue is that the U.S. permitting process “is very open to litigation of any minor issue, which will often set the clock back,” he says.

The Environmental Protection Agency (EPA) is a big part of the problem, McGroarty says.

There was a period under Administrator Lisa Jackson’s tenure — she announced in December that she is stepping down — when the EPA unilaterally expanded its understanding of clean water legislation to both shut down a gold mine already in operation and to stop the permitting process for a copper mine, he says.

So will the EPA’s stance change?

“I don’t know,” McGroarty says. “The leadership, I think, comes from the top of the administration down.”

At least the White House has announced a critical materials initiative, so they are putting that issue into play,” he says.

“I hope they follow it through and understand that means the United States needs the mining to support the manufacturing. … But, it requires a lot more than simply talk and study.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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