Future Trends - Recycling - Metals - Part I

FUTURE TRENDS – RECYCLING – METALS – PART I
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While Americans are captivated about tight oil and shale gas, they overlook a much bigger
problem.
Mining has to return to the United States. Uncle Sam is not just running low on economically
recoverable oil and gas, but also vital minerals at an even faster rate.
From Wikipedia:
The Defense National Stockpile Center (DNSC) is a branch of the United States' Defense
Logistics Agency, whose purpose it is to store, secure, and sell raw materials. The DNSC is
based in Fort Belvoir and has operations throughout the United States. Materials they offer for
sale include: aluminium oxide, beryllium, chromium, cobalt, diamonds, ferrochromium,
ferromanganese, iodine, iridium, mica, niobium, platinum group metals, talc, tantalum, thorium,
tin, tungsten and zinc.
In 1987, the U.S. Congress assigned the Secretary of Defense the job of determining
requirements for and managing the National Defense Stockpile (NDS) of "strategic and critical"
non-fuel materials. Since then, the Institute for Defense Analyses (IDA) has provided regular
analytic support to the Department of Defense (DOD) in structuring and implementing a stockpile
requirements assessment process. The Defense Logistics Agency is in charge of stockpiling
“strategic materials”.
From the Defense Logistics Agency website:
The origins of the Defense Logistics Agency date back to World War II when America's huge
military buildup required the rapid procurement of vast amounts of munitions and supplies. After
the war, a presidential commission headed by former President Herbert Hoover recommended
centralizing management of common military logistics support and introducing uniform financial
management practices.
The 2015 Strategic and Critical Minerals Report identified net shortfalls for 21 materials
(aluminum oxide, (fused crude), antimony, beryllium metal, carbon fiber (two types)
chlorosulfonated polyethylene, europium, germanium, lanthanum, magnesium, manganese
metal, (electrolytic) and silicon carbide fiber (multifilament). The report recommended adding
stockpiles of these materials to others they were already authorized to stockpile.
From the “Strategic and Critical Materials 2015 Report on Stockpile Requirements” report,
Executive Summary section:
Introduction
The primary purpose of the National Defense Stockpile (NDS Program) is to decrease the risk of
dependence on foreign suppliers or single suppliers on supply chains of strategic and critical
materials used in defense, essential civilian, and essential industry applications. The NDS
Program allows for decreasing risk by maintaining a domestically held inventory of necessary
materials.

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Under Section 14 of the Stock Piling Act, the Secretary of Defense must submit a report on
stockpile requirements to Congress by January 15th of every other year. The report must include
stockpile requirements and detail the key supply-demand assumptions used in arriving at its
recommendations.
The United States’ industrial base depends upon global supply chains that are becoming
increasingly complex. In general, globalization results in lower costs, more efficient supply
chains, and access to more resources. However, globalization creates a dependency on foreign
sources of minerals, materials, and, finished goods.
The above is gross understatement! It is also the reason why U.S. manufacturing has been
exported outside the U.S. since the 1980s. Trump will be trying to correct more than 30 years of
mistakes of letting the American Baby Boomer generation transform the country from producers
to conspicuous consumers without any concern for future consequences. Well, the
consequences have arrived, and the situation will just get much worse!
This dependency is growing. According to the United States Geological Survey (USGS), in 1999
the United States was at least 50 percent dependent on a foreign source for 27 out of the 100
materials covered in its publication Mineral Commodity Summaries. By 2013, this number had
grown to 41 materials out of 100. Many of these materials are essential to the defense,
technology and energy sectors. For example, the United States’ import reliance on tantalum is
100 percent, gallium 99 percent, titanium 79 percent, and cobalt 76 percent according to the
USGS 2014 Mineral Commodity Summaries.
Materials with Approved Acquisition Authority
Defense Logistics Agency Strategic Materials received authorization in Section 1412 of the
Fiscal Year (FY) 2014 National Defense Authorization Act (NDAA) to acquire six materials in
order to mitigate their supply chain risk. Results from the 2013 Requirements Report research
formed the basis of support for these authorizations. Congress has allocated approximately $41
million from the NDS Program Transaction Fund (T-Fund) to purchase the materials.
They are
• ferroniobium,
• dysprosium metal,
• yttrium oxide (including high purity yttrium oxide),
• cadmium-zinc-tellurium substrate materials,
• lithium-ion precursors, and
• triamino-trinitrobenzene and insensitive high-explosive molding powders.

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Materials Requested for Action
The NDS Program has already proposed actions regarding nine of the 21 materials exhibiting a
net shortfall. These requests are based on the results of either the 2013 or analyses conducted
in support of this 2015 Requirements Report. The requests for action on these materials are in
various stages of approval and are presented in Chapter 1. In alphabetical order they are
• boron carbide,
• carbon fiber (five types),
• germanium,
• tantalum, and
• tungsten-rhenium ingot.
Materials Recommended for Stockpiling
Section 12 (1) of the Stock Piling Act defines strategic and critical materials as materials that (A)
would be needed to supply the military, industrial, and essential civilian needs of the United
States during a national emergency and (B) are not found or produced in the United States in
sufficient quantities to meet such need. Based on the results of the 2015 Requirements Report
research, the NDS Program recommends new authorities for twelve of the 21 materials
exhibiting a net shortfall. In alphabetical order they are
• aluminum oxide, fused crude,
• antimony,
• beryllium metal,
• carbon fiber (two types),
• chlorosulfonated polyethylene,
• europium,
• germanium,
• lanthanum,
• magnesium,
• manganese metal, electrolytic, and,
• silicon carbide fiber, multifilament.

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From militechmag.com, “Military Technology”, January 9, 2015:
Deep Trouble
Recent reports that China anticipates series production of combat aircraft engines, which can
handle higher internal temperatures, were of great concern mainly in the West. Asian sources
were saying that with the use of rhenium, a strategic metal that is very generally short of supply,
Chinese manufacturers will produce single-crystal blades for WS-10 TAINHANG-powered J-10
and J-11 fighter aircraft. Some 5 metric tons of metal are needed annually from 2016, a figure
that is equivalent to over 10% of the world’s annual production. This figure is equivalent to the
quantity of rhenium used by Pratt & Whitney for the manufacturing of parts of its F135 engine for
the Lockheed Martin F-35 Joint Strike Fighter (JSF). Rhenium is generally recovered, together
with molybdenum, from so-called ‘porphyry copper’ deposits, but it is also enriched in
sedimentary copper resources, called ‘Kupferschiefer’ (copper shale) in central and eastern
Germany, where the metal, together with other critical metals like molybdenum, tellurium, silver,
gold, and platinum group metals (PGM), could be a by-product of a large-scale underground
copper mining operation by 2018 or 2019. In southwestern Poland, a ‘world class’ deposit of this
type is already in production.
Another group of metals, rare earths or Rare Earth Elements (REE), could be in imminent
danger that is due to cuts in Chinese exports. Members of Congress have expressed concern
over US acquisition of REE in 2010, when a series of events and press reports highlighted what
some referred to as the ‘Rare Earth Crisis’. One event that occurred in July 2010 has been the
announcement by China’s Ministry of Commerce that China would cut its exports of REE by
about 72%. In September 2010, China temporarily cut REE exports to Japan, apparently over
the dispute on the Senkaku/Diaoyu islands in the East China Sea that has further accelerated
during 2013 and 2014. Policymakers in Washington were concerned that China had cut its REE
exports and appeared to be restricting the world’s access to these commodities, with a nearly
total US dependence on China for REE, including oxides, phosphors, metals, alloys, and
magnets.
The same is completely true with regard to titanium used for the JSF.
Western Countries Spend Less
The 15 elements belonging to the group of REE plus two other elements, yttrium and scandium,
are referred to as ‘rare’ because, while they are relatively abundant in quantity, they appear in
low concentrations in the earth’s crust, and economic extraction and processing is both difficult
and costly. They are a unique group of chemical elements that exhibit a range of special
electronic, magnetic, optical, and catalytic properties. So, they have hundreds of applications for
the manufacturing of high-tech military hardware: fin actuators in missile guidance and control
systems; disk drive motors installed in aircraft, tanks, missile systems and C2 centres; lasers for
mine detectors, interrogators, underwater mines and countermeasures; satellite

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communications, radars and sonars; optical devices; ceramics (e.g. jet engine coatings); and
propulsion systems (e.g. rechargeable batteries, fuel cells)
Rare Earths at Risk in Africa, Asia
So-called ‘carbonatite-hosted’ REE resources are widespread (some 527 complexes of this
genetic type are known worldwide), but the bulk of them are closely associated with continental
environments and generally related to large-scale, intra-plate fractures, grabens or rifts, rather
than oceanic environments…
Only a small number of other countries – most of them developing nations – host these
favorable geologic conditions, too. However, some of them are located in the world’s most
dangerous crisis regions like Afghanistan, or are affected by political uncertainties and economic
instability like Bolivia. In the latter country, US and European mining exploration companies
terminated their investments to develop the Cerro Manomo Carbonatite Complex.
Cheap Alternatives
Besides REE and by-product niobium, the defense industry is highly dependent upon other
critical metals: nickel; cobalt; chromium; tungsten (decreasing mine production in Austria;
continuing mining operations in Brazil, South Korea, Spain; new projects in Germany, Portugal,
UK); lithium; tin (new mining ventures in Germany, Morocco, Spain); tantalum (Ghurayyah
tantalum-niobium-REE project in Saudi Arabia awaiting approval); and gallium, germanium and
indium. Both germanium and indium are contained in flat screen displays and laptops.
Conclusion
In a seven-page report, which was issued in March 2012, Congress encouraged the DoD to
develop a collaborative, long-term strategy designed to identify any material weaknesses and
vulnerabilities associated with rare earths and other strategic and critical materials required to
meet the defense, industrial, and essential civilian needs of the United States. The list presented
in the report contains ferroniobium, dysprosium metal, yttrium oxide, cadmium zinc tellurium
substrate materials, and lithium ion precursors. Additionally, the Strategic and Critical Materials
Report on Stockpile Requirements issued by the Office of the Under Secretary of Defense for
Acquisition, Technology and Logistics in January 2013 lists four REE shortfalls that were
identified; they are: erbium, terbium, thulium and scandium.
From breakingdefense.com, “Pentagon fails to Act on Crucial Rare Earth Minerals”, Richard
Whittle, March 1, 2016:
A new Government Accountability Office report scolds the Department of Defense for failing to
figure out which rare earth elements are critical to national security — China controls the world
market — and for not developing plans to make sure the United States has enough even though

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Congress passed a law telling them to five years ago. When Breaking Defense asked for a
response, DoD denied any error in its ways – but promised to do better.
Thus continues a sleepy debate over whether the Pentagon, the defense industry and other
manufacturers are comfortably numb about the fact that China controls 100 percent of the world
supply of rare earths the military needs and about 85 percent of those used in consumer
products. In 2010, some reports – denied by Beijing — said China used that near monopoly as a
weapon, cutting off rare earth supplies to Japanese companies after a Chinese trawler collided
with Japanese Coast Guard boats. Rare earth prices skyrocketed.
Why are these minerals so important to the Pentagon (as delineated in the fiscal 2012 National
Defense Authorization Act)?
 Each nuclear-powered SSN-774 Virginia-class fast attack submarine requires about
9,200 pounds of rare earth minerals;
 Each DDG-51 Aegis destroyer needs about 5,200 pounds;
 Each F-35 Joint Strike fighter needs about 920 pounds;
 Rare earths are also essential to precision-guided munitions, lasers, satellite
communications, radar, sonar and other military equipment, added a 2013 Congressional
Research Service report.
“Rare earths are not particularly rare but are found in low concentrations in the earth’s crust,” the
CRS report explained. This makes them expensive to extract and process, and they require a lot
of processing: separating the ore into individual oxides; refining the oxides into metals; forming
the metals into alloys; and manufacturing the alloys into devices and components, such as the
permanent magnets used in the Joint Direct Attack Munition (JDAM), the guidance kit that turns
dumb bombs into smart ones.
Mining and refining these metals also require a lot of energy (natural gas and electricity).
“I’ve talked to major Fortune 100 companies and they all say the same thing: ‘Tony, what’s the
problem? I can buy all the rare earth I want right now, and at very good prices,” Marchese said.
His company is fulfilling a Defense Logistics Agency contract awarded last September to prove
the value of TRER’s Round Top Mountain rare earths deposit about 80 miles south of El Paso.
TRER is producing “bench scale” amounts – samples for laboratory analysis – of yttrium,
ytterbium and another rare earth whose identity DLA ordered the company to keep secret.
Marchese promises Round Top Mountain could “supply 100 percent of the DoD rare earth
element needs in the future.”

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From High Country News, “The U.S.’s only rare-earth mine files for bankruptcy - The U.S.’s only
rare-earth mine files for bankruptcy- How plain old economics could end Molycorp’s Mountain
Pass Mine in the Mojave Desert”, Tim Heffernan, June 30, 2015:
Last Thursday, Molycorp, the mining firm at the heart of HCN’s latest cover feature, “Dust to
Dust,” filed for Chapter 11 bankruptcy. The move was not entirely unexpected, and its ultimate
impact on the Mountain Pass mine in southeast California — the Colorado-based firm’s flagship
operation, and the only U.S. producer of rare-earth elements — is not yet entirely clear. But until
the very last minute, Molycorp had been signaling that it was determined to stay afloat on its own
terms. The bankruptcy, then, had an extra tinge of disappointment, like a ninth-inning rally that
fell one run short.
In 2010, China artificially raised the price of rare-earth elements by restricting exports. The result
was an increase in supply: as existing mines outside China expanded production; as mothballed
mines (like Mountain Pass) came back online; and as new mines opened. Predictably, rare-earth
prices spiked after China cut its exports — a textbook panic. Then, just as textbook, they rapidly
receded.
It is hard to believe that one of the biggest, richest ore deposits of its kind, backed by the most
advanced production facility anywhere, will be left to sleep in the earth. But then it was hard to
believe, in early 2011, that Molycorp was anything less than a sure bet. Heck, only last year a
respected investment advisory firm still believed Molycorp was a “Best Pick.” The difference
between faith and fact is the difference between $79.16 and $0.35, and between a mine and
hole in the ground. As other “energy-critical element” mine developers continue to promise the
moon that should be borne in mind.
From MetalMiner website:
Rare Earths: No Buyers for Mountain Pass; Canada’s Strange Project
by Jeff Yoders on SEPTEMBER 12, 2016
Molycorp failed to sell its Mountain Pass mine in San Bernardino County, Calif., as part of its
bankruptcy case. Molycorp became Neo Performance Materials after it exited bankruptcy and no
longer has any connection to the Mountain Pass mine and facility where it shut down
production a little more than a year ago.
Low Prices = Closed Mines
The open-pit mine was the sole U.S. source of rare earths. When rare earths prices were high
back in 2011, Molycorp plowed $1.5 billion into the Mountain Pass facility but shut it down last
year as prices continued to erode for both light and heavy rare earths. Before declaring
bankruptcy, Molycorp vowed to focus its production on its operations in Estonia.

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Prices have stayed low for the last three years so it’s no surprise that Molycorp and the
bankruptcy court couldn’t find a buyer. Our Rare Earths MMI registered another 17, charting
pretty much the same flat course it’s coasted through for the last three years.
China removed export quotas on producers of the magnetic and battery metals at the end of
2014 and — while demand from cell phone, computer and defense manufacturers has remained
steady to up ever since — supply of heavy rare earths from China and Australia’s Lynas
Corp. has more than filled the gap.
Other nations are still interested in developing their own rare earth resources as no one wants to
experience a Japan-style Chinese producer boycott, which actually happened in 2011 when
Chinese producers cut off their neighbor with no official statement or explanation why. The
boycott ended just as mysteriously as it began, but one thing it did do was inspire major
Japanese manufactures such as Honda Motor Corp. to find substitutes for heavy rare earths
so they could scale back reliance on their testy neighbor.
Canada’s Rare Earth Quest
Yet, in Canada — as with TMRC’s Round Rock, Texas, deposit — exploration is continuing and
there is plenty of investor interest in providing manufacturers with a source of yttria, neodymium
and dysprosium oxide.
Quest Rare Earth Minerals, a Canadian company, has vision for a mine at Strange Lake, on
the Labrador-Quebec border, and it inched a bit closer to reality this month after submitting
environmental impact statements to the Canadian government.
The company hopes to mine rare earths there and process them in a facility they will construct
very similar to the what Molycorp did at Mountain Pass. Yes, they’re planning to do the exact
same thing Molycorp did only with a government that will likely place even more restrictions and
market disadvantages on the project than the U.S. federal government slapped on Molycorp.
There are caribou where Quest wants to mine, so hold onto your wallets, investors!
So, Globalization has done wonders for Uncle Sammy. Not only 1970s U.S. industry vacated to
a large degree but also we are dependent on China for our most defense materials! You couldn’t
dream a better nightmare, but too many Americans are only concerned about the next Super
Bowl, or updating their Facebook site, or the details of the latest cellular phone. There is nothing
else to worry about, is there?
Parts II and III will cover most of the common elements and compounds that are used in
industry. Below is a comprehensive picture of the American reliance on other countries’
resources.

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Future Trends - Recycling - Metals - Part I

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