Rare Earths, “The War Metals?”

Jack Lifton

Sometime after 2007, I was invited to participate in a meeting called by the Office of Net Threat (Assessment) in the inner ring of the Pentagon in Washington, DC. The topic was the impact of the lack of critical materials on the security of the United States. I was asked to discuss the necessity of rare earths for the military. Around that same time, the US Dept of Energy put out its now well-known chart of critical materials. The current version of that chart is now given as a set of bullet points

Note well that there is no mention of specific military demands for any of the critical materials in the DoE bullet points. This doesn't mean that these critical materials are not important to the Department of Defense; it means that the US cabinet departments have separate agendas.

Even though the Pentagon released a report in 2013 that stated that the demand for rare earth permanent magnets by the US military was "about" 1000 tons per year, the current demand figure is "classified,"

Returning to 2007 or thereabouts I well remember that the leading market cap player at the time, sometime around 2010, started using a picture of a US jet fighter plane in its advertising and claiming that "rare earths" were critical to its (the plane's) flying and combat operations and implying that without rare earths the US would be defenseless. This quickly became "received wisdom."

This was, as with so many pronouncements made by many companies in the bull market not true, but it became embedded in all rare earth related advertising from then on.

The purpose and value of rare earth permanent magnets in vehicles of any type is to reduce weight and the need for space. Their value is that they can be miniaturized. In planes, trains and automobiles this allows more payload (for the military) or more range due to less power necessary to carry the weight of the magnets and less volume allowing tiny, but powerful, magnets to be used in power accessories, such as power windows and seats or, as one example of a military use, weapons bay (formerly called bomb bay) doors.

Similar stories were that then began to say that an F35 fighter/bomber needed 935 pounds of rare earth permanent magnets in its construction and operation. This misinformation has also become, today, received wisdom.

In 2017 while working on a plan to recycle rare earth permanent magnets for the Defense Logistics Agency, I, of course, asked from where the scrap magnets were to come. The answer was that the DLA didn't have a firm grasp on that, since compartmentalization and "need to know" and classification of end uses made it impossible for any one agency of the Pentagon to know that.

I guessed that the DoD needed 3000 tons per annum of rare earth permanent magnets. I based my estimate on data about the uses in F35s from an unclassified report published by the Pentagon in 2013, and my own guesses as to the need for rare earth permanent magnets in main battle tanks, man-carried missiles, drones, and the Navy's adoption of electric propulsion.

Rare earth permanent magnets are important to the military for exactly the same reason they are important to the OEM automotive industry; they save weight and volume, and thus increase range and payload.

Vehicles and weapons can be made without rare earth permanent magnets; they will just be less efficient.

The Hellfire missile, made famous by being carried and launched from drones, uses Alnico (aluminum-nickel-cobalt) magnets made in the USA by a magnet maker in business now for 120 years. It could use rare earth permanent magnets, if they were available and made from domestic raw materials processed in the United States.

The F35 could use Alnico magnets in place of its current rare earth permanent magnets, but it would require special cooling to avoid curie-point failure and the additional weight and volume would reduce range and payload. The same for automobiles and trucks except that it wouldn't be so much the payload that is sacrificed it would be convenience accessories such as power windows, seats, and doors in all cars and range in EVs.

Rare earth permanent magnet motors are the most efficient electric motors known. They are thus the best and most robust solution to engineering issues of weight and volume for both military and consumer products.

But, they are not indispensable. And, if the US requires that any such magnets be made domestically from domestic materials then we are going to need to make between 10,000 and 15,000 tons of them per year at current usage.

Even if only the military gets to use them, we would need at least 3,000 tons per year.

Today NO rare earth permanent magnets are manufactured in the USA from domestic materials.

The time to change that is NOW.

Note from the Publisher: Jack Lifton is the co-founder and the Chairman of the Critical Minerals Institute, which maintains lists of the critical minerals as identified by the US, Canada, the UK, Australia and Europe.

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Editor: Jack Lifton

Jack Lifton is the Editor in Chief, Critical Minerals for InvestorIntel.com, a capital market source celebrating its 21st year in business. He is also a Director of InvestorIntel…

Jack,

Am I correct in assuming that USA Rare Earths’ Stillwater, Oklahoma facility, currently under constuction, is a step in the direction you are calling for? Lou

Yes. It is a step in the right direction, but it will need a feedstock of rare earth permanent magnet alloys to move forward. No such product line is produced today in the Americas.

Jack,

Further to the question, there has, to my knowledge, been no announcement of any construction initiation on a magnet facility in Stillwater, OK. There have been agreements inked on business initiation, tax holidays, etc for an existing warehouse to be converted to a manufacturing facility. Meanwhile the Hitachi magnet producing equipment remain in storage awaiting assembly, commissioning and start-up. A lot of questions remain to be answered as to supply and what will actually occur in that facility and what products will be produced. Relevant announcements were made in June 2022 and no new information since that time.

We have USARE and MP both threatening US magnet-making facilities and the privately already producing Noveon (US strategic funded). However, what do you feel about the VAC move to build in the US for GM support and their intentions to use locally sourced materials? Apparently, this move is not US strategically funded (yet). In fact, might this now be motivation for others to arrive and/or for direct US gov’ funding in magnet making? Why leave such a choke point just to private financing when we have your indicated military needs to address? US strategic funding is already in RE processing and incentivizing expanding/reshoring of end-line manufacture as well as battery making (RE mining is another issue).

Thanks for writing. GLTA – REI

REII think we are looking at government failure to understand how to (re)constitute a supply chain, economically. There may be no point, unless open subsidization is guaranteed, to building a rare earth permanent magnet manufacturing facility in the USA. Any consumer business must be profitable to survive. And, in all cases, military and civilian, there must be a supply of the necessary critical raw materials before undertaking construction of facilities that utilize them. The military can do this type of cart before the horse financial legerdemain by simply reciting the mantra of "national security," but private industry can only pay what allows for competitive advantage. Right now, we really don't know what the delivered cost of domestic NdPr, and even more importantly, of domestic or imported DyTb, might be, so that even the military does not know what the ultimate cost of their magnets will be. The consumer industries that want to use rare earth permanent magnet enabled components are today just p*****g in the wind with regard to costs of critical rare earths, much less of fabricating devices enabled by them. Government and industry in the USA have a history of ignoring experience and only consulting with each other and with pet bureaucrats and academics who never disagree with their paymasters.

Hello Jack, What are your thoughts on this article? Rgds, R

https://www.globaltimes.cn/page/202303/1286516.shtml

Russell

It is nonsense, if you think that somehow, Tesla's RE demand, is critical for the RE market.

If Tesla is going to go to heavier, less efficient drive motors, I don't think that will be a competitive advantage.

Musk has become a natural resources influencer, but he is not by any measure an expert.

Don't bet on REs demand or price going down anytime soon.

Jack

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